Beware of online investment scams (part 1)

Today the Internet knows nothing new in scam manufacturing sector. Fraud markets are all alike and sound in the same way. Yet, in spite of numerous warnings and cautions online surfers still fall victims to different kind of fraudsters and cyber criminals. But before the scam became something common on the web space it had long existed in other areas like ‘telemarketing, direct mail, or even door-to-door selling schemes’ as noted by one popular publication.

Still these old circumventions gain new color in light of modern era of information technology. All fake investment schemes usually create the illusion of a large and respected company with the links to the legitimate sites which often soothes visitors that there is nothing illicit with the service. Moreover, millions of Internet subscribers swallowed the bait of the perpetrators. Here we provide the list of the most successful and wide spread investment scams trying to lure you into giving them your hard earned money.

• Ponzi Scheme. It’s a type of financial pyramid when your money as a new investor are paid to the old ones. The project comes to its crash when the returns owned to previous investors exceed the money raised from the new ‘victims’. Such schemes usually collapse eventually.

• Pump and Dump. The experts say that it is a highly illicit activity when a handful of informed persons purchase a stock before they recommend it to thousands of investors. As a result the stock price rises rapidly and enormously which is however followed by as fast decline. When the price is at huge profit the fraudsters that bought the stock earlier than you sell them off and take their gains. Major part of these pump and dump schemes usually recommend companies listed at over-the-counter bulletin board (OTCBB) which means that they have a small float. Such small firms are more volatile which makes it much easier to manipulate their stocks when the information on the company is scare or which is worse absolutely absent. ‘Short and distort’ is another variation of the scheme when instead of spreading positive news scammers conduct slander campaigns to make the stock fall. Then they make their profits by short selling.

• Offshore selling. This type of fraudulent schemes is one of the most popular today especially it is effective with U.S. and Canadian investors. Experts warn investors to be very cautions when dealing with investment projects originating abroad as long as local authorities will have scare opportunities to investigate and prosecute such kind of criminal activity.

• Prime Bank. It is usually associated with the 50 (or abut this figure) largest banks in the world. As it is known prime banks trade high quality and low risk instruments such as world paper, International Monetary Fund bonds, and Federal Reserve notes. This term should sound suspicious to you when you are offered to participate in online investment project. The term is used by scammers to dress their scheme into the clothing of legitimacy. Usually such programs claim that your funds will be used to acquire and trade "prime bank" financial instruments for huge gains. But actually such "prime bank" instruments never exist and you can lose all of your money.