“You’ve got ... fraud.” 

Earn a 1000% return on the hottest new stock? Wealthy foreign government official fleeing an unstable country in search of an American “business” partner in exchange for unbelievable wealth? Earn $1000 a day working from home? Win the Spanish lottery, even when you didn’t buy tickets? All of these offers sound too good to be true, and you probably get them on a daily basis. State regulators, and common sense, advise that you avoid unsolicited offers that you receive via email or find on the Internet.

While the Internet is a terrific tool for investors—giving them Wall Street-quality information and driving down trading costs—it’s also a terrific new tool for crooks to commit old-fashioned frauds. The Internet is an incredibly cheap way to commit fraud. For a couple of hundred dollars a criminal can buy literally millions of e-mail addresses for potential victims.

One particularly popular email scam appears to be an analysis of the “next big stock” that is set to make “astronomical” profits. The emails state that getting in on the ground floor is a sure path to wealth. In fact, the only people getting rich in these “spam” email schemes and Internet “investment” opportunities are company insiders, brokers and stock promoters who control the bulk of the shares. They drive up the price through hype on the Internet, by issuing bogus or misleading press releases and quoting from fraudulent or non-existent analyst reports and then they dump the shares on the unsuspecting public. As the scam artists move on to the next stock, investors watch the price of their shares collapse.

American investors lose billions of dollars a year to stock fraud. Unfortunately regulators usually get on the case after the fraud has occurred and the promoters are long gone. If investors ever get any money back it is usually just pennies on the dollar. Fraud conducted over the Internet is even more difficult to prosecute, due to the anonymity that it provides to con artists. Matters get even more complicated when the promoters of these schemes are based in other countries with laws and customs that may differ from those in the United States.

Investors need to protect themselves by exercising common sense, deleting unsolicited email offers of any kind, ignoring Internet hype for stocks of unknown companies, and never giving out personal or financial information to anyone requesting that information via email.

If something sounds too good to be true, it is. Period.

To get the phone number and address of your state securities regulator, call NASAA at 202/737-0900 or visit NASAA’s online directory of state regulators.