May 19, 2020
The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), is warning the public that there has been an increase in investment schemes luring people to invest based on false promises that a company has produced an effective vaccine or treatment for COVID-19. Other scams include solicitations for investments in companies falsely promising to make a profit on N95 masks, other scarce medical protective equipment, ventilators, and test kits. These companies often promise big returns.
Historically, a national moment of crisis creates the kind of uncertainty and disruption that can lure investors to invest in companies falsely promising to save the day. Add a stressed supply chain and stimulus money and you have the perfect storm for unscrupulous individuals to strike. These scammers manipulate people who have been negatively affected and are trying to either recover losses or are in fear of what their financial future holds.
The Division wants to remind investors to be on the lookout for unscrupulous investment schemes involving COVID-19. We recommend some steps you can take to protect yourself before you invest:
- Research the company. Read anything they provide you and look them up on the Internet.
- Check if it’s a reported scam. If you type in the name of the company followed by the word “scam” in the search bar, you may pull up others who are
- reporting the investment as a scam.
- Try the Internet “smell test.” Shady companies often have websites and marketing materials with misspellings. They also often do not have clear contact information or they use stock photos of fake people running the company.
- Check out the key leadership. A quick Internet search of the people running the company is wise before you hand over your hard-earned money.
- Beware of promises of low risk and high returns on investment. All legitimate investments have some degree of risk. A good rule of thumb is: Anything that guarantees more, better, and faster is suspect. If it seems too good to be true, it likely is. Consider it a serious red flag.
- Check with the legitimate sources. Vaccines and drug treatments have to be approved by the United States Food and Drug Administration (USFDA). Go to FDA.gov to find out more about any approved vaccine or drug. Currently, there is no approved preventative vaccine for COVID-19. Anything claiming to prevent contracting the virus should be a red flag.
DORA’s Division of Securities is Here to Help
If you think you have fallen victim to an investment scam or you want to report one, contact the Division’s enforcement branch for help. Email dora_SecuritiesWebsite@state.co.us or call our main line phone number at 303-894-2320.
For resources and more information, check out the Division website by clicking here.
DORA is dedicated to preserving the integrity of the marketplace and is committed to protecting a fair and competitive business environment in Colorado. Consumer protection is our mission. Visit dora.colorado.gov for more information or call 303-894-7855 / toll free 1- 800-886-7675.