How to Spot an Investment Scam Like a Pro – Part 1

PART ONE of TWO

A MoneySmart Guest Blog

Investment scams are an unfortunate fact of life in Canada. They are often sophisticated operations, run by highly-skilled, smooth-talking people who have years of experience in committing fraud. Well-educated and intelligent people are taken in by investment scams all the time.

So how do you protect yourself and those you care about? Advice from a professional.

Jason Roy is Senior Investigator with the Manitoba Financial Services Agency. He deals with investment fraud on a daily basis, and understands the underlying patterns and red flags of fraud better than anyone.

In this blog, Jason takes you through a typical day in his department telling the story of how they investigate a suspicious advertisement. Along the way, he shares some tips that everyone can use to spot a financial fraud.


Rule 1# – Check the registration

I get new complaints every day—usually multiple emails from victims that have lost money in one scheme or another.

Our team regularly checks online buy-and-sell websites and social media platforms for suspicious ads. In this example, we find an ad promoting a Forex and Cryptocurrency trading company. The ad talks about great returns and little risk (more on that below).

I run the company name through the Canadian Securities Administrators National Registrations Search. As I suspect, it turns out the company is not registered. I also run the name of the person that placed the advertisement, and they’re not registered either.

#ProTip! Checking whether a company or individual is registered to do business in Manitoba (or Canada) is the first thing I recommend anyone do before considering an investment opportunity.

 


Rule 2# – Check for suspicious claims and details

The company’s website lists a Canadian address—an office tower in another Canadian city. I have a large number of techniques and resources I can use to ascertain whether information on the site is accurate or not, which the average person probably doesn’t.

What you CAN check for is this – are they offering HIGH returns with LOW or zero risk? That is a red flag.

#Protip! You can also check for spelling errors and grammatical mistakes. Even a professional, registered organization can make a mistake, but fraud sites are often littered with errors.

 

Click Here for PART TWO

– Jason Roy is Senior Investigator with the Manitoba Financial Services Agency. He has more than 25 years of experience in securities investigation and anti-fraud work, and chairs the Canadian Securities Administrators Investment Fraud Task Force.

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  1. Alan Wolfe says:

    Regarding your #Protip: It being possible for a competent company to possibly make an error in an ad while scammers may have many. From what I have understood, scammers put these mistakes intentionally in their ads and promotion. They are not seeking the ones smart enough to see the mistakes but the ones ignorant enough not to notice but still invest with them anyway.

    Thank you.

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