How to recognize the red flags of an unsolicited investment offer

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Criminals frequently use digital channels to deploy investment scams that rob Canadians of their hard-earned money every year. According to a survey by the Canadian Anti-Fraud Centre, Canadians lost more than $161.4 million to investment scams in just the first six months of 2023. While these losses are expected to surpass 2022’s total of $305.4 million, the CAFC estimates that only 5-10 per cent of frauds are reported.

One reason so many Canadians fall victim to scams is social engineering. Many times, investment scams start with an unsolicited message designed to deceive: a well-crafted introduction to build trust with the potential victim and set the stage for a “money-making opportunity”.

Some versions of these scams — such as the infamous lottery ticket or Nigerian prince schemes — have existed for decades. However, these swindles have evolved considerably over the last few years. Fraudsters are increasingly leveraging growing interest in online trading, cryptocurrency investing, and social media popularity to target Canadians.

How fraudsters use unsolicited messages to initiate a scam

A random direct message on social media or text serves as the modern equivalent of an unsolicited cold call. Messages often begin simply, like “Hi” or a more personalized greeting such as “Hey, are we still on for coffee?” This could be a fraudster trying to start a conversation.

Fraudsters who use this technique quickly build a rapport by striking up a conversation and making the victim feel like they’ve found a real friend. Scam artists will frequently use publicly available personal details, and the victim’s hobbies and interests from social media, to boost credibility and tailor their scam during this stage. Once trust is established, the scammer will introduce a supposedly lucrative investment opportunity that has earned them large returns, enticing the victim to invest as well.

In a 2023 global study by the Global Anti-Scam Alliance, 34 per cent of victims reported being “attracted to the offer made” as the primary reason for falling victim to a scam.

Signs an unsolicited investment opportunity may be a scam

One of the typical red flags of an investment scam is when a person makes claims about unrealistic returns with little to no risk. A seasoned investor or registered investment advisor will tell you that every investment comes with some degree of risk. The higher the potential return, the higher the degree of risk you may lose most, if not all, of your investment. This holds true, especially with alternative high-risk investments such as crypto.

Scammers also employ tactics of impersonation. A recent Interac survey showed that fraudsters pretended to be representatives of legitimate organizations, including government institutions and securities regulators, to deploy fake banking, credit card, and investment scams. Any unprompted communication that lacks background information about the representative or business should be considered a red flag of potential scam. Remember, requests for personal data in such communications are also a warning sign.

Fraudsters frequently use social media platforms, dating sites, messaging apps like WhatsApp, Kik, Signal and Telegram (which allow users to interact with anyone else using the app), and services like Google Chat for correspondence. These platforms allow scammers to quickly delete their profiles once a scam is complete, thereby hiding their identities.

How can you avoid unsolicited investment offers from turning into a scam?

Taking the time to check the fundamentals of any investment opportunity is crucial. Some other steps you can take to protect yourself and your money from investment scams are:

  • Be wary of any investment advice that you did not seek out yourself. Legitimate registered investment professionals and businesses generally do not conduct outreach via social media or text messages.  
  • Ignore investment offers that use words like ‘proven’ or ‘guaranteed’ investment returns. If it sounds too good to be true, it usually is.  
  • Avoid any unsolicited crypto investment opportunities offered online or through unknown individuals. Fraudsters often tailor their scams around crypto or fake trading platforms.   
  • Be cautious of unexpected investment offers that come from friends or acquaintances on social media. Fraudsters can hack or create fake accounts that impersonate those you know. 
  • Limit the personal information you share publicly on social media platforms. Fraudsters often tailor scams based on publicly available details about their targets. 
  • Stay cautious of individuals pushing ‘time-limited’ opportunities. These types of offers are meant to create a sense of urgency to prevent you from researching the investment and the person or firm offering it.  
  • Commonly, fraudsters will direct potential victims to cloned websites by mimicking trusted brands. Remember, spoof websites or phishing ads can open you up to fraud risk. Always check the destination URL of an advertisement or website, and be wary of clicking links in unsolicited messages. Better yet, if you are looking for information, go directly to a company’s official website. 
  • Always check to ensure the individual, firm or trading platform you plan to work with is registered with the Alberta Securities Commission before investing. Generally anyone offering investments should be registered with the ASC.

While unexpected investment opportunities can seem enticing, falling victim to fraud can have long-lasting financial and emotional impacts. Educating yourself about common scam tactics and staying vigilant is the best defence against losing your hard-earned money. 

Staying ahead of investment scams in 2023

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March is Fraud Prevention Month, a time when Albertans are reminded to brush up on their knowledge of investment scams and fraud to better safeguard themselves and those they care for. One of the most prevalent types of fraud is investment scams, which impacts experienced and new investors alike. In a recent study conducted by the ASC, 48% of Albertans believed they had been approached with a potentially fraudulent investment opportunity.

By understanding the tell-tale signs of fraud and remembering the fundamental principles of making suitable investment decisions, Albertans can recognize, avoid and report investment fraud and financial abuse. Remember the following red flags to safeguard your savings or those of someone you care about from an insidious investment scam.

Leveraging fears or anxieties

A go-to tactic for scam artists is tapping into the financial stressors you (their target) may have. This could include the anxiety of not having enough for retirement, leaving a legacy for loved ones or the fear of missing out on great investments. Regardless, be mindful of anyone trying to tap into your fears or anxieties when offering an investment. It is important to pause and do your research before making any investment decisions. Do an online search to see if there are any news articles, social media posts or disciplinary actions taken against the individual or company. Even if the offer isn’t fraudulent, it may not be right for you so it’s important to understand it and its risks.

New friends or love interests taking an interest in your financial wellbeing

As we connect with friends and family and make new friendships, be wary of any new person in your life who takes an immediate interest in your finances. Fraudsters often work hard to establish trust, learn the fears or anxieties you may have, understand how much they can steal and how to manipulate you. Be sure to create boundaries and do not share your personal financial information or anything about your private matters. Also, be mindful of the personal information you share about yourself online – adjust your Facebook, or other social media account settings to “private”, and carefully consider any friend requests. Don’t share personal or financial information with anyone you’ve just met online or in-person unless you can verify their identity and have thoroughly researched any financial offers they’ve given you.

Investment offers from unregistered individuals

By law, anyone selling investments in Alberta should generally be registered with the ASC. Check to see if the firm or individual pitching the investment opportunity is registered by checking the Canadian Securities Administrators’ (CSA) National Registration Search. If the investment offer comes to you from a friend, ask where it originated from and ensure the individual or firm that offered it to your friend is registered. Contact the ASC if you suspect it may be a fraudulent investment or need assistance in confirming registration.

Exclusive offers

Investments promoted as exclusive offers just to you is a clear red flag of fraud. Scam artists often try to take advantage of those interested in investing by promoting opportunities to “get in early,” or claiming that unless you move fast, you are going to miss out on the latest trend or great “opportunity” to make money. Exclusive or time-sensitive offers drive false urgency and prevent you from researching and talking to others about the investment. Investments will always be available, and no credible financial advisor should ever rush you into a decision.

Growing your investor knowledge can help you recognize, avoid and report investment fraud. If you are interested in learning more about how to stay safe and protect yourself from fraud, consider attending a virtual or in-person Fraud Prevention Month event. If you are interested in attending a free event this month, please visit our events page.

If you feel you or someone you care for may be involved in an investment scam, do not let the embarrassment or fear keep you from speaking up. You can contact or file a complaint with the ASC or call us toll-free at 1-877-355-4488.

ASC highlights top investment risks for 2023

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The Alberta Securities Commission (ASC) has compiled a list of the top investment risks and potential scams to watch out for in 2023, based on investor complaints, ongoing investigations, and current enforcement trends.

1. Advice from fraudulent “finfluencers”

Many people look to social media for “how-to” information, and that includes when it comes to finding information about investing. There is an increasing trend of “finfluencers” on social media. These financial influencers use their large social media followings to discuss trends and share advice on topics related to finance and investing.

Some fraudsters act as finfluencers to purposefully promote deceitful investment information through schemes like:

  • Touting: promoting an investment without disclosing compensation
  • Scalping: promoting a stock to quickly drive up the price and then selling at the inflated price

Investors should exercise caution when considering investments promoted as a sure thing. And do thorough research on the company, offer and all parties involved before investing in anything promoted on social media.

Where can you go for information? Start with a Google search about the company and offer. Even if the offer isn’t fraudulent, it may not be right for you. It’s important to fully understand anything you’re investing in.

2. New (fake) friend alert

Any investor should be cautious of new friends offering investment opportunities, particularly related to cryptocurrency or forex trading. Fraudsters often use apps and social networking sites to build relationships and establish trust with strangers, before tailoring an investment scam to their needs and encouraging them to invest increasing amounts of money through professional-looking websites. Victims some times see early returns, but these are designed to create a false sense of credibility. Eventually, the victim can no longer access the website or withdraw their money and the fraudster gives excuses or stops communication altogether.

Always be cautious about sharing any personal information online or in person. Always take time to consider the source of the information and research the opportunity on your own or in consultation with a registered investment advisor.

3. Impersonating a regulatory agent

Investors should be aware of fraudsters impersonating regulatory agents. These fraudsters may pretend to be staff from the ASC or another regulatory agency, using the agency’s logo, name, picture, credentials and social media accounts. When impersonating a legitimate staff member they pressure investors into providing personal information or transferring money. It’s important to always verify the identity of the source and remember that the ASC will never request that an individual transfer money to the organization or to any staff member. To verify the legitimacy of a request, investors can check verified ASC social media accounts on our website and contact the ASC’s public inquiries office to confirm the legitimacy of any request they receive allegedly from the ASC.

4. Spoofed Websites

There is a growing trend of spoofed websites that imitate legitimate investment firms. Often these sites offer unrealistic rates of return. These sites can appear in internet searches alongside legitimate firms and often claim to be “registered with the CSA” or authorized to sell investments in Canada. To protect yourself, always check the registration of any advisor or organization. To learn how to spot the red flags of fake websites, visit the interactive SpotTheSpoof.ca website brought to you by the ASC.

5. Celebrity endorsements

Be cautious of celebrity endorsements for investment opportunities. While it’s common for legitimate businesses to use celebrities to endorse their products, fraudsters do as well. When you see a celebrity promoting an investment, it’s important to remember that they may be being paid to do so with little to no understanding of the investment they are promoting or their image might be being used without their knowledge or consent. Fraudsters will often mimic celebrity personas, adopt similar social media handles, create cloned websites, and manipulate quotes and images to make the endorsement appear genuine. Investors should be cautious of any investment opportunity that is promoted by a celebrity.

As the new year gets underway, it’s a good time to review your investing goals and brush up on your knowledge to protect yourself from scams. Always be vigilant for red flags of fraud and thoroughly research any investment before making a decision. If you suspect any suspicious investment offers, report them immediately to the ASC’s public inquiries office. To keep up to date throughout the year, consider signing up for the ASC’s Investor Newsletter.

Investment fraud prevention: Tips for staying safe in a post-pandemic world

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Over the past year Albertans of all ages experienced social isolation and felt the effects of loneliness. The good news is that with the creation and widespread distribution of vaccines, we should soon be able to reconnect in person with loved ones and friends. As we move towards these opportunities to reconnect, it is important to be mindful of the connections we re-establish and the new friendships we make.

As they always do with global events and trends, fraudsters capitalized on the pandemic to attempt to sell their investment scams (often related to the fight against COVID-19). They marketed their scams heavily through email, social media and online forums like Facebook groups in lieu of in-person interactions. These digital avenues will continue to be popular, but with the eventual reopening of in-person activities, fraudsters will again try to prey on the perceived vulnerability of seniors.

In a recent study conducted by the ASC, 54% of Albertans aged 45-64 believed they had been approached with a potentially fraudulent investment opportunity. By understanding the tell-tale signs of fraud and remembering the fundamental principles to making wise financial decisions, older Albertans and their caregivers can recognize, avoid and report investment fraud and financial abuse. Remember the following tips to safeguard your retirement savings or those of someone you care about.

Leveraging fears or anxieties: A go-to tactic of every scam artist is tapping into the financial stressors their targets may have. This could include having enough for retirement, leaving a legacy for loved ones or the fear of missing out on great investments as the economy reopens. Regardless, keep an eye out for anyone trying to tap into your fears or anxieties when offering an investment and do not share your personal financial information with new acquaintances.

New friends taking an immediate interest in your financial wellbeing: As we start to reconnect with friends and family and make new friendships, be wary of any new person in your life who takes an immediate interest in your finances. Fraudsters do this to establish trust, learn the fears or anxieties you may have, understand how much they can steal and how to manipulate you. Be sure to create boundaries for your personal finances and private matters.

Investment offers from unregistered individuals: By law, anyone selling investments in Alberta should generally be registered with the Alberta Securities Commission (ASC). You can check by visiting CheckFirst.ca or by contacting the ASC. If the investment offer comes to you from a friend, inquire where it originated from and ensure the individual or firm that offered it to your friend is registered. Contact the ASC if you suspect it may be a fraudulent investment or need assistance in confirming registration.

Exclusive offers: Investments promoted as exclusive offers just to you is a clear red flag of fraud. Fraudsters utilize this tactic to drive false urgency and prevent you from researching and talking to others about the investment. Investments will always be available, and no credible financial advisor should ever rush you to a decision.

The reopening of Alberta is an exciting time for everyone, but remember that bad actors will look for ways to use in-person opportunities and friendships to promote their scams. By staying mindful of these tips, older Albertans and those who care for them can enjoy making up for lost time and avoid fraud.

If you feel you or someone you care for may be involved in an investment scam, do not let the embarrassment or fear keep you from speaking up. You can contact or file a complaint with the ASC at www.albertasecurities.com or call us toll-free at 1-877-355-4488.