From reports of bogus bankers going directly to victims homes to “inspect” bank cards to swindlers pretending to be grandchildren on the phone, scammers seem to become more brazen in autumn.
Canada’s main financial regulator, the Ontario Securities Commission (OSC), has issued a list of the most common digital age investment scams to look out for this season.
Romance scams
Romance scams start out as casual chats through social media or an online dating platform. Once the smooth-talking fraudster gains the victim’s trust they might claim to have a great investment tip, which turns out to be a scam.
The OSC cautions that if you meet someone online but have not seen them in person, and the ask you for money, it’s likely a scam.
Crypto scams
The digital era has opened the door to scams involving digital assets that can be quickly exchanged between users.
Crypto-currency related scams are on the rise as digital currencies become more popular. In some cases victims who transfer funds are told they need to provide more money before making a withdrawal.
Affinity fraud
Affinity fraud occurs when someone targets a common social or workplace group.
At first, the fraudsters attempt to blend in until one day they suddenly offer an investment opportunity.
Affinity frauds are often Ponzi or pyramid schemes, with promises of high returns if a select group invests together.
Early investors might receive returns but all returns are contingent on a continued supply of new investors with new money.
Eventually, new investors run out and remaining investors lose their money.
Pump and dump scams
High-pressure scammers work through lists of potential investors, typically through social media or messaging apps, promising high returns for those who buy in immediately.
As more investors buy shares, the value of the stock rises sharply. Eventually, the scammer sells their shares and the stock value plummets below the original price.
Pump and dumpers might claim to be affiliated with legitimate companies and start out promoting stocks from well-known companies. Eventually, they often switch to smaller and riskier companies.
Boiler room scam
Boiler room operations normally approach victims as legitimate trading platforms with professional looking websites and contact information.
They are often staffed by a team of high-pressure fraudsters, who are always ready to close-up shop and disappear without a trace before investors realize they have been conned.
Artificial intelligence (AI) voice scams
AI is taking over most aspects of life, why not investment scams? The latest AI software can imitate anyone’s voice or image and are widely available to the public.
So called ‘deep fakes’ can impersonate the voice or appearance of someone famous or a relative asking for money for bogus investments.
Exempt securities scam
Exempt securities do not require a prospectus or filings with securities regulators but they are limited to accredited investors or certain other conditions.
They aren’t considered scams but some scammers pitch fraudulent investments as “exempt”.
The OSC warns investors to be suspicious of unsolicited phone calls or emails about a hot tip on a promising business that is about to go public.
Victims are often told that the investment is only available to very wealthy people and urged to sign documents that misrepresent their income or net worth.
