Hurricane Ida Scams Target Insurance Payout Recipients Says SEC
The US Securities and Exchange Commission (SEC) is warning the public that Hurricane Ida will likely spur a wave of investment and insurance scams. The investor alert was issued by the SEC’s Office of Investor Education and Advocacy.
Natural disaster-related scams may include cleanup and repair services or investments that offer unusually high returns. Hurricane Ida related scams may leverage fake news articles to make thinly traded companies seem like an attractive investment. When the fraudster gets a number of people to invest in a nearly worthless company, the stock price may increase enough for them to pull out their investment, leaving the other investors with the loss.
“Hurricanes, floods, oil spills, and other disasters often give rise to investment scams,” says the SEC in the alert.
In other schemes, scammers may be trying to get new investment money so they can pay off previous investors as part of a Ponzi scheme.
Some especially unscrupulous scammers will target people who received a lump sum insurance payment. They are already reeling from their losses and looking to stabilize their situation.
Scams are promoted online and usually promise high returns for unsuspecting investors.
“These scams can take many forms, including promoters touting companies purportedly involved in cleanup and repair efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors’ money is used to pay money promised to earlier investors,” says the bulletin from the SEC.
How to Protect Yourself from Investment Scams
Typical signs of fraud promise guaranteed returns, fast profit with little or no risk stop losing your money.
- Ask anyone who is promoting an investment opportunity if they are licensed to operate in the state or with the SEC.
- Ask to see a history of the investments’ performance.
- Be suspicious about anyone who approaches you with an unsolicited investment opportunity – even if it’s not related to hurricane Ida
- Question any investment opportunity that guarantees high returns and fast profits
- Be suspicious of any investment that says there is little or no risk to your monetary investment
- Never let anyone push you into making a rush decision about an investment or how to spend your insurance money
How to Contact the SEC
The SEC prosecuted a number of individuals and companies who mislead investors about alleged business opportunities after Hurricane Katrina in 2004.
If you are thinking about investing and have questions, call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330, or ask a question using this online form.