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Old tactics, new medium: how fraud can ruin a perfectly good day on social media

The Internet is a great place to be, if you're an investor. That is, until you're on the receiving end of a fraud scheme.

Investors flock to the web for news, advice, information and research. Whether it's looking up current strategies or individual stocks, checking out possible financial advisers and firms or posting comments on a favorite finance site-the web gives us endless possibilities to connect. But, there's a downside. Unless you have a sign to warn off solicitors on your social media profiles as well as on the front door of your home, you're going to be approached by some less-than-honest types now and then. Here are some telltale warning signs - and don't be surprised if they seem familiar. 

Fraudulent schemes might use:

  • Logos and names that are close approximations of real investment firms, from social media avatars all the way to linked websites-before you do anything, visit the site they are attempting to duplicate and you'll soon know which one is real.
  • A post, tweet or direct message from someone you don't know, inviting you to connect over an investment opportunity, with a recommendation from or claiming to know a friend of yours.
  • Posts that attempt to entice you with words like "almost no risk" and "incredible gains guaranteed" and "once-in-a-lifetime." It's the same language of other scams, just tailored for social media.
  • Posts that hype a particular stock or investment and immediately seem to have others agreeing and commenting positively (because they're all part of the same team).
  • A social media account that has not been used for anything else. If it has no history, it may be because a fraudster created it solely for the purpose of this one scam. (That helps them stay anonymous.)

Social media is not the issue. Fraud just has a new place to operate.

Think of an overpromising post as an unsolicited phone call, a spam email or someone standing at your front door with a great offer for you-if only you give them money right now. Would you hand it over, no questions asked? Probably not. So, just as you've learned to say, "No thank you, I'm not interested," in those situations, you now have to train yourself to act the same way in this medium.

If you've been burned by investment fraud, don't expect to recover your losses without the help of an attorney, and make sure you report the activity to the Securities & Exchange Commission.

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