Computer Crime Research Center


Internet scams soar

Date: October 21, 2004
Source: The Standard
By: Foster Wong

Investors' losses from financial scams have reached HK$11 million this year while the number of suspicious websites that could trick investors is on the rise, according to the Securities and Futures Commission (SFC).

The regulator said on Wednesday that it has received 100 investor complaints about financial scams since January. Four of the victims were Hong Kong investors who suffered a total loss of about HK$1.9 million.

This compared to a loss of HK$10 million from 59 investor complaints in the nine months to the end of last year, the SFC said.

Meanwhile, the SFC said the number of names on its investor alert list of suspected scam websites, phishing scams (spoof emails) and unlicenced overseas companies has reached 200 compared with 150 suspects at the beginning of the year.

``The number of entities has increased rapidly since the second quarter of last year when many unlicenced entities held out that they operated from Hong Kong by using addresses of business centres and Hong Kong bank accounts, or by making up fictitious addresses altogether,'' the SFC said in a statement.

The commission's alert list was introduced in November 2000 when boiler room activities started to become active. Boiler room refers to unlicenced professional-sounding salespersons who use high-pressure sales pitches to urge investors to invest. Investors usually end up with losses.

The SFC also warned that some suspicious websites could be designed to trap investors, though they appear to promote anti-fraud messages.

It said these websites claim to provide fraud investigation services for investors looking for investment opportunities and ask investors to report fraud to them. They may even post a list of suspicious boiler rooms or websites, or provide hyperlinks to similar alert lists of securities regulators in overseas markets, it added.

``The SFC is concerned that their anti-fraud appearance may be merely a facade to gain the trust of investors,'' the regulator warned.

``The trustworthiness of these websites is questionable and they could be scams themselves aiming to defraud unwary investors.''

The SFC is investigating these websites, although it has yet to receive any complaints or reports of investor loss.
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