As the new year continues to unfold, Virginians should remain wary of scammers who may prey on investor fear and anxiety to sell fraudulent investments amid changes in financial markets and the economy due to COVID-19.
Fraudulent online investment offers involving precious metals, cryptocurrencies, promissory notes and foreign exchange markets are among the top threats facing investors this year, according to a survey by the North American Securities Administrators Association (NASAA), which is an organization composed of state securities regulators that includes the State Corporation Commission (SCC). The survey is based on responses from enforcement officials with state and provincial securities regulators throughout the United States, Canada and Mexico.
The top threat to investors, according to the survey, is fraudulent internet or social media-based investment offers. Next on the list are fraudulent investments related to cryptocurrency and precious metals, especially those purchased through self-directed individual retirement accounts (IRAs). The third most common threat is fraudulent foreign exchange-related schemes.
This year also may see a resurgence of high-yield foreign exchange and cryptocurrency-related schemes disguised as membership or investment programs. Scammers may attempt to lure investors into these programs by promising high rates of return as a way to supplement income lost due to the pandemic.
“Bad actors continue to follow the headlines in an attempt to separate investors from their money,” said Ron Thomas, director of the SCC’s Division of Securities and Retail Franchising (Division). “Not every precious metals, cryptocurrency or foreign exchange-related investment is fraudulent, but we urge investors to consider these products with caution,” he said.
Thomas urges Virginians to be wary of investment offers that sound too good to be true. The most common sign of an investment scam is an offer that guarantees high rates of return with little or no risk. “All investments carry the risk that some, or all, of the invested funds could be lost,” he said.
Before making any investment decision, Thomas encourages Virginians to do the following:
Ask questions and make sure you understand the investment product. Ask for details about the investment offer in writing.
Ask if the salesperson and the investment itself are properly licensed or registered. To confirm this, investors can call the Division in Richmond at 804-371-9051 or toll-free at 1-800-552-7945.
Avoid high-pressure sales tactics and “can’t miss” opportunities promising guaranteed returns or big returns with little or no risk.
Understand the warning signs of investment fraud.
For more information, visit the Division’s website at scc.virginia.gov/pages/Consumer-Investments or the North American Securities Administrators Association’s website at https://www.nasaa.org/investor-education/fraud-center/top-investor-threats/.
