Fraudsters often use social media to scam investors. The SEC’s Office of Investor Education and Advocacy encourages you to be skeptical and never make investment decisions based solely on information from social media platforms or apps.
Investors increasingly rely on social media for information about investing. While social media can provide many benefits to investors, it also creates opportunities for fraudsters. Social media allows fraudsters to contact many people quickly, cheaply, and without much effort – and it is easy for fraudsters to post information on social media that looks real and credible.
Fraudsters may disseminate false information anonymously or while pretending to be someone else. They may make up credentials, create entirely fake profiles, or impersonate legitimate sources. It can be difficult to track down who is behind a social media account, and anonymity can make it harder for fraudsters to be held accountable.
Testimonials and Celebrity Endorsements. Do not be swayed by testimonials or celebrity endorsements when making an investment decision. Fraudsters sometimes pay people – for example, actors to pose as ordinary people turned millionaires, social media influencers, and celebrities – to tout an investment on social media.
Investment information found in social media also may be inaccurate, incomplete, or misleading. Social media may convey false impressions of consensus or legitimacy, making it look like large numbers of people are buying an investment when this is not the case. Fraudsters may use social media to lure investors into a variety of schemes, including impersonation schemes, “crypto” investment scams, romance scams, market manipulation schemes, and community-based investment fraud. Here are a few scams you should be aware of: Impersonation Schemes
Fraudsters may impersonate legitimate brokers or investment advisers or other sources of market information on social media. For example, fraudsters may set up an account name, profile, or handle designed to mimic a particular individual or firm. They may go so far as to create a webpage that uses the real firm’s logo, links to the firm’s actual website, or references the name of an actual person who works for the firm. Fraudsters also may direct investors to an imposter website by posting comments in the social media account of brokers, investment advisers, or other sources of market information.
When you receive investment information through social media, verify the identity of the underlying source. Look for slight variations or typos in the sender’s account name, profile, email address, screen name, or handle, or other signs that the sender may be an imposter. When contacting a company or attempting to access its website, be sure to use contact information or the website address provided by the company itself, such as in the company’s SEC filings . Similarly, only contact a broker or investment adviser using contact information you verify independently – for example, by using a phone number or website listed in the firm’s Client Relationship Summary ( Form CRS ). Carefully type the website’s url into the address bar of your web browser.
Some social media operators have systems that may help you to determine whether a sender is genuine. For example, Twitter verifies accounts for authenticity by posting a blue verified badge (a solid blue circle containing a white checkmark) on Twitter profiles. While a verified account does not guarantee that the source is genuine, readers should be more skeptical of information from accounts that are not verified.
Fraudsters may even impersonate SEC staff on social media. Like many companies and agencies, the SEC maintains a list of verified social media accounts, which is available at www.sec.gov/opa/socialmedia .
Fraudsters have also found victims by hacking into social media profiles and sending fraudulent investment opportunities to the hacked person’s contacts. Be wary if someone – even someone you trust – sends a social media message recommending an investment, and be sure to check with them “off-line” to make sure that person actually sent the message. “Crypto” Investment Scams
Fraudsters may exploit investors’ fear of missing out to lure investors on social media into “crypto” investment scams . “Crypto” assets are marketed using a variety of terms, including digital assets, cryptocurrencies, coins, and tokens.
How do you know if an investment involving “crypto” assets is a scam? As with any other type of investment product, if a crypto investment “opportunity” sounds too good to be true, it probably is. Promises of high investment returns, with little or no risk, are classic warning signs of fraud. Fraudsters may post fabricated historical returns on their websites showing high investment returns. Depictions of investment accounts rapidly increasing […]
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