ONLINE TRADING FRAUDS
Because of the simplicity and hassle free working of online trading, a lot of people have started to take part in it. But there are a lot of chances that a person carrying out online trading becomes the victim of online investment fraud. These frauds are quiet similar to frauds committed over the phone or through the mail. Fraudsters use various different internet tools to carry out these frauds. These include spam, chats such as Internet Relay Chat and Web Page Chat, online newsletters, and distributing false information. Another tool used is building a web that that seems to be showy complicated to the visitor, as this may fool the visitor to think that it is an authentic web site. The tools used by fraudsters are very cheap, and they can find them without any difficulty as well.
Following are some of the categories that investment frauds may belong to:
Pump and Dump Scam
A lot of messages can be found over the internet that try to convince people to make a purchase as soon as possible, or to sell off their stock as there is a chance that the price may go down. The writers of such type of messages use apparently sound stock and economic data to make a strong argument, or claim to possess inside information relating to a particular stock. But the truth is that the aim of these people is to make a gain by tricking naïve and unsuspecting investors. If the traders listen to them, they usually lose their money. This type of fraud is used mostly with small companies because there isn't enough information available about the company.
The Pyramid
This fraud is carried out by displaying messages that promise big money through online trading. All such claims are false, and the perpetrators try to make money by attracting more participants and charging an initial investment.
Other fraud categories are
- The Risk Free Fraud
- Offshore Frauds
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