These days, everyone has a website. Your neighbour’s kids have blogs or websites as professional looking (or more) than many legitimate businesses. The lesson here: just because a company has an impressive website does not mean they are a smart or legitimate investment. You have to look further.
First of all, even if the business is legitimate, remember that this is their website – their tool for communicating to their customers and investors. Do you really expect them to tell you that sales are low, that they’re laying off workers and they are running a deficit? Of course not. Even when they do disclose bad news, they will do their best to make it sound as cheery as possible. If you want the real story, keep looking.
Remember your neighbour’s kids? Anyone can build a website. What proof do you have that this business even exists? Fraudulent business and investing websites are being created all the time – as fast as, or faster than regulators can have them taken down. They offer fantastic rates of return, deals you can’t get anywhere else. And they make it all sound so easy!
How can you tell the real sites from the fake ones? Truth is, you might not be able to, but you can do your best. Check the website out carefully. Is it short on details? Vague on the day to day operations of the supposed business? Fraudulent websites often offer few details and no contact information, or when they do it is only an email address or a contact form.
Sometimes, a con artist will go as far as to copy the website of a legitimate business. The whole website. Right down to the pictures and bios of the staff and board of directors. They will change the business name and web address, and any email or telephone numbers, and pass the website off as their own. Scammers are clever. Always get a second opinion. Or even a third and fourth.
See what other people are saying about the business. Google them. If no one else is talking about them, maybe there is a reason. Check with the Better Business Bureau. You can also get information from:
- analysts’ reports
- financial newspapers and websites
- investment newsletters
- chat rooms and online communities
You can get a lot of useful information from these sources, but remember each source only forms part of the overall picture of a company. Be skeptical of what you read and check as many different sources as you can to get a more complete picture. You can also get a second opinion from an independent financial adviser.
Remember it is your money, so if it sounds too good to be true… it probably is.
Related posts:
- Investment fraud on the Internet The Internet is a quick and easy way for scam...
- Are you vulnerable to investment fraud? There is no “typical” victim of fraud. Professional scam artists...
- Online Scams – Kijiji, Craigslist and more “Double your money.” “Earn 500% annually, guaranteed.” “Make money fast...
- Canadian securities regulators caution against online investment fraud To kick-off Fraud Prevention Month in March, the Canadian Securities...
- Investment Fraud Checklist Most investing scams have some common warning signs that are...
Share & Bookmark This Story!
Bookmark on Delicious 
StumbleUpon 
Google Bookmarks
Tip'd
Financial Post Headlines
{ 2 comments… read them below or add one }
There are so many online boiler rooms out there, it’s easy for the inexperienced to fall for them.
With the “finding out what other people are saying” is a gray area because there are representatives from those companies posing as consumers and posting positive comments about them.
All great points, Andrew. You can never do too much research. Second, objective opinions are great. And in the end, if in doubt – move on. There are always other investment opportunities.