SEC Warns Paid-to-Click Programs May Be Ponzi Schemes
The Securities and Exchange Commission (SEC), the federal agency charged with protecting investors in the financial markets, recently warned that paid-to-click (PTC) online ads may be an investment scam.
SEC is warning investors about scams involving online paid-to-click ad programs.
These PTC ad programs often promise investors a piece of the company’s profits in exchange for upfront fees or for purchasing their products. The ads may also promise to provide investors with advertising services such as display ads on their website, or guarantee traffic to your website in exchange for a fee.
Did you invest in a paid-to-click scam and lose money? Contact the Business Trial Group.
SEC Charges Traffic Monsoon LLC in Ponzi Scheme
The SEC has investigated and charged several PTC ad companies for conducting Ponzi schemes wherein initial investors were paid with money obtained from newer investors.
For example, in SEC v. Traffic Monsoon, the SEC charged an online company falsely claiming to be an advertising company for running a pay-per-click program where users were paid to click on others’ website banner ads. The company solicited investors worldwide through its website and YouTube videos. Nearly all of the company’s revenue, however, was generated by other investors, not its products or services—the hallmark of a Ponzi scheme.
In total, more than 162,000 investors purchased approximately $207 million in Traffic Monsoon’s advertising products, with over 99% of the money distributed to investors coming from newer investors.
Warning Signs of Paid-to-Click Scams
If you are approached with the opportunity to put your money into a PTC program, even if it does not appear to be an investment, the SEC suggests you look for the following warning signs that the program may be a scam:
- Promises of high returns just for paying upfront fees, purchasing advertising products, or clicking a certain number of ads per day;
- Required upfront payments;
- No revenues except from other investors;
- The company does not have a legitimate address or just a virtual address; and
- Problems withdrawing your investment or requirements to reinvest your profits.
If you suffered significant financial losses from investing or buying into a paid-to-click scam, or are unsure whether you invested into a scam, the Business Trial Group may be able to help.
Contact the Business Trial Group if you suffered investment losses from a PTC scam.
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