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Editor's Note.
This is an excerpt of the book Mining for Gold on the Internet, written by frequent Searcher contributor Mary Ellen Bates. It seemed to be an appropriate piece to include as part of Searchers new "Dangerous Data Ahead" series, which debuted last month in Carol Ebbinghouse's "Sidebar" column.
By Mary Ellen Bates
Mary Ellen Bates, Mining for Gold on the Internet; New York, McGraw-Hill, 2000, ISBN 0-07-134981-2, $24.95, for a special discount, go to the Information Today, Inc. Web site (www.infotoday.com) and click on the Information Today Store link.
Chapter 15:
Scams and Frauds
As Arthur Levitt, chair of the U.S. Securities and Exchange Commission, has noted, "It is just as easy, if not more, to lose money through the click of a button as it is to make it." It's easy to get swept up in the excitement of the moment, particularly now that electronic brokerages enable investors to execute their own trades. The traditional checks and balances of SEC monitoring and investment house caution do not come into play to protect individual investors, particularly if they rely on information they glean from the Web. As a result, investors have to be more vigilant than ever to detect scams, frauds, and other questionable tactics online. This chapter describes Webbased sources to help you detect and report investment scams. It will also cover the more subtle forms of deception such as insiders promoting their companies' stock and pyramid schemes promoted on the Net.
Running a Reality Check
Yes, if an investment opportunity sounds too good to be true, it probably is. Most people have figured out by now that the sweepstakes letter that promises, "You may already be a winner!" is not necessarily going to be your ticket to early retirement. The smooth-talking telemarketer with the great deal that must be acted upon RIGHT NOW is probably not looking out for your best long-term interest.
Likewise, there are plenty of "opportunities" on the Net that are, shall we say, less than they appear. In fact, the technology of the Web has made it easier than ever for anyone to set up a virtual storefront and appear to be a well-established, reputable business, while actually running the electronic equivalent of a...