Watch Out For Frauds Involving Cryptocurrency
In recent months, Saskatchewan has seen an increase in fraudulent investment opportunities that involve cryptocurrency. The Financial and Consumer Affairs Authority (FCAA) wants to warn Saskatchewan investors about fraudsters who are using various techniques such as flashy advertising with promises of high returns to target individuals who are looking to supplement their income for retirement purposes.
Fraudsters create fake websites and use advertisements, recommendations and private messages to convince investors that they should part with their money to achieve big returns.
Here are a few common methods that fraudsters use:
- Online ads which highlight high returns and low risk.
- Pop-up ads that promote cryptocurrency giveaways or include fake customer reviews.
- Recommendations on social media that seem to come from "a friend".
- Private messages on social media sites such as LinkedIn and Facebook from fake profiles that look legitimate. Fraudsters can pretend to be senior executives and their profiles showcase fake investor references.
As cryptocurrency is very complicated, investors may find themselves in a situation where they are not sure about an investment opportunity, here are a few warning signs of fraudulent investments:
- Promises of high returns - Fraudsters use the promise of higher-than normal investment returns to lure investors. If it sounds too good to be true, it is.
- Guaranteed risk-free - Fraudsters will lure you in with the promise of a zero risk investment. All investments involve some degree of risk.
- Pressure to buy - Fraudsters use high-pressure sales tactics and may tell you there's no time to ask for advice.
- Complex documents and technical jargon - Fraudsters want to confuse you with complex documents and technical language. They may dismiss your questions and use arguments that are inconsistent and filled with jargon.
Here are some steps investors can take to protect themselves:
- Do your research - Before making an investment, always examine the website thoroughly and do your own research. Fraudulent websites will have "too good to be true" statements and grammar mistakes. You can also search the company's reputation online to see the reactions and reviews of other people who may have invested.
- Verify registration - Check to see if the person or company, offering the online investment is registered and crosscheck their details with the Canadian Securities Administrators National Registration search at https://www.securities-administrators.ca/nrs/nrsearchprep.aspx.
- Check disciplinary history - Before investing check the history of the person or company, to find out if they have broken regulatory rules in the past. It is easy to do, using the Canadian Securities Administrators Cease Trade Orders at https://cto-iov.csa-acvm.ca/SearchArticles.asp?Instance=101&AttrSet7=0&Attr7=1&Attr7=2&XSL=SearchArticles Advanced database and the list of disciplined people and companies.
- Be suspicious of high returns - Be suspicious of anyone who promises that an investment will perform a certain way. If it sounds too good to be true, it is.
- Do not be pressured - Do not feel pressured to make quick decisions.
- Get a second opinion - Seek professional advice before investing in a product or service.
If you have discovered a fraudulent investment opportunity, you can report the scam to the FCAA Securities Division at [email protected] or 306-787-5936.
For more investor protection information visit https://fcaa.gov.sk.ca/consumers-investors-pension-plan-members/investors/investment-fraud.