Danger Zone

Caught In The 'Net

Technological advances have given rise to new kinds of scams. The Internet, while providing all sorts of legitimate business opportunities, has also become a breeding ground for charlatans looking for easy money. Maintaining a Web page is a flashy and impressive way to separate an entrepreneur from his or her closely guarded cash.

A fancy-looking Web page makes any promoter, well-intentioned or not, that much more attractive, according to Ben Lewis, an investigator with North Carolina's securities division. "You can [claim a top] magazine has chosen you as the number-one fund for entrepreneurs and let it stay up [on your site] until someone questions it," he says. "It gives credibility and reliability." Pages with eye-pleasing graphics, bold headlines and other electronic bells and whistles dazzle entrepreneurs. One page Lewis has seen offers users a choice of three languages: "You think, 'Someone who's going to this much trouble must be legitimate.' "

Lewis cautions entrepreneurs to go "beyond the screen" and verify the organization's or individual's true identity. Legitimate brokers are always registered with the state's securities division or the National Association of Securities Dealers, he says, "and they jump through the more traditional hoops, crossing the T's and dotting the I's."

Scam artists lurking behind the screen use the quick-fix nature of such technology to get your money without allowing much time for thought. Real brokers don't promise instant money online; they go through the traditional steps of meeting face to face, mapping out a financing plan and taking the time and thought necessary to make it work.

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This article was originally published in the August 1996 print edition of Entrepreneur with the headline: Danger Zone.

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