Investment scams involving cryptocurrencies, promissory notes, online investment offers and schemes involving Self-Directed Individual Retirement Accounts (IRAs) may be among the top investor threats Americans face during 2022, according to a recent survey of securities regulators.
The State Corporation Commission’s (SCC) Division of Securities and Retail Franchising (Division) encourages Virginians to do their homework any time they plan to invest. Understanding the benefits and risks of any investment is important.
“Let caution be your guide, especially when investing in cryptocurrency and digital assets, which can be volatile and headline the list of investor threats for the new year,” said Director Ron Thomas. “Don’t be lured by thoughts of easy money or stories of ‘crypto millionaires,’ and never invest more than you can afford to lose.”
The list Thomas references is a list of the top 2022 investor threats, as determined by a survey of state and provincial securities regulators conducted by the North American Securities Administrators Association (NASAA), of which the SCC is a member. The annual survey is designed to identify the products, practices or schemes that may present challenges or risks for investors.
Thomas offers the following tips to identify and avoid scams:
- Independently verify who is offering an investment and details of an offer. Scammers often spoof websites and rely on fake social media accounts to obscure their identities. To spot fake accounts, look closely at their content, dates of inception and quality of engagement. Pay careful attention to domain names and learn more about how to protect your online accounts.
- Beware of fake client reviews. Scammers often reference or publish positive, yet bogus, testimonials purportedly drafted by satisfied customers. These testimonials create the appearance the promoter is legitimate and has demonstrated solid performance in the past, but they are sometimes drafted by the scammer, not a satisfied customer. Learn how to protect yourself with NASAA’s Informed Investor Advisory on social media, online trading and investing.
- If it sounds too good to be true, it probably is. Don’t be enticed by promises of safe, lucrative, guaranteed returns with little or no risk and over relatively short terms – sometimes measured in hours or days instead of months or years. These representations are often a red flag for fraud, since all investments carry some degree of risk.
Individuals offering investments are obligated to truthfully disclose all material facts, and they must disclose the risks associated with each product. On the other hand, bad actors will often minimize or conceal risks and, instead, tout profits and payouts.
Thomas encourages Virginians to understand any investment before turning over their hard-earned money. To learn more about whether investments and the people offering them are properly registered, Virginians can contact the Division at 804-371-9051 or toll-free at 1-800-552-7945 or email SRF_General@scc.virginia.gov. They can also search the federal Securities and Exchange Commission’s Investment Adviser Public Disclosure website or visit the BrokerCheck platform offered by the Financial Industry Regulatory Authority or FINRA.