Submitted by nsscadmin on
Special Guest Blog from the Nova Scotia Securities Commission Enforcement Office
There is no shortage of illegal trading platforms online. In 2021, investment fraud was the highest reported crime to Canada’s Anti Fraud Centre with losses reported at over 160 million dollars. Let’s look at the reasons behind this and talk about how investment fraud impacts people.
The first reason there is so much online investment fraud is that it’s lucrative. It’s as easy as setting up a website. If you have an opportunity to look at many of these fraudulent websites, you might see some common themes on the sites because there is an entire industry of scammers who market and sell templates to other scammers looking to make easy money.
The second reason there is so much online investment fraud is that it’s easier than ever to move money across the internet in a relatively anonymous way. Highly trained scammers with computer skills can easily move digital assets and cryptocurrency quickly and anonymously.
The third reason investment fraud is so prevalent is because it’s difficult to distinguish the good guys from the bad guys online because all the sites look so similar. They all promise high returns and easy money. It’s enticing for investors to want to try it out and invest a small amount to see what might happen.
When an investor decides to turn over their personal and financial details to these investment scammers, what happens next tends to follow a predictable pattern. Investors are shown an investment account that is growing quickly. It’s easy to then convince the investor that putting more money into the account would lead to even greater profits.
Scammers can be convincing by telling people they are on their way to financial freedom while at the same time showing them an account value that is impressive…but unfortunately fake. Most of the time there is no real account, no real trading and no real profits. It’s all made up by scammers in an effort to get your money. The moment the investor wants his or her “profit”, a different game gets played. You might be told you need to pay fees or taxes as the scammers try one last time to get more money out of you. If you stop giving them money and insisting on taking your money, you won’t be able to reach anyone and your messages wont be returned either.
The Impact
It can be difficult for the investor to come to terms with the fact that they were being manipulated the entire time. Too often, they have had a long relationship with the scammer and can’t believe that someone who seemed to want to help them invest was never on their side to begin with. The investor has gotten used to seeing a large balance in their account and now they cannot get at their money at all. It’s bad enough that investors have lost money but many still believe they had real profits. In reality, they’ve lost what they’ve put in and nothing more as any profits shown were fictitious.
Most victims of this type of investment crime say they have lost their ability to trust. To add insult to injury victims are now prone to becoming a victim of a “recovery room scam” where fraudsters reach out and say they can get your money back, for a fee of course.
The truth is that scammers now have the personal and financial details of their victims which they then sell to other scammers. In some recent cases, victims have provided their banking details and access to their online accounts as part of the scam and so they need a computer expert to remove file sharing software. They also need to talk to their bank to cancel credit cards and to look for odd transactions and monitor their credit for years in order to make sure that scammers haven’t stolen their identities and opened up loans or credit cards in their names.
Many people say that had they known they would need to stay on top of their personal financial administration for years after getting scammed, they would not have dealt with these fake investment platforms. Many people spend a lot of time worrying about what is going to happen to their finances in the future. This can lead people to become overwhelmed and have feelings of shame and guilt.
The best thing a victim can do is to talk to a friend or relative, report the crime and then take steps to prevent this type of thing from happening to them in the future.
The investor will need to also come to terms with the fact that there is likely no way to recover any losses. So, the true cost of investment fraud can be significant investment losses, along with an increase in personal financial administration which can prove to be very emotional and time consuming.
Protect Yourself
The securities industry is highly regulated and people and companies working in this industry require registration with a securities regulator.
Investors should always check with their provincial securities regulator to see if the company they are considering giving their money to is registered in their province before they send any money. Here is a useful link to the Canadian Securities Administrators registration page.
Please take the time beforehand to check the registration of the person or company you are considering dealing with. You could save not only your hard-earned money but your time and emotional well being as well.