SCC: Beware of coronavirus profit schemes, scammers
Scammers often rely on headlines to lure unsuspecting investors into bogus investment offers. As daily news reports continue to track the spread of the coronavirus (COVID-19), the State Corporation Commission (SCC) reminds Virginians to beware of unscrupulous individuals seeking to capitalize on fear and uncertainty surrounding these reports.
“Think twice before considering ‘research reports’ or promotions claiming that the products or services of publicly-traded companies can prevent, detect or cure coronavirus and that the stock of these companies will dramatically increase in value as a result,” said Ron Thomas, director of the SCC’s Division of Securities and Retail Franchising. These promotions can come in the form of emails, texts, cold calls, social media posts or other online promotions.
“Fraudsters are opportunistic and exploit news events for their own financial gain. They peddle misinformation to give their promotions an air of legitimacy and immediacy,” Thomas said. “Before investing, understand the investment, the person or company offering it, where your money is going, how it will be used, and how you can get it back. Always verify that the salesperson and the security are registered by the appropriate securities regulator.”
Thomas also cautions Virginians to be on the lookout for scam artists trying to use recent market volatility and the coronavirus outbreak to scare investors into so-called “safer, guaranteed investments.” “Don’t make investment decisions based on panic or fear. If you have questions, contact a financial professional or your state securities regulator,” he said.
“When it comes to investing, rely on research rather than personal feelings,” Thomas said. He urges potential investors to ask the following questions:
- Does the investment promise guaranteed high returns with little or no risk? Remember: all investments carry risk that you may potentially lose some or all your money. No one can guarantee an investment return.
- Is there a sense of urgency or limited availability surrounding the investment? If someone offers you a “can’t miss” investment opportunity and puts you on the spot to complete the transaction, don’t be afraid to walk away.
- Are the person or the company offering the investment and the investment itself properly licensed or registered? In Virginia, you can find out by contacting the SCC Division of Securities and Retail Franchising at 804-371-9051 in Richmond or toll-free (in Virginia) at 1-800-552-7945 or by visiting its website.
For more information, visit the North American Securities Administrators Association’s website.