|
SEC fake Web sites snare the unwary, then warns them about scams -------------------- Gullible investors get warning about scams By Shawna Gamache Medill News Service February 6, 2005 WASHINGTON * Tired of seeing so many people fall victim to online fraud, one government agency has taken an unorthodox tack: creating fake Internet companies to catch gullible investors in the act, then educating them through their own folly. The Securities and Exchange Commission's campaign features phony Web sites that redirect duped investors to a tutorial on Internet fraud. Many Internet fraud experts say this brand of tough love might be especially effective for South Florida because of its many elderly investors as well as uneducated Internet users. "We were discovering that the victims in our Internet cases had spent money on investments that really were too good to be true," said Susan Wyderko, director of investor education for the SEC. "This emerged just as an effort to try and reach a particular segment of American society we knew we weren't reaching, so we didn't go in with a typical bureaucratic mind-set." Though the SEC created its first site, www.mcwhortle.com, in late 2002, the program has received little publicity. Meanwhile, the agency has added four sites, updating content consistently. The sites mimic investment opportunities like hedge funds, mutual funds and offshore investment prospects. Visitors click through a series of links, and when they indicate they're ready to invest, a Web page comes up warning, "If you responded to an investment idea like this, you could get scammed!" The sites also list contact phone numbers and e-mail addresses. Calls and e-mails to the fake companies are received by SEC employees, who explain the hoax and direct consumers to educational resources. Within weeks of its launch, the McWhortle site got more than 1.5 million hits and SEC staff received more than 500 e-mails. The sites are listed with online search engines and, because of their linking with the SEC, tend to come up higher on returned results on searches for, say, "offshore investment" or "hedge funds." Members of the SEC created the sites using their existing resources. They wrote much of the text in their free time, and agency Web developers created the sites alongside their existing projects. All art is either clip-art or other free images. Wyderko said the program had cost little more than the $50 fee to register each of the Web site names. Consumer agencies said the campaign might cause people to wake up to dangers of online scams. "When they're actually in the midst of doing something and they find out, hopefully it drives the message home to people," said Brodie White of the Better Business Bureau of Southeast Florida and the Caribbean. White said South Florida consumers are particularly susceptible to online investment scams. "We have such a large investment environment here -- retirees who depend on maximizing their investments in order to live might make a decision not in their best interest." South Florida is also a perfect target for Internet scammers because of a lack of education, said Pedro Sostre, president of the Miami-based Internet consultancy Sostre & Associates. "While we share a high rate of Internet users like other big cities, the level of Internet education is generally lower here as opposed to cities in California and New York." While consumers can help block or detect fraudulent material by installing various software, Sostre said, knowledge is key to protection. "Education is always going to be the right answer because software can never keep up with the next big thing." Educating consumers is a challenge. Despite the SEC's scam warnings on the phony sites, some consumers still don't want to believe they're hoaxes. "People have been so excited about the promises on the sites that they've written in, saying, `The SEC has hacked into the site. How do I invest?'" Wyderko said. "We've received bank account numbers, wire transfers, and requests for information packets." Wyderko said the agency has even heard from mutual fund managers who want to recommend the investment opportunities to their clients. That kind of reaction isn't surprising, said Robert Sicilliano, a personal security and identity theft educator and author for the past 12 years. People tend to believe what they read when it's accompanied by sophisticated, colorful graphics with well-written content, he said. "When they approach a Web site like this, it looks very professional, and contains solid copy that looks like it has been written by an intellectual," Sicilliano said. Still, not all scam victims are trapped by naivete alone, said Marc Nurik, chairman of the white-collar group at Ruden, McClosky, Smith, Schuster & Russell PA in Fort Lauderdale. There are others who trip up on their own greed. "There is a core group of inveterate `gamblers' who won't be deterred," Nurik said. "Ultimately, people who get involved in investment schemes that are fraudulent often do so because they are looking for and expecting unrealistic returns on their money." Copyright (c) 2005, South Florida Sun-Sentinel |