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6 investment scams you need to watch out for during the coronavirus pandemic

Stop the spread of scammers. Don't fall for these coronavirus-related investment schemes.

RALEIGH, N.C. — North Carolina Secretary of State Elaine Marshall has a warning for investors: the coronavirus pandemic means scammers will be trying to take advantage of you. 

“Sadly, scam artists will seek to exploit rising concerns about COVID-19 to draw people into investment traps,” Marshall said on Tuesday. “Fraudsters often use the days’ headlines in their pitches, so expect to see them prey on the fear surrounding the unfolding coronavirus pandemic and recent economic developments to promote sham investments.”

Investors are encouraged to call the NC Investor Hotline at (800) 688-4507 or email secdiv@sosnc.gov before signing over their money in any investment opportunity. If you suspect an investment opportunity is fraudulent, you can report it at www.sosnc.gov.

6 investment schemes to watch for: 

Private placements and off-market securities: Scammers will take advantage of your concerns with the regulated securities market to promote off-market private deals. These schemes pose a threat to retail investors because private securities transactions are not subject to review by federal or state regulators. Retail investors must continue to investigate before they invest in private offerings and independently verify the facts for themselves.

Gold, silver and other commodities: Scammers may also take advantage of the decline in the public securities markets by selling fraudulent investments in gold, silver and other commodities not tied to the stock market. These assets are often promoted as “safe” or “guaranteed” means of hedging against inflation and mitigating systematic risks. However, scammers may conceal hidden fees and mark-ups, and the illiquidity of the assets may prevent retail investors from selling the assets for fair market value. There are no “can’t miss” opportunities.  

Recovery schemes: Retail investors should be wary of buy-low, sell-high recovery schemes. For example, scammers will begin promoting investments tied to oil and gas, encouraging investors to purchase working or direct interests now so they can recognize significant gains after the price of oil recovers. Scammers will also begin selling equity at a discount, promising the value of the investments will significantly increase when the markets strengthen. Never lose sight of the risks associated with any prediction of future performance and remember that market gains may not correlate with the profitability of their investments.

Get-rich-quick schemes: Scammers will capitalize on the increased unemployment rate with false promises of quick guaranteed returns that can be used to pay for rent, utilities or other living expenses.

Replacement and swap schemes: Investors should be wary of any unlicensed person encouraging them to liquidate their investments and use the proceeds to invest in more stable, more profitable products. Investors may pay considerable fees when liquidating investments, and the new products often fail to provide the promised stability or profitability. Advisors may need to be registered before promoting these transactions and legally required to disclose hidden fees, mark-ups, and other costs.  

Real estate schemes: Real estate investments may be appealing because the real estate market has been strong and low-interest rates have increased demand. Scammers often promote these schemes as safe and secure, claiming real estate can be sold and the proceeds can be used to cover any losses. However, real estate investments present significant risks, and changes to the economy and the real estate market may negatively impact the performance of these products.

5 ways to protect yourself: 

Ask before you invest: Investors in North Carolina should call the NC Investor Hotline at (800) 688-4507 or email secdiv@sosnc.gov to find out if the salesperson and the investment opportunity itself are properly registered. Avoid doing business with anyone who is not properly licensed. If you suspect fraud, report it to www.sosnc.gov

Don’t get hooked by a phishing scam: Phishing scams make emails look like they're from people associated with the Centers for Disease Control and Prevention, the World Health Organization, or by individuals claiming to offer medical advice or services. Watch out for con artists offering “opportunities” in research and development. These scammers impersonate government personnel by spoofing email addresses and encouraging victims to click links or open malicious attachments. These emails may look real and sound good, but any unsolicited emails with attachments and web links may be directing you to dangerous websites that can steal information from your computer, lock it up for ransom, or steal your identity. When in doubt, don’t click!

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There are no miracle cures: Scientists and medical professionals have yet to discover a medical breakthrough or develop a vaccine or cure for COVID-19. Don’t fall for online pharmacies claiming to offer vaccines and don’t send money to anyone claiming they can prevent COVID-19, through a vaccine or other preventive medicine.

Avoid fraudulent charity schemes: White-collar criminals may pose as charities soliciting money for those affected by COVID-19. Fake charities will frequently use sound-alike names that mimic established charities. Rather than clicking on the links or responding to the email addresses or phone numbers provided in a text, email or social media post, do an internet search to find the charity’s website and reach out to them directly. A link in an unsolicited email could send you to an impostor site. Make sure your money is going to those who actually need it. 

Be wary of schemes tied to government assistance or economic relief: The federal government will send most Americans checks as part of the stimulus package, but the government WILL NOT require the prepayment of fees, taxes on the income, the advance payment of a processing fee or any other type of charge. Anyone who demands prepayment will almost certainly steal your money. Don't give out or verify any personal information. Government officials already have your information. No federal or state government agency will call you and ask for personal information.

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