COVID-19 pandemic gives rise to scams, puts investors at risk

As more scams emerge to take advantage of those made vulnerable by the COVID-19 pandemic, Eric Munson, commissioner of the Arkansas Securities Department, talked to Hot Springs National Park Rotary Club about financial security and literacy among investors.

“The primary role of the Arkansas

Securities Department is to protect Arkansas investors,” Munson said during the club’s Wednesday Zoom meeting. “As commissioner, I advocate for Arkansas investors. Our investors are the key. You cannot raise capital without investors. Markets don’t function without investors. And people do not invest unless they know their money is protected.”

Among the department’s priorities, he said they strive to improve financial literacy among Arkansans.

“We have so many Arkansans … and even here people that aren’t aware how to save,” Munson said. “They don’t have a savings account, they don’t have checking accounts, they don’t put enough money in their retirements, they don’t understand how to leverage a dollar, getting a loan, a lot of different things, and we’re trying to do our role with investor education, and one of those is speaking to groups like you all.”

Part of being financially literate is knowing how to detect scams created in response to the pandemic.

“We have a lot of people at home through isolation and … their routines changed and a lot of things through the COVID have altered other formalities,” Munson said. “We’ve seen a lot of people prey on individuals with the financial side, trying to take advantage of them.”

One of the most common scams is identity theft.

“It’s so important that you do not give out your Social Security number, your driver’s license, your name,” Munson said. “They hijack this. … They find more and more about you and access to your money or bank accounts or others.

So, beware. And even though you say this and we know we shouldn’t do it, it happens all the time.”

He said scams conducted through the internet have been “nonstop” since the start of isolation in the pandemic.

“You hear all this … ‘ Get in now,’ ‘Double your money,’ ‘Triple your money,’ ‘ This is guaranteed,’ ‘Get rich quick,’ all the different things,” Munson said. “You start getting this solicitation ‘ Invest in this cure for COVID.’ We have a lot of scams where ‘ New cure for COVID, invest now,’ ‘Give us your money up front.’ … I think we all can relate if you’re on Twitter or if you’re on Facebook, Instagram; any type of social media platform, there’s so much traffic and junk out there.”

“These people,” he said, “they’re set up in Eastern Europe, Russia, China, Canada, other places, and they’re very savvy in technology just a step ahead of us. We try to shut them down, but they move fast.”

In order to avoid these scams, Munson said there are a few things you can do.

“Get off the phone,” he said. “Do not pick it up, or if you pick it up tell them you do want on the do not call list. Be very skeptical of the unsolicited calls or emails. … If they say, ‘Send us your money,’ or ‘ We’ve got to update your account number, please send us all your personal information,’ do not respond to that.

“If you are uneasy about financial decisions,” he said, “it’s so good to find a friend, a family member, a trusted person to help you decipher that, before you invest. People get so caught up in, ‘ Oh I want to double my money.’ … You need to just step back and think about it and take your time and make an informed decision.

“Beware the hot tips like, ‘ Get in now,’ ‘ All the guys on Wall Street are doing this,’ ‘ All the big guys are doing this.’ You’ve really got to watch for the red flag promises. … You don’t have to do any of that. You do what’s best for you and know your plan.”

Whether it’s via phone, email or text, if someone suspects a proposition is fraudulent, they can call the department’s hotline at 800-981-4429.

“If it’s too good to be true, take a breath and think about it,” Munson said.