You go online and receive an e-mail promising a no- or low-risk investment opportunity with guaranteed high profits. This may sound like the tip of a lifetime, but hit the brakes before handing over your money. This enticing offer could be an online investment scam. Knowing the warning signs of an Internet scam could be your wisest investment.
Protect Yourself from a Rocky Road
Anyone can fall prey to an online investment scam. Scammers can use a variety of online resources to draw in victims, such as e-mails, online investment newsletters and message boards. Following these tips can help you avoid becoming a victim:
If It Happens to You
- Watch out for words like "guaranteed," "limited offer" and "as safe as a CD." Avoid investments that promise high profits quickly. There is no such thing as a no-risk investment because no one knows exactly how an investment will do. Remember, if it sounds too good to be true, it probably is.
- Get it in writing. Before investing, get written information about the company, such as a prospectus, an annual report or financial statements. Companies that are legitimate will be more than willing to provide this information or tell you where to find it.
- Check it out. Have a trusted financial advisor, broker or attorney look over any online investments you are interested in.
- Investigate your investments. Federal securities laws require many companies to register with the U.S. Securities and Exchange Commission, or SEC. Look up the company you're interested in at www.sec.gov and use the SEC's EDGAR database*. You can assess the annual reports, with audited financial statements, of registered companies for free. If a company is not registered, that does not necessarily mean it's a fraudulent investment – smaller companies that make less than $1 million do not have to register with the SEC. If you can't find a company on the EDGAR database, contact the SEC at (202) 551- 8090. You can also check with your state securities regulator to find out more information about the company you'd like to invest in.
If you are a victim of an investment scam or think someone may be running an online scam, contact the SEC immediately. Acting quickly can help prevent others from being victimized and may even help you get lost money back. Submit a complaint using the SEC's online complaint form or e-mail your grievance to firstname.lastname@example.org
To find out more about online investments scams and how to protect yourself, visit the U.S. Securities and Exchange Commission's Web site at www.sec.gov.*
When you're ready to make your next investment, contact a financial advisor that you can depend on. At PeoplesBank, our experienced advisors can help you with all your financial needs.
* Web site provided for information only: no endorsement is implied.
- Not insured by any government agency
- No financial institution guarantee
- May lose value