The North American Securities Administrators Association has issued an alert warning potential investors of scammers using social networking sites like Facebook, Twitter LinkedIn and dating sites.

The typical modus operandi of the scam is to approach groups and even individual users to attempt to gain trust and rapport. (We have warned several times in the past that it is never a good idea to accept a friend or connection request from a complete stranger). Once a victim is targeted and on the hook, the scammers will then approach their friends, relatives, associates – anyone they can gain access to. For this reason, it is a good idea to limit the ability for non-friends to see your Facebook friends list.

Eileen AJ Connelly, a freelance personal finance writer has some warnings that would-be investors should be on the lookout for:

1. Red flags for online scams are similar to those in the real world.
2. Con artists will promise high returns with little or no risk. Guarantees of daily, weekly or monthly returns are not uncommon with these scams.
3. Victims may be encouraged to open online accounts to create money transfers.
4. Bonuses may be offered for recruiting others into the scheme.
5. Potential victims may be directed to slick and polished sites that look great, but offer little or no information about the company, its location or the investment itself.
6. Promoters don’t provide a prospectus or written information explaining potential risks.

Connelly goes on to offer advice on what you can do to avoid these scams and who to contact if you have already been victimized.

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