7.5.4 Video: Avoiding investment scams

From: Financial Consumer Agency of Canada

Transcript

Introduction

Watching your investments grow can be a very rewarding experience. It's a little like growing a garden. We seed it, then water and cultivate. But along the way, we need to be on the lookout for storms, an early frost or blight.

Just as blight destroys a thriving garden, investment scammers can cost you your life savings.

Segment 2: How scammers operate and how to respond (red flag, green flags)

Scammers and fraud artists are very smooth though. Let's look at how some of them operate and how you can protect yourself.

(Voiceover)

  • Don't invest if someone who is not your financial professional asks you to invest. Legitimate sales agents don't approach strangers for money.
    • One simple but essential way to protect yourself is to check that the investment seller is licensed in your province or territory.
    • Deal with licensed investment professionals only. Even friends or people you trust can be mistaken, or they can be victims of fraud themselves.
  • You're promised high returns at no risk. A security with a high potential return is never free of risk.
    • Ask for complete documents, such as a prospectus or memorandum, with the information you need. Don't rely only on the internet or personal tips.
    • If you don't understand the risk, don't invest. Speak to your own financial professional to assess the investment.
  • You're asked to act fast, keep the matter secret or sign forms or proxies in advance.
    • Take your time, read the documents and get a second opinion if you feel you need it.
  • You're told that a regulatory agency has "approved" an investment.
    • Regulatory agencies don't approve investments. They regulate their offerings. When you hear this claim, you can be sure that this "investment" is a scam.
  • Financial transactions are carried out without full explanations or without your consent.
    • Check your transaction reports and statements.
    • If you think an investment may be a scam, or your financial professional may be scamming you, contact your provincial or territorial securities regulator immediately

Conclusion

Learn how to spot the signs of investment scams and fraud artists and respond safely. Weeding out these problems is a smart way to ensure that your investment garden keeps growing.

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