Investor Bulletin: 

Social Media and Investing-Tips for Seniors

The SEC’s Office of Investor Education and 

Advocacy is issuing this Investor Bulletin to 

provide seniors who use social media with a 

few tips to help them do so more safely and 

to help them avoid investment fraud. 

More and more older Americans are using 

social media every day, including to help 

guide investment decisions. Whether it 

is to research particular stocks, to find 

background information on financial 

professionals, to gather up-to-date news, 

or to discuss the markets with others, 

social media – web-based platforms that 

allow interactive communication, such 

as Facebook, YouTube, Twitter, LinkedIn, 

bulletin boards, and chat rooms – has 

become an important investing tool. 

While social media can provide many 

benefits, it also presents opportunities for 

fraudsters targeting older Americans. As a 

result, seniors need to proceed with caution 

when using social media as part of their 

investment process. The following tips can 

help.

Tips to Help Avoid Investment 

Fraud Online

The key to avoiding investment scams on 

the Internet is to be an educated investor. 

Below are five tips to help seniors avoid 

securities fraud:

1. Look out for “Red Flags”

Wherever you come across a 

recommendation for an investment on the 

Internet, the following “red flags” should 

cause you to use caution in making an 

investment decision:

Investor Assistance (800) 732-0330 www.investor.gov

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It sounds too good to be true. 

Any investment that sounds too 

good to be true probably is. Be 

extremely wary of claims on the 

Internet that an investment will 

make “INCREDIBLE GAINS” 

or is a “BREAKOUT STOCK 

PICK.” Claims like these are 

hallmarks of extreme risk or 

outright fraud. 

The promise of “guaranteed”

returns with little or no risk. 

Every investment entails some 

level of risk, which is reflected 

in the rate of return you can 

expect to receive. Most fraudsters 

spend a lot of time trying to 

convince investors 

that extremely 

high returns are 

“guaranteed” or that the 

investment “can’t miss.” 

Don’t believe it.

Offers to invest outside the 

United States. You should 

carefully examine any unsolicited 

offer to invest outside of the 

United States. Many fraudsters set 

up operations outside the United 

States to make it more difficult for 

regulators to stop their fraudulent 

activity and recover their victims’ 

money.

Pressure to buy RIGHT NOW. 

Don’t be pressured or rushed 

into buying an investment before 

you have a chance to think 

about – and investigate – the 

“opportunity.” Be especially 

skeptical of investments that are 

pitched as “once-in-a-lifetime” 

opportunities.

2. Be Wary of Unsolicited Offers

Investment fraud criminals look 

for victims, including seniors, on 

the Internet. If you see a 

new post on your wall, a 

tweet mentioning you, a direct 

message, an e-mail, or any other 

unsolicited – meaning you didn’t ask 

for it and don’t know the sender – 

communication regarding a so-called 

investment opportunity, you should 

exercise extreme caution. An unsolicited 

sales pitch may be part of a fraudulent 

investment scheme. 

3. Look out for “Affinity Fraud”

An investment pitch made through 

an online group of which you are a 

member, or on a chat room or bulletin 

board catering to an interest you have, 

may be an affinity fraud. Affinity fraud 

refers to investment scams that prey 

upon members of identifiable groups, 

often seniors, religious or ethnic 

Investor Assistance (800) 732-0330 www.investor.gov

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communities, professional groups, or 

combinations of those groups. Even 

if you know the person making the 

investment offer, be sure to check out 

everything – no matter how trustworthy 

the person seems who brings the 

investment to your attention. Remember, 

the person making you the offer may not 

know that the investment is a scam. 

4. Be Thoughtful About Privacy 

and Security Settings

Seniors who use social media as a tool 

for investing should be mindful of the 

various features on these websites that 

can help protect privacy. Understand 

that unless you guard personal 

information, it may be available not only 

to your friends, but for anyone with access 

to the Internet – including fraudsters. 

For more information on privacy 

and security settings, as well as other 

guidance regarding setting up on-line 

accounts with an eye toward avoiding 

investment fraud, see our Investor 

Bulletin Social Media and Investing: 

Understanding Your Accounts.

5. Ask Questions and Check Out 

the Answers 

Be skeptical. Never judge a person’s 

integrity, or the merits of an investment, 

without doing thorough research on 

both the person selling the investment 

and the investment itself. Investigate 

the investment thoroughly and check 

the truth of every statement you are 

told about the investment. You can 

check out many investments using 

the SEC’s EDGAR filing system or 

through your state’s securities regulator. 

You can check out registered brokers 

at the Financial Industry Regulatory 

Authority’s (FINRA) BrokerCheck 

website and registered investment 

advisers at the SEC’s Investment Adviser 

Public Disclosure website. See our 

publication Ask Questions for more 

about information you should gather 

before making an investment.

A Few Common Investment 

Scams Using Social Media and 

the Internet

While fraudsters are constantly changing 

the way they approach victims on the 

Internet, there are a number of common 

scams of which you should be aware. Here 

are a few examples of the types of schemes 

Investor Assistance (800) 732-0330 www.investor.gov

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you should be on the lookout for when 

using social media:

“Pump-and-Dumps” and Market 

Manipulations

“Pump-and-dump” schemes involve 

the promoting of a company’s stock 

(typically small, so-called “microcap” 

companies) through false and misleading 

statements to the marketplace, in order 

to sell the cheaply purchased stock at a 

higher price. These false claims could 

be made on social media such as 

Facebook and Twitter, as well 

as on bulletin boards and chat 

rooms. 

Fraud Using 

“Research Opinions,” 

Online Investment 

Newsletters, and Spam 

Blasts

While legitimate online newsletters 

may contain useful information about 

investing, others are merely tools for 

fraud. Some companies pay online 

newsletters to “tout” or recommend 

their stocks.  Touting isn’t illegal as long 

as the newsletters disclose who paid 

them, how much they’re getting paid, 

and the form of the payment, usually 

cash or stock.  But fraudsters often lie 

about the payments they receive and 

their track records in recommending 

stocks. To learn more, read our tips for 

checking out newsletters. 

High Yield Investment Programs

The Internet is awash in so-called 

“high-yield investment programs” 

or “HYIPs.” These are unregistered 

investments typically run by unlicensed 

individuals – and they are often frauds. 

The hallmark of an HYIP scam is the 

promise of incredible returns (30 or 40 

percent – or more) at little or no risk to 

the investor. 

Internet-Based Offerings

Offering frauds come in many 

different forms. Generally speaking, 

an offering fraud involves a security of 

some sort that is offered to the public, 

where the terms of the offer, such as 

the likelihood of a return, are materially 

misrepresented. 

What Seniors Should Know 

About Professional Designations

Some financial professionals use social 

media to attract new clients. These 

financial professionals may use designations 

such as “senior specialist” or “retirement 

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advisor” to imply that they are experts 

at helping seniors with financial issues. 

Seniors should be aware that some of 

these titles require little or no training or 

education.

In some cases, a financial professional may 

need to study and pass several rigorous 

exams—after working in a designated field 

for several years—to receive a particular 

designation. In other cases, it may be 

relatively easy in terms of time and effort to 

receive a “senior” designation, even for an 

individual with no relevant experience.

If you want to find out more about a 

particular professional designation, check 

out the “Understanding Investment 

Professional Designations” page on 

FINRA’s website. Please keep in mind that 

the SEC does not endorse any professional 

designation. Furthermore, we encourage 

you to always look beyond a financial 

professional’s designation and determine 

whether he or she can provide the type of 

financial services or product you need. You 

should thoroughly evaluate the background 

of anyone with whom you intend to do 

business-before you hand over your hardearned cash. 

Where can I go for help?

Never be afraid to complain or ask 

questions. If you suspect fraud or a 

questionable practice and the explanations 

you receive are not satisfactory, do not 

let embarrassment or concern that you 

will be judged incapable of handling your 

own affairs prevent you from filing a 

complaint. Seniors who learn of investing 

opportunities from social media should 

always be on the lookout for fraud. If 

you have a question or concern about 

an investment, or you think you have 

encountered fraud, please contact the SEC, 

FINRA, or your state securities regulator 

to report the fraud and to get assistance.

U.S. Securities and Exchange Commission

Office of Investor Education and Advocacy

100 F Street, NE

Washington, DC 20549-0213

Telephone: (800) 732-0330

Fax: (202) 772-9295

www.sec.gov

Financial Industry Regulatory Authority 

(FINRA)

FINRA Complaints and Tips

9509 Key West Avenue

Rockville, MD 20850

Telephone: (301) 590-6500

Fax: (866) 397-3290

North American Securities Administrators 

Association (NASAA)

750 First Street, NE

Suite 1140

Washington, DC 20002

Telephone: (202) 737-0900

Investor Assistance (800) 732-0330 www.investor.gov

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The Office of Investor Education and 

Advocacy has provided this information as 

a service to investors. It is neither a legal 

interpretation nor a statement of SEC 

policy. If you have questions concerning 

the meaning or application of a particular 

law or rule, please consult with an attorney 

who specializes in securities law.

Related Information

For additional educational information for 

investors generally, see the SEC’s website for 

individual investors, Investor.gov. For additional 

information about securities fraud, see:

Guide for Seniors: Protect Yourself 

Against Investment Fraud 

Social Media and Investing – Avoiding 

Fraud

Social Media and Investing – 

Understanding Your Accounts

NASAA Informed Investor Advisory: 

Social Networking

Operation Broken Trust

Avoiding Fraud

Stopping Affinity Fraud in Your 

Community

FINRA Warns Investors of Social 

Media-Linked Ponzi Schemes, HighYield Investment Programs

Investor Assistance (800) 732-0330 May 2012