Beware: Time Is Ripe for Hurricane Sandy Scams
Beware: Time Is Ripe for Hurricane Sandy Scams
Investment scams and charity fraud crop up after every natural disaster. But Hurricane Sandy is the first U.S. catastrophe to occur in the social-media age.
“We are in uncharted territory,” says Andrew Stoltmann, a Chicago securities attorney. “And social media has expanded the tentacles of scamsters exponentially.”
A decade ago fraudsters had to rely on phone calls to deliver their high-pressure sales pitches. Then they were able to use e-mail. Now social media adds an entirely new weapon to their arsenal.
When a natural disaster like Hurricane Sandy occurs, there is an outpouring of relief from Americans who want to help. And they become easily vulnerable to fraud.
The latest outgrowth of social media is crowdsourced funding, or crowdfunding, which is a way to pool small donations on the Internet from large amounts of investors — or people who want to support causes. It was approved by the JOBS Act, which was passed this year. Crowdfunding can’t be used until next year for investments. But it can be used now for charities — and, therefore, by scam artists looking to rip off the unwary.