Sunday, October 24, 2010

Anatomy of an Internet Forum Investment Scam

In my last post I talked a little about investment scams. After I wrote that post I searched around the Internet for more information. I wanted to find out more about how scammers operated on Internet forums. I'll try to provide a general description of how they do it.

1. First, a scammer/s will often post on forums where a large number of members are looking for investments that yield a good return.

2. The patient scammer will wait a few months or even years, reading and posting in the forum and building a nice reputation as a knowledgeable person. Most, however, are not this patient and will strike within the first few days or weeks of joining.

3. The scammer will then start a forum topic and post that he is looking for investors for a business opportunity. When asked about the opportunity he will be evasive and vague. Usually he will hint that it involves a hot industry (alternative energy, Internet marketing, etc.). He will instruct those interested to contact him via e-mail or cellphone. Some will even actually meet with potential "investors". The business opportunity guarantees a phenomenally high rate of return.

4. Several interested forum members will then ask for details, leaving their own contact information. Many of these will actually be dummy accounts created by the scammer and/or his friends to generate interest in the topic.

5. During this time anyone who expresses any doubt over the "business opportunity" will be dealt with in one of two ways.

5.A. The first way is a polite response by the scammer saying "Let's just talk via email or in person so I can explain it better to you."

5.B. The second way is to be shouted down by the scammer's supporters, either dummy accounts or those who have already "invested" their money. Their message is anyone who doubts this business opportunity is just jealous and maliciously trying to smear another person's name. They might also tell the doubters to "mind their own business".

6. When the scammer and friends decide they have enough money, or that people/the authorities are starting to catch on, they take the money and run. Before this happens some "investors" may actually make some money (though illegally gained). The majority will have lost all the money they put in.

7. There are a few things that may deter the victims from seeking help from the authorities. First are the feelings of shame and guilt. Second is the vain hope that the "investment" was legitimate and that the scammer will pay them back in the end. The forum dummy accounts will also try various tricks to stop victims from reporting the incident. They might ask the "investors" to be patient, some might even claim to have been paid a partial amount, and that the scammer just needs to straighten some things out before resuming payments.

I hope this helps.

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