Facebook Fraud: Massive Scam Targets Social Networks

Federal investment regulators issued a warning this week about a sophisticated and fast-growing fraud that trolls social networks for victims and has already cost investors hundreds of millions.

Using advertisements on Facebook to lure in initial victims, who are then convinced to inadvertently con their friends, so-called “high-yield investment program” scams have gone viral, spurring an entire online community, according to the Financial Industry Regulatory Authority.

“HYIPs use an array of websites and social media –including YouTube, Twitter and Facebook — to lure investors,” said John Gannon, senior vice president of investor education with FINRA. “They’re very sophisticated.”

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The pitch is a simple one: Invest in safe securities that pay high yields through a supposedly “guaranteed” program that pays “interest” as often as once a week. But these programs are Ponzi schemes that do nothing more than pay old investors with the money brought in from new investors.

The trick that makes them successful? They’re using Facebook and Twitter to woo youthful and unsophisticated victims, who are then told that they can get “referral fees” for recommending the investments to their friends.

Since the Ponzi scheme appears to pay high rates — at least for a while — victims think they’re doing their friends a favor and become the scam’s most avid proponents and salesmen. The victim/salespeople are further convinced that they’re touting something legitimate because the con artists are supporting dozens of supposed “rating sites” that pretend to point investors to the “best opportunities.” There are even YouTube videos promoting the “investment programs.”

That combination has made the scam “viral” — growing at an exponential pace. The number of high-yield investment programs investigated by the FBI jumped 105% in a year. Yet the con is so new that regulators have only nabbed two operators — the people behind Pathway to Prosperityand the so-called Genius Fund, which cost investors an estimated $400 million.

“There is this whole world online,” said Gannon.  ”I never seen anything like this.”

There’s even an eBook called “Riding the Ponzi,” that acknowledges that the HYIP programs are Ponzi schemes, but contends that people can profit by “timing” the con — getting in early and jumping out before the scheme collapses.

All of the high-yield investment programs are scams, Gannon said. “It is not often that you can say that, but this time every one of them is a con.”

Avoid these schemes at all costs, regulators said. If you’ve already been taken, at least don’t send more money and certainly do not refer your friends.

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But you’re sure that you’ve stumbled on the one legitimate high-yield investment program? Here are the warning signs that it’s a scam:

• High, short-term yields: The return is usually stated as a “daily rate,”  and the schemes may offer “short-term” (daily or weekly) and “long-term” (60-day) payout options.
• Off-shore operations: Many HYIP sites are headquartered offshore. Pathway to Prosperity, for example, was run out of the Philippines. Genius was headquartered in Cyprus.
• Payment with e-Currency: Almost all the sites require you to open an “e-currency” account to transmit money. These e-currency sites are unregulated help the con artists obscure the money-trail that would otherwise lead back to them.
• Incentives to recruit: Most cons offer “referral bonuses” that can let victim/salespeople earn up to 25% of the amount their friends invest. New investors are always needed to keep Ponzi schemes afloat.

If you think you’ve been scammed, report it to the FINRA Investor Complaint Center online or call them at     1-866-963-4672   

Source: http://moneywatch.bnet.com 1-866-963-4672

7 Things to Stop Doing Now on Facebook

Using a Weak Password

Avoid simple names or words you can find in a dictionary, even with numbers tacked on the end. Instead, mix upper- and lower-case letters, numbers, and symbols. A password should have at least eight characters. One good technique is to insert numbers or symbols in the middle of a word, such as this variant on the word "houses": hO27usEs!

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Leaving Your Full Birth Date in Your Profile

It's an ideal target for identity thieves, who could use it to obtain more information about you and potentially gain access to your bank or credit card account. If you've already entered a birth date, go to your profile page and click on the Info tab, then on Edit Information. Under the Basic Information section, choose to show only the month and day or no birthday at all.

Overlooking Useful Privacy Controls

For almost everything in your Facebook profile, you can limit access to only your friends, friends of friends, or yourself. Restrict access to photos, birth date, religious views, and family information, among other things. You can give only certain people or groups access to items such as photos, or block particular people from seeing them. Consider leaving out contact info, such as phone number and address, since you probably don't want anyone to have access to that information anyway.

by Consumer Reports Magazine
Wednesday, May 12, 2010

Posting Your Child's Name in a Caption

Don't use a child's name in photo tags or captions. If someone else does, delete it by clicking on Remove Tag. If your child isn't on Facebook and someone includes his or her name in a caption, ask that person to remove the name.

Mentioning That You'll Be Away From Home

That's like putting a "no one's home" sign on your door. Wait until you get home to tell everyone how awesome your vacation was and be vague about the date of any trip.
Letting Search Engines Find You

To help prevent strangers from accessing your page, go to the Search section of Facebook's privacy controls and select Only Friends for Facebook search results. Be sure the box for public search results isn't checked.

6 Things You Should Never Reveal on Facebook

The whole social networking phenomenon has millions of Americans sharing their photos, favorite songs and details about their class reunions on Facebook, MySpace, Twitter and dozens of similar sites. But there are a handful of personal details that you should never say if you don't want criminals — cyber or otherwise — to rob you blind, according to Beth Givens, executive director of the Privacy Rights Clearinghouse.

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The folks at Insure.com also say that ill-advised Facebook postings increasingly can get your insurance cancelled or cause you to pay dramatically more for everything from auto to life insurance coverage. By now almost everybody knows that those drunken party photos could cost you a job, too.

You can certainly enjoy networking and sharing photos, but you should know that sharing some information puts you at risk. What should you never say on Facebook, Twitter or any other social networking site?

Your Birth Date and Place

Sure, you can say what day you were born, but if you provide the year and where you were born too, you've just given identity thieves a key to stealing your financial life, said Givens. A study done by Carnegie Mellon showed that a date and place of birth could be used to predict most — and sometimes all — of the numbers in your Social Security number, she said.

Vacation Plans

There may be a better way to say "Rob me, please" than posting something along the lines of: "Count-down to Maui! Two days and Ritz Carlton, here we come!" on Twitter. But it's hard to think of one. Post the photos on Facebook when you return, if you like. But don't invite criminals in by telling them specifically when you'll be gone.

Home Address

Do I have to elaborate? A study recently released by the Ponemon Institute found that users of Social Media sites were at greater risk of physical and identity theft because of the information they were sharing. Some 40% listed their home address on the sites; 65% didn't even attempt to block out strangers with privacy settings. And 60% said they weren't confident that their "friends" were really just people they know.

Confessionals

You may hate your job; lie on your taxes; or be a recreational user of illicit drugs, but this is no place to confess. Employers commonly peruse social networking sites to determine who to hire — and, sometimes, who to fire. Need proof? In just the past few weeks, an emergency dispatcher was fired in Wisconsin for revealing drug use; a waitress got canned for complaining about customers and the Pittsburgh Pirate's mascot was dumped for bashing the team on Facebook. One study done last year estimated that 8% of companies fired someone for "misuse" of social media.

Password Clues

If you've got online accounts, you've probably answered a dozen different security questions, telling your bank or brokerage firm your Mom's maiden name; the church you were married in; or the name of your favorite song. Got that same stuff on the information page of your Facebook profile? You're giving crooks an easy way to guess your passwords.

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Risky Behaviors

You take your classic Camaro out for street racing, soar above the hills in a hang glider, or smoke like a chimney? Insurers are increasingly turning to the web to figure out whether their applicants and customers are putting their lives or property at risk, according to Insure.com. So far, there's no efficient way to collect the data, so cancellations and rate hikes are rare. But the technology is fast evolving, according to a paper written by Celent, a financial services research and consulting firm.

So again,

  Your Birth Date and Place
  Vacation Plans
  Home Address
  Confessionals
  Password Clues
  Risky Behaviors

Source: finance.yahoo.com