Five Best Practices on Social Media Use
Pointers on setting acceptable use policies for your employees' social media habit while they are at work.
The Securities and Exchange Commission earlier this week issued an alert to warn investors that social media platforms, including Facebook, Twitter, LinkedIn and YouTube, are being used with increasing frequency and success as platforms for investment scams.
The SEC reported that it had charged one such scammer, Anthony Fields, an Illinois-based investment adviser, with offering to sell more than $500 million in fictitious securities on various social media sites. It cited Fields' use of LinkedIn to promote fictitious "bank guarantees" and "medium-term notes," which drew interest from purported potential buyers.
The investor alert, titled "Social Media and Investing: Avoiding Fraud," offers five tips to help you avoid investment fraud in social media:
- Be wary of unsolicited offers to invest. Investment fraud criminals look for victims on social media sites, chat rooms, and bulletin boards. If you see a new post on your wall, a tweet mentioning you, a direct message, an e-mail, or any other unsolicited communication regarding a so-called investment opportunity, you should exercise extreme caution. An unsolicited sales pitch may be part of a fraudulent investment scheme. Many scams use spam to reach potential victims. For example, with a bulk e-mail program, spammers can send personalized messages to millions of people at once for much less than the cost of cold calling or traditional mail. If you receive an unsolicited message from someone you don't know containing a "can't miss" investment, your best move is to pass up the "opportunity" and report it to the SEC Complaint Center.
- Look out for common "red flags." Wherever you come across a recommendation for an investment-be it on the Internet or from a personal friend (or both), certain red flags should cause you to use extreme caution in making an investment decision. These include any offer that sounds too good to be true, the promise of guaranteed returns and pressure to buy immediately.
- Look out for "affinity fraud." Never make an investment based solely on the recommendation of a member of an organization or group to which you belong, especially if the pitch is made online. An investment pitch made through an online group of which you are a member, or on a chat room or bulletin board catered to an interest you have, may be an affinity fraud. Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. Even if you do know the person making the investment offer, be sure to check out everything-no matter how trustworthy the person who brings the investment opportunity to your attention seems. Be aware that the person telling you about the investment may have been fooled into believing that the investment is legitimate when it is not.
- Be thoughtful about privacy and security settings. Investors who use social media websites as a tool for investing should be mindful of the various features on these websites in order to protect their privacy and help avoid fraud. Understand that unless you guard personal information, it may be available not only for your friends, but for anyone with access to the Internet-including fraudsters.
- Ask questions and check out everything. Be skeptical and research every aspect of an offer before making a decision. Investigate the investment thoroughly and check the truth of every statement you are told about the investment. Never rely on a testimonial or take a promoter's word at face value.