Advanced Scams: Faking Legitimacy, Impersonation Scams and What Investors Can Do to Protect Themselves

Scams and fraud are on the rise, and research from CIRO’s Investor Survey shows that one in five Canadians has been approached with a possible investment fraud. A quick glance at CIRO’s Investor Alerts webpage reveals two types of scams that are commonly seen: false claims of CIRO registration and impersonation scams. Together, these trends show how quickly investment fraud is evolving, and why staying informed is one of the strongest tools investors have to protect themselves.

The Value of Working with a CIRO-Registered Firm

CIRO registers and regulates investment dealers, mutual fund dealers, and trading activity on Canadian marketplaces. It acts as a gatekeeper, ensuring firms and individuals meet high proficiency and conduct standards, and monitors them to protect investors.

What does that mean for Canadian investors?

CIRO-registered firms must follow strict rules designed to protect investors – from requiring advisors to be qualified and honest, to having safeguards for investment accounts. In short, a CIRO membership is a sign that an advisor or firm is monitored for your safety, giving you greater peace of mind when investing. Working with a CIRO-regulated firm means an extra set of eyes is always checking that your advisor and their firm stay on the right track.

CIRO firms must have clear procedures to handle any client complaints promptly and fairly. They’re also required to be members of Ombudsman for Banking Services and Investments (OBSI), an independent, impartial and a free service for Canadians that helps resolve disputes between consumers and over 1,500 Canadian financial services firms.

This means if investors ever have a serious issue, you have a formal process to resolve issues and seek compensation.

Because of the value of working with a CIRO registered dealer or advisor, scammers sometimes falsely claim CIRO registration on their websites and in their communications.

How can investors verify that an organization or individual is registered to sell investment products?

Investors can look for CIRO’s logo at the entrance to their investment dealer’s office and on the company’s website.

A second layer of verification is provided through Dealers We Regulate, where investors can verify that the investment dealer is registered and the Canadian Securities Administrators National Registration Search. Investors can also consult our Advisor Report to determine whether their investment advisor is currently or formerly regulated by CIRO, their approval categories an any conditions on their license (applicable only to investment dealer representatives and not mutual fund dealers). Using this tool, investors can also confirm previous firms that advisors have worked with, check courses and education and any disciplinary actions that they have been party to.

Impersonation Scams

With an abundance of AI tools available, it has become increasingly difficult to differentiate between what is real and what is fake—making it that much more important for investors to educate themselves about cyber literacy skills.

Fraudsters replicate real dealer websites, platforms, emails and in some cases will replicate entire portions of the website. Fraudulent crypto trading platforms frequently impersonate real crypto platforms. That’s why it’s important for investors to stop and think before responding to any investment offer.

While fraud is on the rise, one of the best things investors can do is educate themselves. If you think you’ve been a victim of fraud, find out what to do next by consulting our tip sheet, What to do it you’re a victim of fraud.