SCC Reminds Virginians that Coronavirus Scams, Like Many Fraudulent Opportunities, Often Follow the Headlines

Financial

OCT 21, 2020

RICHMOND – As the coronavirus pandemic lingers, so does the potential for coronavirus-related investment schemes. Scammers may take advantage of the situation to offer business opportunities for supposed miracle cures or purported innovative technologies to unsuspecting investors.

The State Corporation Commission’s (SCC) Division of Securities and Retail Franchising (Division), along with other securities regulators, are working to prevent coronavirus-related scams. The Division encourages Virginians to use caution when presented with investment opportunities touting products and services related to the coronavirus pandemic.

“COVID-19-related schemes, like many other types of scams, often follow the headlines and prey on people’s fears and uncertainty,” said Division Director Ron Thomas. “Regardless of the type of investment scam, the red flags that an offer may be fraudulent are often the same.”

Thomas encourages Virginians to beware of unsolicited calls, emails or texts, or social media posts and other online promotions regarding investment opportunities that claim to be raising money for companies promising new health care products that can detect, treat or cure the coronavirus. These opportunities may include offers to invest in medical technology or healthcare companies by purchasing membership units in general or limited partnerships, stock, or other investment vehicles, such as private placement offerings, initial coin offerings or other cryptocurrency-related investments, or crowdfunding.

Thomas also urges Virginians to use caution when presented with investment opportunities promising high yield returns with little or no risk, or that offer trendy, complex or exotic investments. “Every investment opportunity carries some degree of risk that you could lose your money,” he said. He recommends using caution when considering investments that refer to returns as “passive income” or “cash flow” and promise to pay returns on a monthly basis.

“Before handing over your hard-earned money, research the investment and the person or company offering it and know where your money is going, how it will be used and how you can get it back,” Thomas said. He offers the following tips when considering any investment opportunity:

  • Do not invest money you cannot afford to lose.
  • Do your research. Ask for details about an investment opportunity and read the fine print. Ask about the risks and fees involved. Never invest in something you do not fully understand.
  • Always verify that an investment and the person offering it are licensed or registered by the appropriate securities regulator. In Virginia, you can find out by contacting the Division of Securities and Retail Franchising in Richmond at 804-371-9051 or toll-free at 1-800-552-7945.
  • Resist high-pressure sales tactics or “can’t miss” opportunities.
  • Be wary of participating in a general partnership or joint venture if you have no specific experience, knowledge or education in the industry sector – which is often the healthcare industry for coronavirus-related frauds – and would have to rely on others’ expertise.
  • Think twice before considering “research reports” or promotions claiming that the products or services of publicly traded companies can prevent, detect or cure coronavirus and that the stock of these companies will dramatically increase in value as a result.
  • Don’t always believe what you see. Con artists are often good at producing professional-looking websites boasting current productivity levels and profits with photos of vaccine or medical equipment production sites. These easily can be faked.

Additionally, Thomas encourages Virginians to report suspected fraudulent COVID-19 or other investment opportunities by contacting the Division of Securities and Retail Franchising at the numbers above or by visiting its website at scc.virginia.gov/pages/Securities-Retail-Franchising. For more information, visit the North American Securities Administrators Association’s website at www.nasaa.org/55847/the-coronavirus-is-novel-but-crisis-related-scams-are-nothing-new/?qoid=investor-advisories.

 

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Contact: Katha Treanor, 804-371-9141