"Social networking in the Internet age allows people to connect to one another more quickly
and easily than ever before. Investment promoters increasingly are logging
on to find investors ... and their money." - NASAA
These days, it's hard to find anyone who isn't on at least one
social networking website - and that includes con artists, says theNorth
American Securities Administrators Association in a recently released
"While social networking helps connect people with others who share
similar interests or views, con artists infiltrate these social networks
looking for victims," warned the association. "By joining and
actively participating in a social network or community, the con artist
builds credibility and gains the trust of other members of the group."
To protect themselves, investors should watch out for the red flags of
online investment fraud: promises of overly
high returns, particularly without risk; prods to "recruit your friends;"
lack of information or verifiability; offshore operations; and requests
to transfer money through an e-currency account.
"If you have to open an e-currency account to transfer money, use
caution," warned the NASAA. "These sites may not be regulated,
and the con artists use them to cover up the money trail."
Additionally, the NASAA recommends investors always check with their state
securities regulator before making an investment. Investors should also
ask themselves these two questions before trusting anyone online with
their hard-earning funds:
- Have I verified that the promoter is legitimate?
- Do I understand the risks of the investments?
For more tips on avoiding investment fraud on FaceBook, LinkedIn, Twitter,
and other social networking websites, read the full NASAA investor advisory here.