Learn to recognize the 5 warning signs of investment fraud

March is Fraud Prevention Month and the British Columbia Securities Commission (BCSC) wants investors to learn to recognize the five warning signs of investment fraud.

Every year in B.C., thousands of people lose millions of dollars in investment scams,” says BCSC director of communications and education Pamela McDonald.

Investment fraud can have a devastating effect on its victims.

“In addition to losing their money, people can lose their health, trust in other people and personal relationships,” says McDonald. “Investment fraud has led to broken marriages, depression and even suicide. Don’t let it happen to you.”

Take a minute to protect yourself by learning to recognize the five warning signs of investment fraud.

No risk!
There’s no such thing as a guaranteed investment: The higher the returns, the higher the risk.
 
“This type of sales pitch is often aimed at people who live on a fixed income or those near or in early retirement who are worried about having enough money,” says McDonald.
 
Profit like the pros!
These scams are pitched as opportunities known only to a select few who are said to be making a lot of money.
 
“The scam artist convinces you they have access to this inside information or special advisors,” says McDonald. “But they really don’t.”
 
Offshore, tax free!
Fraudsters pitch this scheme as a way for investors to avoid paying taxes.
 
“If you allow yourself to be convinced to move your money outside of Canada to avoid taxes, it will be out of the reach of Canadian authorities – and Canadian law – which is what the fraudster wants,” says McDonald.
 
Get in now!
Scammers use this tactic to pressure you into making a quick decision.
 
“A fraudster will suggest they have secret information about a company that the general public doesn’t have,” says McDonald. “Don’t let yourself get conned. Research an investment advisor, salesperson, company and investment before you invest.”
 
Your friends and family can’t be wrong!
Scam artists target religious, ethnic or close-knit groups by working their way into organizations and befriending members. This approach, which is called Affinity Fraud, relies on the trust you place in the people around you.
 
Visit BCSC InvestRight’s BeFraudAware page to check the new BeFraudAware, the 2 Minute Musical, the Smarter Investor Quiz, a Fraudster Fighter Toolkit, and more tools and information to help you become a smarter investor by being aware of investment fraud.