The US Securities and Exchange Commission has warned investors to be “extremely wary” of potential investment scams related to Hurricane Ida’s aftermath.
This alert comes from SEC’s Office of Investor Education and Advocacy, which regularly issues investor alerts to warn investors about the latest investment frauds and scams.
Scammers will likely set their targets on those who will receive compensation in the form of large payouts from insurance companies as a direct result of Hurricane Ida’s damage.
Previously spotted hurricane-related scams promised high returns for investing small sums in thinly-traded companies that would’ve made massive profits from cleanup and recovery efforts.
“For example, the SEC brought a number of enforcement actions against individuals and companies who made false and misleading statements about alleged business opportunities in light of damage caused by Hurricane Katrina in 2005,” the SEC warning reads.
“Some of those cases involved pump-and-dump scams where fraudsters used bogus “news” to pump up the stock price of small companies so they could sell their own shares at artificially high prices.”
How to spot and protect yourself from scammers
To protect yourself from investment fraud attempts, you should ask anyone approaching you with an investment opportunity if they’re licensed and if their investment is registered with the SEC or with a state.
The most important thing to remember is that any promises of fast and huge profits that come with little or no risk are classic signs of fraud.
“Take a close look at your entire financial situation before making any investment decision, especially if you are a recipient of a lump sum payment. Remember, your payment may have to last you and your family for a long time.”
If you want to invest and have any questions, you can call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330 or ask for help using this online form.
FBI also warns of hurricane-related fraud
This alert comes after the FBI’s New Orleans office issued two warnings in the last four days, alerting the public about an increased risk of fraudsters trying to capitalize on the Hurricane Ida natural disaster.
“Unfortunately, hurricane or natural disaster damage often provides opportunities for criminals to scam storm victims and those who are assisting victims with recovery,” the FBI warned.
The FBI also provided a set of measures those impacted by a natural disaster can take to avoid getting scammed, including to:
- Not respond to unsolicited (spam) emails.
- Be skeptical of individuals representing themselves over email as officials soliciting donations.
- Not click on links within an unsolicited email.
- Be cautious of emails claiming to contain pictures in attached files, as the files may contain viruses—only open attachments from known senders.
- Not provide personal or financial information to anyone who solicits contributions; providing such information may compromise your identity and make you vulnerable to identity theft.
- Be cautious of emails claiming to offer employment for which you did not expressly apply.
- Thoroughly research housing ads before sending money to a potential landlord.