Avoiding Investment Fraud
It's an unfortunate fact that many trusting investors are preyed upon each year by fraudulent scam artists.
Some of the most common investment fraud schemes include:
West African Letter Scam
Here, individuals claiming to be high-ranking government officials or royal-family members from developing nations send an e-mail requesting help removing large quantities of money from an account. They ask people to show good faith by depositing funds in a mutually accessible bank account or to provide a bank account number, in which they will deposit the money. The individuals then drain the bank accounts and head for the hills.
Prime Bank Schemes
Scam artists lead investors to believe that they can participate in a secret trading regime through the world's most prestigious banks.
With this deception, scam artists hoodwink a group of individuals by joining a common-interest or ethnic club and pretending to be "one of them."
These short-term loans, often sold as insurance products, promise high returns for the benefit of borrowing your money. The companies offering the "investments" are often non-existent.
A Pyramid Scheme is a multi-level marketing (MLM) program that cannot support itself because advancing within the system (and earning money) depends on recruiting other people into it, rather than selling a product or service.
Offshore Investment Scams
Here, Canadians fall for the oft-heard promise that their Canadian dollars can flourish in an offshore (usually warm-weather) tax haven. Swindlers convince people to give them money with extravagant claims that they have no intention of fulfilling.
To protect yourself from becoming a victim of investment fraud, take the following actions:
- Ask questions until you're satisfied that you know exactly what the investment offer is.
- Get a second opinion about the investment from a trusted adviser.
- Never buy over the phone or online without first investigating the source of the offer.
- Avoid investment opportunities promising large returns in a short amount of time that seem too good to be true. They probably are.
- For more information and tips on how to avoid becoming a victim of credit card fraud, visit www.visa.ca/securewithvisa