A phony website established by the Ontario Securities Commission (OSC) illustrates the pitfalls of making investment decisions based on unverifiable information provided over the Internet, said the OSC Thursday.
The OSC site, NoRiskWealth.ca was launched on January 22, and promised investors unusually high returns with little or no risk. In the six weeks that the site was operational it had more than 16,000 hits with over 1,000 visitor sessions.
People were prepared to invest thousands of dollars based solely on unsubstantiated information provided on a website, and scores more wanted additional information, said Michael Watson, OSC director of enforcement, Michael Watson said.
The lesson from this exercise is that people should not trust information on the Internet unless they have confidence in the source, Watson added.
The project also tested the ability of securities regulators to monitor the Internet, Watson said. He reported that four different regulators, including OSC staff not aware of the project, discovered the site just days after it went live.
Watson said the experiment demonstrated that proactive monitoring of the Internet could assist regulators in detecting scam artists and shutting them down. The OSC gathered valuable information about potential traffic to other Web sites, Watson added. For example, approximately 60 percent of the visitors to the Web site came from the United States, 30 percent from Canada and 10 percent from other countries, the OSC reported.
The project gave the commission a first hand look at the potential for abuse and a greater understanding of how scams such as this one operate, Watsonsaid.
In order to assure the authenticity of the site, the OSC created the content modeled on scams that they have observed, and promoted it using the same tactics that are generally employed by Internet con artists. The Web site was operated by an outside contractor, AssetRisk, and configured so that the OSC does not have access to information about individuals who visited the site.
The OSC can be reached at http://www.osc.gov.on.ca/.