Online Fraud: A product of Increased Internet Exposure
By Maina Roy Mwangi
Continuous and increased access to the internet and social media platforms such as Whatsapp, Instagram, and Facebook has reported one of its most devastating effects, online fraud, with cases rising over the years.
It is estimated that approximately eight out of every ten social media users have been conned when using the sites and social media platforms.
How Online Fraud happens
They are asked to provide personal information such as identification and passport numbers, addresses and money.
Many investors use the Internet and social media to help them with investment decisions.
Also read: BE WARY OF EARPHONES, HEADPHONES
While these online tools can provide many benefits for investors, these same tools can make attractive targets for criminals. Criminals are quick to adapt to new technologies and the Internet is no exception.
The Internet is a useful way to reach a mass audience without spending a lot of time or money. A website, online message, or social media site can reach large numbers with minimum effort.
It’s easy for fraudsters to make their messages look real and credible and sometimes hard for investors to tell the difference between fact and fiction.
If an investment promotion grabs your interest, research the “opportunity” even before providing your phone number and email address. Otherwise, you may be setting yourself up to be targeted for investment fraud.
The key to avoiding investment fraud on social media sites or elsewhere on the Internet is to be an educated investor. Social media, such as Facebook, YouTube, Twitter, and Whatsapp, have become key tools for many investors.
Whether they are seeking research on particular stocks, background information on a broker-dealer or investment adviser, guidance on an overall investment strategy, up-to-date news or simply wanting to discuss the markets with others, investors turn to social media.
Social media also offers a number of features that criminals may find attractive. Fraudsters can use social media in their efforts to appear legitimate, hide behind anonymity, and reach many people at a low cost.
While legitimate online newsletters contain valuable information, others are tools for fraud. Some companies pay online newsletters to “tout” or recommend their stocks.
Touting isn’t illegal as long as the newsletters disclose who paid them, how much they’re getting paid, and the form of the payment, usually cash or stock. But fraudsters often lie about the payments they receive and their track records.
Fraudulent promoters may claim to offer independent, unbiased recommendations in newsletters when they stand to profit from convincing others to buy or sell certain stocks.
They may spread false information to promote worthless stocks. The fact that these so-called “newsletters” may be advertised on legitimate websites, including on the online financial pages of news organizations, does not mean that they are not fraudulent.
Online bulletin boards, chat rooms and social media sites are a way for investors to share information.
While some messages may be true, many turn out to be bogus or even scams. Fraudsters may use online discussions to pump up a company or pretend to reveal “inside” information about upcoming announcements, new products, or lucrative contracts.
You never know for certain who you’re dealing with, or whether they’re credible because many sites allow users to hide their identity behind multiple aliases. People claiming to be unbiased observers may actually be insiders, large shareholders, or paid promoters.
One person can easily create the illusion of widespread interest in a small, thinly-traded stock by posting numerous messages under various aliases. Other online offerings may not be fraudulent but may nonetheless fail to comply with the applicable registration provisions of the federal securities laws. While the federal securities laws require the registration of such, some offerings are exempt.
Seemingly online fraud has been there for a long time as the following article by the US Securities and Exchange Commission reveals: Updated Investor
Maina Roy is a Journalism Student at KCA University, firstname.lastname@example.org