online_scams - Updated 01/18/2006 Online Investment Scams...

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Updated 01/18/2006 Online Investment Scams Tutorial http://www.investopedia.com/university/scams/ Thanks very much for downloading the printable version of this tutorial. As always, we welcome any feedback or suggestions. http://www.investopedia.com/contact.aspx Table Of Contents 1) Investment Scams: Introduction 2) Investment Scams: Different Types Of Scams 3) Investment Scams: Bulletin Boards 4) Investment Scams: Newsletters 5) Investment Scams: Dealing With Investment Fraud 6) Investment Scams: Conclusion Introduction To: investor@aol.com Subject: This is your lucky day!!! I don't usually send out stuff like this, but what I have to tell you is just too good. For the last 6 months I've been developing the ULTIMATE TRADING PROGRAM. I've figured out exactly how to pick the next Microsoft. In fact, over the last year I've had a 3000% return on my investment!!! In my investing program there is absolutely NO RISK. In fact, it's such a SURE THING that we'll guarantee you cannot lose your investment. Thing is, if you want a part of the action, you'll have to send me $499.95 today. There are just too many other investors who want to get in on this. .. Ever find a scam like this in your e-mail? We sure get enough of them in the Investopedia inbox. The Internet is a great tool for investors, allowing us to research investments and trade securities with unprecedented ease. Unfortunately, the lack of rules on the 'Net also makes it a perfect place for fraud to flourish. In this tutorial, we look at the ins and outs of Internet investment fraud. We
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examine different scams, see how they are carried out, and discuss how to avoid them. Different Types Of Scams Very few of the scams on the Internet are new. Most of the swindling techniques we see today originated long ago as telemarketing, direct mail, or even door-to- door selling schemes. But the Internet adds another troubling dimension to these old tricks. For example, a fancy Web site can create the illusion of a large and reputable company, especially if it provides links to legitimate sites. Here are some of the largest and most successful investment scams: Ponzi Scheme - A type of pyramid scheme, this is where money from new investors is used to provide a return to previous investors. The scheme collapses when money owed to previous investors is greater than the money that can be raised from new ones. Ponzi schemes always collapse eventually. Pump and Dump
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This note was uploaded on 05/17/2010 for the course BUS 001 taught by Professor Gra during the Spring '99 term at American University in Cairo.

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online_scams - Updated 01/18/2006 Online Investment Scams...

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