The Internet is a quick and easy way for scam artists to find potential victims for their investment scams. First, the internet provides a large audience at a very low cost. And second, with the Internet, a scam artist can operate anonymously from anywhere in the world, making them especially hard to catch. Once you’ve given your money to an online scam artist, it’s likely gone for good.

Internet fraud often appears in the form of spam e-mail. Spam is unsolicited e-mail that usually promotes a certain product or service: cheap prescription drugs, a wide variety of what we’ll politely call marital aids, and very often, investments. Because spam e-mail is cheap and easy to create, scam artists can use this to reach thousands of potential victims at a time.

E-mail spam may promote a wode variety of investment scams, from Ponzi schemes to Pump-and-Dump scams.

The best way to deal with spam is to ignore it. Never reply to spam e-mails. Even if you just reply to ask the sender to remove you from their mailing list, that tells them that they’ve found an active e-mail address. Instead, delete the e-mail and block further e-mail from that sender.

And if you haven’t figured this out already: NEVER give out your personal information. A legitimate businesses will never ask you to provide personal information through e-mail, and neither will a legitimate investment adviser. If you get an e-mail asking for confidential information, don’t click on the included links and don’t send any information.

The best way to protect your money is to be an informed investor. Before you invest in anything, find out as much as you can about it. Read financial documents like the prospectus and financial statements, which you can find on www.sedar.com. Public companies and investment funds are required by securities law to file these and other documents on the System for Electronic Document Analysis and Retrieval (SEDAR).

Stay tuned for next week’s post on another sneaky form of investment fraud on the internet: spoof websites.