Just when you thought you knew all the "bad" types to look out
for, the economy has churned out a different kind of con
artist, the faux investment guru.
This isn't your typical stock broker or investment banker.
This guy is a whole other kind of sleazy. And he's lurking in
the shadows of your eHarmony, Facebook, Twitter, and LinkedIn
accounts, according to the North American Securities
Administrators Association, the oldest international investor
It seems crooks and thieves like the so-called "affinity"
frauds, which zero-in on members of a tightly-knit group, like
an alumni association or club. That's because victims let down
their guard. Think about it, wouldn't you let down your guard
if you were introduced to someone through a friend? Even if
the introduction is second-hand, like: "Kim suggested that I
You see, we presume that our friends won't betray us, so that
belief boosts the chances that even a reasonable person could
be fooled. The danger is even higher on Facebook, Twitter and
LinkedIn as the entry points may be easier. Say you receive a
request to connect from someone who is friends with your
friends; you might accept -- in fact, many people would. The
problem is, not all your existing connections are as picky.
Just because you're connected doesn't mean anybody actually
knows one another anymore.
A key indicator you're dealing with an impostor -- months into
your online "relationship" a big move in the stock market
might cause him to casually mention that he's an "investment
A really smooth con artist won't even approach you. You'll
approach him. Before you know it, you're both commiserating on
the lousy market and traditional investment strategies. Then,
suddenly, he'll throw his pitch, telling you: There's one
thing you can invest in but hey, it's not for everyone.
Don't get sucked in to the affinity fraud vortex. Despite how
it may seem in the moment, you are not getting a golden
opportunity because you've "reconnected" with a long-lost
friend or classmate. This flawed perception, will land you in
a pickle. Most victims of affinity frauds are so sure that the
con artist is legitimately helping them that they turn around
and promote the bogus opportunity to their own friends and
families; perpetuating the cycle!
But how can you tell if you're a potential victim? well...
If you're offered an investment that can't be looked
up on Yahoo! Finance, demand to see the prospectus
filed with the Securities and Exchange Commission.
If there isn't a prospectus don't walk, run away!
If you're offered high return with little or no risk,
forget it. If it looks too good to be true, there's
If there's a sense of urgency, don't do it.
(Example: "This opportunity won't last long")
If the request for payment comes through an
e-currency website, don't send a dime.
If the relevant information is hard-to-find, turn the
other way. If the investment is registered, in Bermuda
instead of the US for example; don't do it.
What else can you do? Three key things:
Call your friend. From the get-go when your hear or read "Kim
suggested that I call you." Call Kim and ask. Find out how she
and this mystery person know each other. Even if he and Kim go
way back, you're under no obligation to accept the request to
connect. PS - Do you even know Kim? Or is she also a friend of
a friend? Consider the source.
Do you homework. Before investing any money, contact your
state securities regulator to learn more about the background
of the salesperson and the status of the investment. Find your
regulator at www.nasaa.org. If you're in New York contact
Get more details. Familiarize yourself with the alert posted
Come on ladies, why fall for a fake investment banker when
there are so many real ones out there (wink).