Are You Vulnerable to Frauds?

There is no “typical” victim of fraud. Professional scam artists go where the money is, which means if you have money to invest, you are at risk.

Most successful scams are built on trust. Fraudsters often start with seemingly harmless questions about your health, family, or hobbies. For example, they may learn that you are worried about not having enough money to retire. They then use this information to tailor their sales pitch to your specific situation.

How You May Be Approached: Affinity Frauds

Affinity fraud targets groups such as religious organizations, seniors’ groups, ethnic communities, or social clubs. The scammer may be a member of the group or know someone in it. These scams are often successful because people are less likely to question advice from someone they know.

A common fraud is the pyramid (Ponzi) scheme. Investors are recruited with promises of high returns. Early investors may receive quick returns through “interest cheques,” encouraging them to re-invest or recruit friends and family.

The Catch: The investment does not exist. “Interest cheques” are paid from other investors’ money, and the scheme collapses when new investors stop joining.

Investment Seminars

Investment seminars promote various investment opportunities. While the investments themselves may not be scams, the sales tactics often raise concerns. Presenters may be paid to promote specific high-return investments without disclosing risks. They use high-pressure tactics to encourage immediate investment or follow-up appointments.

The Fraud

Fraudsters promise quick profits or double returns, but in reality, they take your money and disappear. They use false or misleading information to convince you to invest in:

• Digital currencies (cryptocurrency)

• Stocks, bonds, or real estate

• Businesses directly

Some scams use social media, dating apps, internet ads, or websites to pressure you into acting quickly. Fraudsters may also use pyramid schemes or fake/real celebrity endorsements.

How to Spot Fraud

1. Claims of High Returns with Little or No Risk
   High-risk investments offer higher potential returns; low-risk investments offer lower returns. If an opportunity promises guaranteed high returns, it may be a scam.

2. Hot Tips or Insider Information
   Ask why they are offering you a tip and how they benefit. Acting on false or illegal insider information can cause you to lose money.

3. Pressure to Make a Quick Decision
   Scammers use high-pressure tactics to prevent you from researching or questioning the investment.

4. Unregistered Sellers
   Anyone offering investment advice or selling securities must be registered with a provincial securities regulator.

How to Protect Yourself

• Be cautious of unsolicited investment opportunities via phone, internet, or social media.

• Research investments using credible sources and take your time before deciding.

• Understand the risks before investing in cryptocurrency. Payments are usually irreversible, and legal protections are limited, especially for companies outside Canada.

• Verify that investment companies are registered with your Provincial Securities Agency and check the National Registration Search.

• Check if a person or company is flagged as a risk by the Investment Industry Regulatory Organization of Canada or provincial regulators.

How to Report Fraud and Scams in Canada

Reporting scams helps law enforcement stop fraudsters and protect others. Less than 5% of fraud victims report incidents, so your information is critical.

Steps to Take:

• Record the scammer’s name, actions, and date of contact.

• Note telephone numbers or online contact details, and take screenshots of websites, emails, or ads.

• Keep receipts, cancelled cheques, emails, text messages, chat logs, brochures, and other relevant documents in a safe place.

• Report the incident to local law enforcement, even if you lost no money. Record the file number.

• Contact the Canadian Anti-Fraud Centre at 1-888-495-8501.

• Contact the Competition Bureau Canada at 819-997-4282 for misleading marketing practices.

• Notify financial institutions, payment services, or online platforms like Facebook, eBay, Kijiji, or dating websites.

• Check your credit report with Equifax Canada (1-800-465-7166) and TransUnion Canada (1-800-565-2280).

Common Types of Scams

• Cryptocurrency Scams: Fraudsters promise high returns on cryptocurrency buy-ins but steal your investment or personal data.

• Fixed Income Scams: Scammers offer fake GICs or bonds with unusually high returns.

• Pump and Dump: Scammers inflate stock prices to sell their shares at a profit, leaving investors with worthless stock.

• Ponzi Schemes: Early investors are paid using new investors’ funds until the scheme collapses.

• Initial Coin Offerings (ICOs): Fraudulent virtual currency investments with fake documentation and tokens.

• Franchise/Business Opportunities: High-cost investments in ATM machines, POS systems, or businesses that never deliver.

• Gems Scams: High-pressure sales of gems with little actual value; victims are asked to wire funds offshore.

• Pyramid Schemes: Profits rely on recruiting other investors, often using gifts or contributions with little product value.

Info Provided by the Competition Bureau of Canada

Emergency Contacts if Scammed:

• Canada Revenue Agency: 1-800-959

• Canadian Anti-Fraud Centre: 1-888-495-8501

• National Cybercrime Coordination Centre (NC3)