The Internet can serve as an efficient tool for investors, but it is also an excellent tool for fraudsters. The Internet allows individuals or companies to reach tens of thousands of people by building a web site, posting a message on an online bulletin board, entering a discussion in a live chat room, or sending mass e-mails. It's easy for fraudsters to make their messages look real and credible, but it can be nearly impossible for investors to tell the difference between fact and fiction. Many companies use online bulletin boards or e-mail spams to pretend to disclose "inside" information. Since investors never know who they are dealing with on bulletin boards, it is hard to discern whether the information is legitimate and unbiased. To avoid falling for an online investment fraud, investors should take care to never rely solely on information gathered from online bulletin boards, online investment newsletters, chat room, or e-mails. Investors should diligently research the companies using SEC's EDGAR Database, for example.
For more information, see: