Articles Posted in Social Media Fraud

INVESTOR ALERT:
Email Hack Attack? Be Sure to Notify Brokerage Firms and Other Financial Institutions Immediately if you Feel that your Security has been Compromised.

Every day each of my websites and email address receive numerous unwanted spam and and unsolicited contacts from what are clearly fraudsters.  Obviously, the easiest way to deal with these types of contacts is to just delete them without opending the email itself or the attachment.  However, this is easier said then done, especially wen dealing with some of the most proficient fraudsters.

In the most serious cases, a compromised email account can lead not only to identity theft, but also to theft of your money. That’s why one of the most important first steps you should take if your email account has been hacked is to notify your brokerage firm and other financial institutions.

Investors’ use of Facebook,Twitter and other social media websites as an investing tool has increased substantially in recent years. Investors who use social media websites for investing should be mindful of the various features on these websites in order to protect their privacy and help avoid fraud.  Consequently, please be mindful of the following:

Privacy Settings:   Investors should be mindful of the default privacy settings when establishing an account on a social media website. The default privacy settings on many social media websites are typically broad and may permit sharing of information to a vast online community. Investors should check default settings and modify them, if appropriate, before posting any information on a social media website.

Biographical Information:   Many social media websites require biographical information to open an account. This information may not have to be made available to other social media users once the account is active. Investors should consider customizing their privacy settings to minimize the amount of biographical information that they allow others to view on the website. For example, many users permit “friends” or authorized users to see their birthday month and date, but not the birth year. Or similarly, many users choose not to display their address, hometown, work or other identifying information.

While fraudsters are constantly changing the way they approach victims on the Internet, there are a number of common scams of which you should be aware. Here are a few examples of the types of schemes you should be on the lookout for when using social media:

“Pump-and-Dumps” and Market Manipulations:

“Pump-and-dump” schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create.  Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money.

It is a fact that U.S. retail investors are increasingly turning to social media, including Facebook,YouTube,Twitter, LinkedIn and other online networks for information about investing.  Whether it be for research on particular stocks, background information on a broker-dealer or investment adviser, guidance on an overall investing strategy, up-to-date news, or to simply discuss the markets with others, social media has become a key tool for U.S. investors.

While social media can provide many benefits for investors, it also presents opportunities for fraudsters.  Social media, and the Internet generally, offer a number of attributes criminals find attractive.  For example, social media lets fraudsters contact many different people at a relatively low cost.  It is also easy to create a site, account, email, direct message, or webpage that looks and feels legitimate – and that feeling of legitimacy gives criminals a better chance to convince you to send them your money.  Finally, it can be difficult to track down the true account holders that use social media.  This anonymity makes it harder for fraudsters to be held accountable.  Therefore, it goes without saying that investors need to use caution when using social media when considering an investment.

Here are some easy to follow tips to help you avoid online fraud: