Red Flags of Investment Fraud

One of the best ways to protect yourself from investment fraud and scams is to educate yourself about them. A quick and easy way to do this is to learn the red flags of investment fraud. If you know the red flags and are able to spot them, you can protect yourself and your money by avoiding fraud. Although there may be different types of investment fraud, they often have similar characteristics and the same red flags. Here are the red flags to watch out for to protect yourself.

The firm or individual is not registered

Anyone offering investments in securities in Nova Scotia must be registered with the Nova Scotia Securities Commission, unless an exemption applies. It doesn’t matter where the firm or person selling securities are physically located. If they are offering investments to individuals that are in Nova Scotia then the firm or person must be registered here. If someone is offering investments without being registered, then they are not being overseen by regulators and are not complying with securities laws.

Promised high returns for low or no risk

There is no such this as a high return low risk investment. The opportunity for higher returns always comes with increased risk. No matter what anyone tells you, you can’t have one without the other. Any investment that claims to offer high returns for low risk is undoubtedly a scam.

Uses high pressure tactics, demands you to decide now

Fraudsters often pressure people into making quick decisions and do not give them time to think over the investment proposal. Usually the reason for this is, if you were to give the decision any real thought you would not go through with the investment.  If someone is not giving you time to think over an investment, ask yourself why. Never be pressured into making an investment decision.

Uses inside or secret information, says they’re making an exception for you

Fraudsters often take advantage of people by making them feel they are special and being given information that no one else has. If someone is providing you with secret or insider information, there is usually no way for you to verify it. If it is truly insider information you could be committing insider trading which is illegal. Another red flag fraudsters send up is making the victim believe an exception is being made for them. They may say only select people are being given this information or are being invited into this investment. And of course, you’re one of those select people.

Lack of credible sources

If you ever receive an unsolicited investment offer or opportunity, make sure you verify that the investment is legitimate and real. Many investments offered by fraudsters don’t exist at all, and many times no investment is made with the money they collect from their victims. By the time the investors figure out the investment wasn’t real, the fraudster has disappeared with their money. If you cannot verify the investment with credible unbiased sources, do not invest.

Offshore firms, accounts, transfers

Once money has been transferred offshore it becomes harder to track and much harder to recover. If you’re being asked to deposit or wire money into an offshore account, ask why they’re doing business outside of Canada.