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8 common investment scams

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Learn about common investment scams
and how to protect yourself.

8 common investment scams

#1: Advance fees scheme

In this scam, the victim is persuaded to pay money up front in order to take advantage of an investment opportunity promising significantly more in return. But the scammer takes the money and the victim never hears from them again. Investors who have lost money in a risky investment are often targeted.

8 common investment scams

#2: Boiler room scam

Investment scams are often pulled off by a team of people who set up a makeshift office, called a “boiler room”. To convince you their company is real, they might professional-looking website, a toll-free number and even a physical address. However, the company doesn’t exist.

8 common investment scams

#3: Exempt securities scam

On their own, exempt securities aren’t scams. But some scammers pitch fraudulent investments as "exempt" securities. Be suspicious if you get an unsolicited phone call about a hot tip on a promising business that is about to "go public" and contact your local securities regulator to check.

8 common investment scams

#4: Forex scam

Forex ads promote easy access to the foreign exchange market, often through courses or software. But foreign exchange trading is dominated by large, well-resourced international banks with highly trained staff, access to leading edge technology and large accounts. It’s extremely difficult to beat these professionals.

8 common investment scams

#5: Offshore investing scam

This scam promises huge profits if you send your money "offshore" to another country. Usually the goal is to lower or avoid your taxes, but you could end up owing the government money in back taxes, interest and penalties. Also, if something goes wrong, you likely won’t be able to take your case to civil court in Canada.

8 common investment scams

#6: Pension scam

This scam targets people who have retirement savings in a Locked-In Retirement Account (LIRA). In most cases, you can’t withdraw money from a LIRA until you reach a certain age, usually 55 or older. The scam is often promoted in newspaper ads as a special "RRSP loan" that lets you tap into your locked-in funds.

8 common investment scams

#7: Ponzi or pyramid scheme

These schemes recruit people through ads and e-mails that promise you can make big money working from home or turn $10 into $20,000 in just weeks. Or, you may be given the chance to join a special group of investors who are going to get rich on a great investment. The invitation might even come from someone you know.

8 common investment scams

#8: Pump and dump scam

Scammers contact you to promote a low-priced stock. What you don’t know is that the scammer already owns a large amount of this stock. As you and other investors buy shares, the value of the stock rises. At the peak price, the scammer sells their shares and the value of the stock plummets, leaving you with worthless stocks.

8 common investment scams

Learn more about these scams

Visit GetSmarterAboutMoney.ca to read more about these scams and learn how to protect yourself against investment fraud. If you suspect a scam, report it to your local securities regulator.

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