Scammers use social media to build trust quickly and trick you into fake investments.
If someone reaches out to you on social media about an investment opportunity, be cautious. Always verify their credentials and do thorough research before sending any money.
Warning Signs It's A Scam
- Promises of high returns with no risk.
Many online scams promise unreasonably high short-term profits. Guarantees of returns around 2 percent a day, 14 percent a week or 40 percent a month are too good to be true. Remember that risk and reward go hand-in-hand. - Offshore operations.
Many scams are headquartered offshore, making it more difficult for regulators to shut down the scam and recover investors' funds. - E-Currency sites.
If you have to open an e-currency account to transfer money, use caution. These sites may not be regulated, and the con artists use them to cover up the money trail. - Recruit your friends.
Most cons will offer bonuses if you recruit your friends into the scheme. - Professional websites with little to no information.
These days anyone can put up a website. Scam sites may look professional, but they offer little to no information about the company's management, location or details about the investment. - No written information.
Online scam promoters often fail to provide a prospectus or other form of written information detailing the risks of the investment and procedures to get your money out.
How to Protect Yourself
- Before investing, contact DFI.
Before investing any money, contact DFI to learn more about the background of the salesperson and the status of the investment. Verify a license online at www.dfi.wa.gov or call 1.877.RING DFI (746-4334). - Protect your personal information.
Many sites will allow you to choose how much personal information you want to make publicly accessible, and how much you want to keep private. Adjust privacy and security settings accordingly, and think twice before posting personal information online. - Search the names of all persons and companies connected to the investment being offered.
The Internet offers anonymity and scam artists take advantage of this. Do a search for the name of the person offering you the investment and the companies involved in the investment. If there are few results, or their name doesn't appear anywhere outside of the one investment program they're offering you, that's a red flag that they may be using multiple aliases, or hiding behind a fake identity. - Beware of the use of names or testimonials from other group members.
Scam artists frequently pay out high returns to early investors using money from later arrivals. This type of scam is a Ponzi scheme. Fraud aimed at groups of people who share similar interests is called affinity fraud. - Obtain a prospectus.
Ask for written documentation that details the risks of the investment and procedures to get your money out. - Do not take the word of a salesperson.
Don't feel pressured to "act now." Take time to check out the investment yourself, and remember the old adage: "If it sounds too good to be true, it probably is."