Fraudsters are master manipulators who leverage relationships to build trust and exploit you financially. Technology makes it easy to become a victim as bad actors can, pretend to be someone you know online, or use artificial intelligence to trick you. According to data from the Canadian Anti-Fraud Centre (CAFC) 2021 Annual Report, investment scams and romance scams were the top two reported scams.
Some common techniques which may be used to trick you into an investment scam or romance scam include:
- Being approached via dating, messaging, or other social media apps to develop a relationship and presented with an investment opportunity.
- Pretending to be a friend or loved one through a fake or hijacked account and convincing you to make an investment.
- Creating a tailored pitch based on your social media likes, history, and any other information you make public.
- Convincing you to allow remote access to your computer or device and then using that access to help navigate a fraudulent investing platform.
- Offering “one-of-a-kind” or “unique” investment advisory services to you for a “once in a lifetime”, or “secret” investment opportunity with “guaranteed returns”.
Scams require your trust
These techniques may be applied gradually, over time. The common theme amongst these scams is fraudsters are using your trust as a weapon. They connect with you on a personal level through shared interests on social media, mutual friendships, photos of loved ones, and other subtle ways of appearing friendly. Once trust is established, you might be ‘nickel and dimed’ until the amounts you send or invest become overwhelming.
How to protect yourself:
Never send money, gift cards, crypto, logins, etc. to someone you meet online without doing your research and asking questions.
Always remain skeptical when you are offered unsolicited investment advice. Check to make sure an individual is registered to purchase an investment and offer advice.
Be aware of red flag terms such as “time limited”, or “guaranteed returns”. These terms are intentionally used to make you feel pressured and instill the fear of missing out (FOMO). Remember: you can always say no or take time to consider your options.
If you don’t understand it, walk away. Investing can be complex, and fraudsters will use this to their advantage.
If you suspect you were a victim of an investment fraud, report it to the Canadian Anti-Fraud Centre and your local securities regulator to help prevent other Canadians from becoming victims.
For more investor education articles and fact sheets visit CIRO’s Office of the Investor.