SEC issues paid-to-click scam warning

The Securities and Exchange Commission (SEC) is urging investors to be aware of paid-to-click scams fraudulently promising an easy payday.

SEC officials said online advertising programs, which require consumers to purchase a membership or an advertising product up front and then click on a certain number of online ads each day, may be nothing more than an elaborate financial hoax.

“Be skeptical if you are offered high returns for buying advertising products or clicking on online ads,” Lori Schock, director of the SEC’s Office of Investor Education and Advocacy, said. “Some paid-to-click programs are actually Ponzi schemes.”

The agency recently filed an enforcement case in a Florida federal court, alleging roughly 99 percent of the purported profits paid to earlier investors came directly from the buy-in fees collected from newer investors.

Investigators said the alleged perpetrator siphoned several million dollars out of investor funds to purchase a luxury home, automobiles, and private plane charters while also using the money to fund his other businesses.

“As alleged in our complaint, these companies had no viable source of revenue besides income from investor membership fees and the sale of ad packs, so this boiled down to an ad packs Ponzi scheme in which the promised investment returns to earlier investors were not possible without using funds from new investors,” Eric I. Bustillo, director of the SEC’s Miami Regional Office, said.