If you think you might have been scammed by an online stock trader, here are a few tips you can use to avoid becoming a victim.
Avoid buying from strangers.
A trader could easily sell you shares, which is a scam because a person can be a potential victim, too.
The person who sold you the shares could be selling you shares they already have or they could be offering you a commission.
Check your shares are public.
If you buy shares from a stockbroker, ask if they’re publicly traded.
Be suspicious of the stock price.
Stock prices are a good indicator of a company’s value.
If it’s more than double the price you paid for it, you might be better off buying a different stock.
Be careful with the company’s website.
If the company is registered with a website, the person selling you stock could be scammers.
Look for the stock description.
A stock listing might look like this: “This stock is a global company with an attractive dividend yield, a high cash position, a strong balance sheet, and strong capital structure.”
A stock description is an indication of a stock’s valuation, but it’s not the same as an investment.
Check the company name.
Companies with the same name may be the same company.
The same stock may have different name and different company.
Be aware of the company.
Some companies are registered under a different name than their company.
If your company is the same, you should always check with the registered company to make sure it’s the same.
Know what to look for.
If a company says on its website it is a “distributed ledger” company, that could mean it’s a company that uses distributed ledger technology.
This technology allows a company to record and distribute its assets in a secure manner.
But the company could also be a scam.
If there is no website or no description on the company, you’ll need to check the company itself.
Keep a record.
Record the company in a spreadsheet, called a “basket.”
The company’s name, company address, the stock symbol and the price of the shares it’s offering.
If these are not visible on the spreadsheet, you can look up the company on a company website or call the company directly.
Know the rules.
The Securities and Exchange Commission has rules about when and how a company can list on a stock exchange, so if you suspect a company has a scam on its books, call the SEC.
Know who owns the company that listed your stock.
You might want to check who owns a company with a similar name.
A company like eBay may have one or more of its affiliates or partners who own shares in the company with the scam name.
Know your rights.
If someone else is scammed, the company should have the right to cancel your shares.
If they don’t, you may be able to file a claim with the SEC for a refund.
Report scammers online.
Report them to the SEC or other authorities.
Do not wait until you get scammed to report it online.
Be as specific as possible, including the name of the scammer and their contact information.
You should also be as clear as possible about who they are, who you think might be a victim and what they’re offering.