Have you ever seen a full-page ad for a penny stock in a respected newspaper like The New York Times or USA Today? The Times recently ran a story about scammers who purchase full-page ads in legitimate newspapers and capitalize on the implied approval the ad gives them. Clark thinks it took a lot of guts for the Times to run this particular story because the paper had to admit it had accepted some dubious penny stock ads. Penny stocks typically “advertise” via spam, fax, or telephone. Anytime you get a message in your inbox about getting in on the ground floor of a company that’s about to hit the big time, well, chances are it’s a scamming penny stock.
In this latest twist, the penny stock scammers were actually buying full-page ads at a base rate of $37,500/page in well-known papers; some scammers even bought ad schedules valued at a quarter million dollars! A lot of unsuspecting people immediately thought these advertisers must be legitimate if they’re in the Times or USA Today. Not true, says Clark. Advertising is paid propaganda, it’s not news. There’s nothing wrong with advertising — it’s an important element of capitalism — but you have to be wary when scammers are the advertisers. Beware whenever a company buys ads touting how great they are and how you need to buy their stock. Do the independent research to verify any claims they make.