Investor Protection Guide: Internet Fraud

Internet fraud refers to schemes in which individuals or entities use online tools to deceive investors, often by presenting false, misleading, or manipulated information about investment opportunities. Because the Internet allows fraudsters to reach large audiences quickly through websites, online discussion boards, email solicitations, social media, and community forums, investors may have difficulty distinguishing legitimate investment information from fraudulent promotions.

Common forms of online investment fraud include, but are not limited to:

Pump and dump schemes, where promoters disseminate false or misleading statements to artificially inflate the price of a security and then sell their holdings at the inflated price.
Fraudulent online newsletters, message-board postings, or mass email campaigns that claim to provide confidential insider information or guaranteed returns.
Impersonation scams, in which fraudsters pose as brokers, investment advisers, or legitimate companies to solicit funds or personal information.

Because online communications may obscure the identity, location, or credibility of the promoter, investors may be unable to verify the accuracy of the information they encounter. To protect themselves, investors should not rely solely on unsolicited online materials, message-board discussions, or promotional emails. The U.S. Securities and Exchange Commission (SEC) advises investors to independently research any securities offering and to review publicly available filings through the SEC’s EDGAR database. Investors can also consult state securities regulators or use the Investment Adviser Public Disclosure (IAPD) website for checking the registration status and disciplinary history of brokers and advisers.

[Last reviewed in November of 2025 by the Wex Definitions Team]

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