For accountants whose clients include investors, here’s a warning to pass on: The Securities and Exchange Commission (SEC) has issued an alert about paid-to-click scams.
These are investment scams done online by enticing investors with promises of pay if they click on ads. The fraudsters may promise a share of the program’s profits in exchange for paying an upfront fee or buying products, the SEC states.
Profit-sharing could be offered to investors who buy “ad packs” or other products. Or, advertising services — displaying an investor’s ad on the fraudster’s network or guaranteeing traffic to an investor’s website in exchange for becoming a member or purchasing ad packs — might be dangled. And, the crooks might promise to share profits with investors.
So how can people keep from being duped? The SEC offers these five tips:
If it seems too good to be true, it likely is. The promise of pay just for clicking on a number of ads every day or buying something is probably bogus.
Be wary of upfront payments. As the SEC puts it, “Why would a company require you to pay a membership fee or to buy a product for the ‘opportunity’ to click on ads?”
Where’s the money? Ask for financial statements audited by a CPA that show some real bucks from the services or products offered. If the only money is from the program’s members, any returns likely will come from other investors’ buy-in fees — typically called a Ponzi scheme.
Verify the address. Is it legitimate? Enter the address in an online search engine like Google and question if results indicate an invalid address or that the program doesn’t operate at that location.
Withdrawal trouble. Investors who have difficulty withdrawing their money or must reinvest profits may find that there simply isn’t enough money coming in from new investors to cover earlier investors’ withdrawal requests — another sign of a Ponzi scheme.
An alleged Ponzi scheme, in fact, is at the heart of at least one action that the SEC took against companies. In SEC v. Traffic Monsoon et al., for example, the SEC froze the assets of the operator of an international Ponzi scheme based in Utah.
The scheme raised more than $207 million from investors worldwide, primarily in the U.S., India and Russia, according to the SEC. In a complaint filed in federal court in Salt Lake City in 2016, the SEC alleged that Traffic Monsoon LLC and Charles Scoville, the company's only member, operated an internet-based Ponzi scheme that they falsely represented to investors was an advertising company.
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.