The Internet has created a new breed of investor. This investor is the investor who has started buying stocks on the Internet without the help of his stockbroker or the knowledge to investigate the stocks he is buying. Money frauds are thriving on the Internet. Who are the losers? The losers are simply millions of American investors that have access to the Internet, e-mail and are following these message boards. Could that be almost any investor? Could that be you? There is so much information available on the Web to such a large audience, that people are doing their own research and getting sucked into these stock scams. They have heard the stories of the poor farmer who got rich over night and they believe it could be their turn. This mind-set and the massive numbers of people investing online has created a hideous opportunity for fraud.

The best way to avoid getting your hard-earned money mixed up into a "cyberscam" is to do your homework. The thousands of stories of how people lost huge sums of their savings to various stock scams all end the same. They believe that if it is on the Internet, then it is O.K. There is no doubt that the Internet is a very powerful tool for investors, but the naïve investor has created an opportunity for one of the fastest growing industries, stock fraud. The (NASAA) North American Securities Administrators Association reports that on and off-line, $10 billion a year or $1 million an hour is what investors are being taken for.

The SEC set up an online unit about five years ago and has brought more than 100 Internet-related lawsuits to trial and sent many a con man to jail, but they have not touched the tip of the iceberg. The SEC's Internet complaint hotline (e-mail address: enforcement@sec.gov) is receiving about 300 messages on any given day about stock scams. The NASAA receives another 500 calls per week. The calls they get are generally about spam e-mailing promoting usually unknown stocks with false and or inflated claims. The sad thing is that not all of these come from unaffiliated spamming groups but from within the company itself. Penny-stock promoters can spam thousands of investors, drive the stock price up and dump their shares at the inflated price and poof, they are gone. The Internet has created a serious problem because the con men (or women) can be anywhere or nowhere at the stroke of a key. Even sadder is the fact that they probably only spent a few cents pulling this off. Maybe only the price of Internet access.

Below is a list of questions you need the answers to before you invest online:

1. Does the investment say you will get rich quick? Is "risk free" or "guaranteed high return" part of the promotion? Does it say invest quickly before you could have time to investigate your purchase?

2. Is the tip from an online bulletin board or e-mail?

3. Is the investment registered with the Securities and Exchange Commission?

4. Who is the person recommending this investment? Is this person a registered broker? Check the CRD (Central Registration Depository) records. You can do this by going to www.nasdr.com or your state securities regulator. Check your state at www.nasaa.org the North American Securities Administrators Association.

5. Have you read audited financial statements about the investment? You can find these public company filings at the SEC's website www.sec.gov .

6. It is illegal for a promoter to receive cash or securities from an investment they are promoting. The Stock Detective www.stockdetective.com has a list of paid Web promoters.

7. Overseas investments are harder to get recourse to justice if you get burned. Check all overseas investments. Conflicting time zones, differing currencies and the high cost of International phone calls and overnight mailings use to make it difficult to check overseas investments. These offshore schemes targeted the U.S. but the Internet has removed those obstacles.

8. Don't assume that your access provider or on-line service has approved or ever screened the investment. Anyone can set up a Web site or advertise on-line, often without any check of its legitimacy.

You can research cases of Internet Scams and you would be amazed at the people sentenced to years and years in prison and the huge fines. For some reason they feel the computer keeps them out of arms reach of responsibility. There have always been scams but now it is so easy and so fast and cheap. One man collected $190,000 from 150 investors but instead of using the money to build the company, he kept the money and bought personal items such as stereo equipment. The SEC sued him in a civil case and he was convicted of 54 felony counts and did not get to take his stereo with him to entertain him while he serves 10 years in jail.

This news is not to scare you from investing online. Not all spam stock e-mail messages are frauds but as a buyer, you need to be aware of the risks. The people who have been the unfortunate ones to experience first hand the impact of the Internet in this negative fashion have said they feel so embarrassed or ashamed and hate to admit they fell for the "deal". Don't let this fool you either. There are full time traders who have fallen victim to cyberscams and they know the business. The point is to be alert. Save all documents and turn in any claim no matter how small to the SEC and NASD. This will by no means guarantee your money back but will help the law bring to the forefront what they consider to be a ramped disease of the Web.