Financial Scammers Are Now Using YouTube, Facebook, LinkedIn, Twitter, and Other Websites to Target Investors, Warns Texas Securities Commissioner

Texas Securities Commissioner Benette L. Zivley wants investors to be aware that fraudsters are now using the Internet as a vehicle for their investment schemes. Online social networking Websites, such as Facebook, Twitter, YouTube, and Linked in, are among the sites being used to find potential victims, gain access to their personal information, and build relationships of “trust.” Scammers have even been known to purposely “mimicking” a target’s interests to try and get someone to invest. Considering that about 750 million users (who on average are linked to about 80 groups, community pages, and events) are logging 700 billion minutes a month on Facebook alone, this shouldn’t come as a surprise.

Affinity fraud scams are among the easier investment schemes to perpetuate online. This type of financial scam usually targets professional organizations, community service groups, religious communities, and other social networks. Whereas in the real world, a fraudster would have to work to establish actual connections with its target communities, now he/she can easily become part of these groups by pretending to share similar interests, religions, careers, or hobbies.

Online media channels, such as YouTube have now also become video forums through which to market financial scams. Remember, anyone can record an impressive sales pitch or edit professional looking footage to make themselves appear legitimate.

The State Securities Board warns that not only are financial scammers using the Internet to target investors, but also, they are going online to recruit their sales teams so that they can swiftly sell millions of dollars worth of inappropriate/bogus investments to their victims.

The Federal Bureau of Investigation offers a number of tips for how to avoid investment fraud schemes on the Internet:
• Don’t let a sophisticated Web site impress you. These days, sites with bells and whistles are not the difficult to get up and running.
• Do your due diligence before investing, including checking to see that the company involved is legitimate.
• Be careful about responding to investment opportunities made through unsolicited e-sources.
• Exercise caution when investing with companies and individuals located outside the US.
• Make sure you learn about the different terms and conditions involved with your investment.

You may want to limit how much personal information you make available/accessible on your social networking sites to people that you don’t know well.

A few warning signs that someone may be targeting you with an investment scheme:
• The promise of no risk and high returns • Offshore operations • Payments having to be made through an e-currency site • Testimonials from “satisfied” clients
You can always contact the State Securities Board and request a free background check on a financial firm, investment professional, or the investment being offered. IT is also a good idea to always ask for written information (such as a prospectus) about an investment opportunity, as well inquire about the risks involved.

An example of a recent investment fraud scam that took place through the Internet involves a woman who solicited investments through the classifieds on Craig’s list. She also used these investors’ credit histories to apply for credit cards and loans. Another financial scammer, a man, used the online dating site to meet a woman and convince her that if she gave him $10,000, within a year he would be able to grow that into $1 million.

Our Texas securities fraud law firm is dedicated to helping clients recover their losses brought about by investment fraud scams.

Internet danger: Scammers use social network sites to find victims, Chester on Tribune, September 21, 2011
Federal Bureau of Investigation

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Texas Minister Pleads Guilty to Involvement in $7.2M “White Hat Guys” Securities Fraud that Bilked Thousands of Petro America Corporation Investors in the US and Canada, Stockbroker Fraud Blog, February 27, 2011