From the Office of Investor Education and Advocacy, U.S. Securities and Exchange Commission
Social media and the Internet have become important tools for investors – providing not only a wealth of information for investors, but also opportunities for those looking to take advantage of innocent victims.
Scam artists use social media and the Internet to conduct complex frauds and schemes that even the most seasoned investor may have trouble detecting. They spread false or misleading information, and conceal their identities or even impersonate credible sources of market information.
Below are five tips to help you avoid investment fraud on social media and the Internet:
Be Wary of an Unsolicited Offer to Invest – If you receive an unsolicited message from someone you do not know regarding a “can’t miss investment,” pass up the offer and consider reporting it to the SEC.
Look out for Affinity Fraud – Never make an investment based solely on the recommendation of a member of an organization or group to which you belong. You should use independent information to evaluate any financial opportunity, even those recommended by people you know.
Research the Investment and the Investment Professional – Never rely solely on a testimonial or take a promoter’s word at face value in making an investment. You can check out many investments using the SEC’s EDGAR database or your state’s securities regulator. You can check out registered investment advisers at the SEC’s Investment Adviser Public Disclosure website and registered brokers at the BrokerCheck website of the Financial Industry Regulatory Authority.
Be Thoughtful about Privacy and Security Settings – Unless you guard your personal information, it may be available to anyone with access to the Internet – including fraudsters. If you use social media websites as a tool for investing, be aware of the features on these websites that help you protect your privacy and personal information.
Ask Questions and Check out Everything – Be skeptical and research every aspect of an offer before making a decision. It’s your money and if you don’t understand something, ask questions until you are satisfied.
For additional information for investors, visit Investor.gov, the SEC’s website for individual investors.
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The Office of Investor Education and Advocacy has provided this information as a service to investors. It is neither a legal interpretation nor a statement of SEC policy. If you have questions concerning the meaning or application of a particular law or rule, please consult with an attorney who specializes in securities law.