Outsmarting Investment and Financial Scams

  
     
Typically, seniors are on a fixed income, but may have a large lumpsum of money in the bank from savings. Scammers can take advantage of this. Be sure to beware of these scams and follow these tips to protect yourself.
June 02, 2014

Typically, seniors are on a fixed income, but may have a large lumpsum of money in the bank from savings. Scammers can take advantage of this. Be sure to beware of these scams and follow these tips to protect yourself.

Types of Scams

Pyramid Schemes: Fraudsters claim they can turn a small investment into large profits within a short period of time—but in reality, participants make money solely by recruiting new participants into the program.
Ponzi Schemes: A central fraudster or “hub” collects money from new investors and uses it to pay purported returns to earlier-stage investors—rather than investing or managing the money as promised.
Pump-and-Dump: A fraudster deliberately buys shares of a low-priced stock of a thinly traded company and then spreads false information to drum up interest in the stock and increase its stock price. The fraudster then dumps his shares at the high price and vanishes, leaving many people caught with worthless shares of stock.
Advance Fee Fraud: The scam begins with an offer to pay you an enticingly high price for worthless stock in your portfolio. To take the deal, you must send a fee in advance to pay for the service. But if you do so, you never see that money—or any of the money from the deal—again.
Affinity Fraud: Fraudsters use groups of friends, colleagues, religious groups, ethnic groups or other people who inherently trust one another to build support for the next “great investment.” This investment turns out to be a fraud and leaves a trail of broken relationships and bank accounts behind.

Tips

  • Watch for red flags like: guarantees, unregistered products, overly consistent returns, complex strategies, missing documentation, account discrepancies or a pushy salesperson.
  • Ensure you’re dealing with a licensed and registered professional and firm. Double check with the Ontario Securities Commission at (877) 785-1555.
  • Ask questions and get the answers you need
  • Take notes during conversations with sales people
  • Take your time to make decisions
  • Seek independant advice or see a lawyer if there’s something you don’t understand
  • Never accept a verbal agreement
  • Never sign a document before reading it carefully

Investment Support
Ontario Securities Commission (OSC) is the regulatory agency responsible for administering the province’s securities (stock trading) laws.
Website: www.osc.gov.on.ca
Email: inquiries@osc.gov.on.ca
Phone: (877) 785-1555

Financial Industry Regulatory Authority (FINRA) pursues investor protection and market integrity by overseeing virtually every aspect of the brokerage industry.
Website: www.finra.org/Investors/ProtectYourself
Phone: (240) 386-HELP (4357)


Financial Consumer Agency of Canada (FCAC) provides objective information about financial products and services and informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies.
Website: www.fcac.gc.ca
Phone: 1-866-461-3222

Consumer Support
BBB Serving Western Ontario’s vision is an ethical marketplace where buyers and sellers can trust each other. We act as a faciliator between consumers and businesses to help resolve complaints.
Website: www.bbb.org
Email: complaints@westernontario.bbb.org
Phone: (519) 673-3222

Service Ontario is a ministry of the provincial government that investigates consumer complaints, enforces consumer protection legislation and licenses and registers regulated businesses and charitable organizations.
Website: www.ontario.ca/serviceontario
Phone: 800-267-8097

General Scams and Fraud Support
Canadian Anti-Fraud Centre is a trusted source for fraud data and for educational and prevention resource materials.
Website: www.antifraudcentre-centreantifraude.ca
Email: info@antifraudcentre.ca
Phone: 1-888-495-8501