Social Networks May Be The Next Target For Investment Scams
Posted by Michelle Moquin on May 7th, 2010
Readers: I know I have been including a lot of articles about scams lately, but obviously there is a lot of info to give out. The scammers are out and they’re trying to get a piece of you. Social networking is big these days, (FaceBook, Twitter, etc.) and the scammers know it.
I found this article by Scambusters particularly interesting and enlightening. Be sure to hit the hyperlinks too – there’s a lot of good stuff here that you don’t want to miss. I’d hate for any of my readers to be scammed, again.
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Are Facebook and Twitter Next For Investment Scams?
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Hear the cry of the investment scams artist: It’s going to be the next big thing; it’s going to change the game; hardly anyone knows about it… yet.
They’re going to let you in on the secret, so you should sell the family silver and pile the proceeds into whatever it is they’re selling.
It’s always the same old song, but often sung in a different voice. And it seems there are plenty of people who are willing to listen.
We covered investment scams in some depth in previous issues:
- 7 Deadly Sins: Investment Scams Promise Shortcut to Economic Recovery
- How to avoid investing scams, Ponzi schemes and scandals: Internet ScamBusters
But now, there are new worries about the growing use of the Internet as a vehicle for investment scams, especially on social networks like Facebook and Twitter and in blogs.
These sites have taken over from the old Internet bulletin boards and chat rooms where “pump and dump” scammers would try to promote their stocks.
You could say it’s the next big thing in the Internet investment scams world.
In fact, the main regulator of US security firms, the Financial Industry Regulatory Authority (FINRA), has recently issued guidance to its members about what they should and shouldn’t say about the investments they promote in blogs and on social networks.
Their message, basically, is: “We’re watching you.”
Regulators and law enforcement agencies are particularly worried about the risk of affinity fraud on these sites.
Affinity scams, which we also covered in issue #124, rely on people building and exploiting friendships, which is precisely what social networking sites do. (I blogged about it here too)
You get a bunch of friends or followers, lull them into thinking you’re a good guy, then you pass on your bogus investment tip.
New wave of green scams
And it’s not just stocks and shares the latest investments scams artists are pushing. Wherever there’s a leading edge in technology or a topical issue that’s attracting major public interest, you’ll find the crooks.
In particular, FINRA has also recently expressed concern about tech-related green scams — online and offline.
“Right now there are a lot of legitimate stories in the news about green energy initiatives and con artists want to leverage people’s interest in green energy to make a quick buck at investors’ expense,” says John Gannon, the organization’s VP for Investor Education.
“There is a lot of interest in companies that claim to provide green energy, but (we want) to remind investors to be vigilant about avoiding investment scams, no matter how they are packaged.”
The latest green investment scam tricks, for instance, include:
* Solar stock “pump and dump” schemes touting a 200% gain.
* Investing in a supposed substitute for charcoal made from
organic waste or a system for converting plastic to oil at $10
a barrel.
* An opportunity to invest in environment-related patents in
which the fraudster holds out the prospect of a 1,000% return!
Crazy, isn’t it? But investors still plowed in their money.
Worse still, these investment scams crooks love nothing better than spinning such a convincing tale that their victims even remortgage their homes, sell everything they’ve got and cash in their IRAs and 401Ks to get in on the next big thing – which turns out to be the scammers’ bank accounts.
You probably read our earlier report on green scams, in which we warned about renewable technology and miracle device scams.
And since we are enthusiastic fans and practical users of green technology, our message was and is to make sure you know your stuff, so you can indentify genuine opportunities in this market, both for investing and for using.
More tricks — and 10 tips
Another trick investment scams artists use to fool victims is to link into news events, especially those that prey on public fear.
For instance, after numerous anthrax-in-the-mail scares, one con man claimed latex gloves would be the next big thing and investors duly poured their savings into a bogus manufacturing scheme. Instead, the money went to buy, among other things, luxury seats for the scammer at Dodger Stadium.
Then, there are those tricks which just play on the willingness of victims to believe there’s an opportunity to make big money that no one else knows about.
In one recent high profile-case, TV actor Kiefer Sutherland was reported to be the victim of a scam in which he was convinced to invest in a deal that promised huge profits by purchasing cattle in Mexico and reselling them in the US.
Sutherland, among others, supposedly parted with a large six figure sum but there’s no evidence that the livestock were ever bought.
So, how do you spot potential scams and distinguish frauds from legitimate investment opportunities?
FINRA offers this list of what they call “rip-off tips” – things that should put you on alert:
* Unsolicited communication such as faxes, emails, text
messages, tweets (on Twitter), and strategically placed
“opinions” in blogs and message boards.
* Seminars and webinars that use short-term incentives and
bonuses.
* Price targets or predictions of swift and exponential growth.
* The use of facts from respected news sources to bolster
claims of the size of the market for a new product or
technology.
* Mention of associations with or actions by governments that
bolster a company’s product or service.
* References to actions by well-known companies used to
justify growth of the company being touted.
* Claims that they’re the next big thing (yes!).
* Products that are only at the development stage.
* Unverifiable claims of enormous energy efficiency.
* Pressure to invest immediately.
Naturally, there are legitimate investments that use some of these tactics (such as predictions of swift or exponential growth, facts from respected news sources, well-known companies or government actions to bolster claims, and development stage products). However, it is good to be very skeptical.
Actually, FINRA has a useful “scam meter” on its website that allows you to check out your thoughts about an investment opportunity.
We certainly don’t recommend that you use this as the last word on the authenticity of an investment, but it’s worth a run-through to confirm your own suspicions.
These tips will help you avoid green scams and other investment scams — on and off the social networking sites.
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Readers: I’ll check in and respond tomorrow. Happy Friday!
Lastly, greed over a great story is surfacing from my ‘loyal’(?) readers. With all this back and forth about who owns what, that appears on my blog, let me reiterate thatall material posted on my blog becomes the sole property of my blog. If you want to reserve any proprietary rights don’t post it to my blog. I will prominently display this caveat on my blog from now on to remind those who may have forgotten this notice.
Gratefully your blog host,
michelle
Aka BABE: We all know what this means by now :)
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May 7th, 2010 at 10:21 am
Zen Lill
I work out after work 5 days a week. I live in LA. So where is this gym you work out in. I will not approach you. I will respect your space. I just have to see the woman who brings game like you do.
Joel
May 7th, 2010 at 10:26 am
Eat Carbs, Weigh Less
Walter Willett, MD, DrPH
Harvard School of Public Health
Mollie Katzen
Harvard School of Public Health Nutrition Roundtable
Carbohydrates have a bad reputation among weight watchers. People proclaim that excess pounds melt away when carbs are eliminated from their diets and their plates are filled with protein instead.
Problem: The trendy high-protein/ultra-low-carb diets generally are too monotonous and extreme to be successful long-term eating plans —
so although it initially appears that weight is lost with little effort, for many people the pounds soon pile back on. Also, by limiting carbohydrates, you deprive yourself of the many nutrients that these foods provide…
and you miss out on the ways in which carbohydrates promote permanent weight control.
Solution: Choose the right kinds of carbohydrates — and strike a healthful balance overall among carbs, proteins and fats.
What you need to know…
JUST WHAT ARE CARBS?
Carbohydrates are plant-based compounds composed of carbon, hydrogen and oxygen that provide energy to cells. Different types…
Simple carbohydrates contain one or two sugar units per molecule. They include fructose and glucose, found in fruits… galactose, found in milk products… and sucrose (table sugar).
Complex carbohydrates consist of long chains of many sugar molecules. The most healthful type is dietary fiber — sugars linked by bonds that are not broken down by digestive enzymes. Sources of fiber include whole grains, vegetables, legumes, nuts and seeds.
Refined carbohydrates are complex carbs that have been processed and turned into simple carbs — which causes them to lose much of their fiber and nutrient content while retaining their calories.
Example: The process of refining whole wheat removes the nutrient-rich inner portion (the germ) and high-fiber coating (the bran), leaving only the soft, white, nutrient-poor endosperm from which white flour is made.
“BAD” CARBS
Just as there are “bad fats” (trans fats and saturated fats) and “good fats” (such as omega-3 fatty acids), so too are there carbs that contribute to health risks and carbs that are beneficial.
Simple and refined carbohydrates fall into the risky category. They are digested quickly, causing a rapid spike in blood glucose (sugar) levels.
In response, your pancreas pumps out a lot of insulin, a hormone that ushers sugar into your cells for use as energy, thereby causing blood sugar levels to plummet.
This rapid drop in blood sugar sends a signal to your brain — “Eat!” This is why consuming simple or refined carbs feels satisfying at first, but after just a little while hunger pangs return.
Concern: In general, Americans get far too many of their daily calories from simple and/or refined carbs — especially from cakes and other sweet baked goods… ready-to-eat sugary cereals… soft drinks… table sugar, syrups and jam… white potatoes… and white bread. No wonder so many people are overweight.
If you feel hungry all the time, it may be that you’re never entirely satisfied by what you’re eating.
Reason: Your body is designed to break down intact, whole foods. When you eat mostly refined carbs, it’s as if your brain were telling your body, “The bran is already off this rice, so there’s nothing left to do but let it come on in and add to the blood sugar.”
Example: Dieters often snack on pretzels because they are low-fat… but most pretzels are made from white flour, so when you eat them, you’re hungry again a half hour later.
Along with contributing to hunger and weight-control problems, excess consumption of refined carbohydrates may further increase the likelihood of developing diabetes among people already at risk for the disease.
It also raises levels of triglycerides (a type of blood fat) and reduces HDL (“good”) cholesterol, increasing the risk for cardiovascular problems.
Recommended: Get no more than 10% to 15% of your daily calories from simple and/or refined carbs.
“GOOD” CARBS
Unlike simple carbs, complex carbohydrates are digested slowly. Blood sugar and insulin levels rise gradually and peak at lower levels.
With such stability, the brain receives sustained signals of satiety — so hunger pangs and food cravings are held at bay longer.
Also: Complex carbs generally are high in vitamins, fiber and other nutrients that guard against heart disease and digestive problems… and some studies suggest that they can help reduce diabetes risk.
The glycemic index (GI), a ranking system from zero to 100, is one way to gauge the effect of various foods on blood sugar.
The lower a food’s GI number, the more time your body spends breaking down and digesting it… the more stable blood sugar levels remain… and the longer you feel full.
Simple strategy: Opt for low-GI foods as much as possible. To learn the GI of various foods, visit http://www.glycemicindex.com and click on “GI database.”
CARB RECIPES REVISED
Small changes turn simple and/or low-carb foods into nutritious sources of complex carbohydrates that promote easy weight control. How to make over…
Burgers. Use whole-wheat buns… add minced mushrooms, onions and walnuts to the ground beef.
Burritos. Choose whole-grain corn tortillas instead of white-flour shells… add diced peppers, onions and tomatoes.
French toast. Use whole-grain bread instead of white… top with puréed fresh berries instead of syrup.
Grilled cheese. Spread whole-wheat bread with grainy mustard… top with tomato or zucchini slices… use half your usual amount of cheese… broil until cheese melts.
Lasagna. Select whole-wheat noodles… add shredded carrots and diced eggplant to the filling.
Peanut butter and jelly. Opt for whole-grain bread and natural peanut butter… instead of sugary jelly, add thin slices of apple or pineapple.
Side-dish grains. In place of white rice, cook millet, barley, bulgur or cracked wheat… stir in nuts, seeds, dried fruits and/or spices.
Bottom Line/Women’s Health interviewed Walter Willett, MD, DrPH, and Mollie Katzen, co-authors of Eat, Drink, and Weigh Less (Hyperion). Dr. Willett is a professor of epidemiology and nutrition at Harvard School of Public Health and professor of medicine at Harvard Medical School, both in Boston. Katzen is a member of the Harvard School of Public Health Nutrition Roundtable and author of 10 cookbooks, including the best-selling The New Moosewood Cookbook (Ten Speed).
May 7th, 2010 at 10:43 am
I was looking at your John Curley and thinking how lucky the must have felt to be able to have you full attention while capturing that image.
I’m smitten