Old scams with a social networking twist
"If you see a news story on Yahoo, there's a good chance that right at that same moment a scammer is figuring out how he's going to work it into his pitch," Straney says.
There's almost always a promise of inside information, too.
"A big part of why this stuff works is that fraudsters get people believing that their method for making money is going to pay off because they have information nobody else has," says Lynndel Edgington, who spent 18 years working in the financial services industry before founding Eagle Research Associates Inc., a Mission Viejo, Calif.-based nonprofit that educates consumers and works with law enforcement to track scammers.
"These pitches have been around for years, but they've moved from hotel rooms to online forums, and the scammers use the fact that they don't have a brick-and-mortar location to play up the offer's exclusivity," Edgington says.
There's also the greed factor.
"Scammers always promise way more than you'd likely get with a legitimate investment," Edgington says. "But that old rule is as good as ever, even in the Internet age. If it sounds too good to be true, it is."
While technology has made it easier for fraudsters to perpetrate their crimes, it can also be a force for good.
"Protecting yourself comes down to ask and check," Walsh says. "Ask the person pitching you the investment if they're licensed or registered to do so, and then check them out."
FINRA offers investors free access to BrokerCheck, an online tool that contains information on 1.3 million current and former FINRA-registered brokers as well 17,000 current and former FINRA-registered brokerage firms. Legitimate securities brokers and firms that sell stocks and bonds can also be verified with the Securities and Exchange Commission. And investors can always contact financial regulators in their home state to verify the credentials of the person or firm offering any type of investment.
"Financial instruments are regulated by a number of different agencies, so it may seem difficult at first to determine who you need to call to check," Straney says. "But the key thing to remember is that bad guys don't register, so right up front you'll want to ask the person pitching you where they're licensed or registered -- and then verify that information."