Whether you have a lot or a little to invest, we all want to make smart decisions when it comes to our money. This year brings unique challenges due to economic uncertainty, as well as scams related to COVID-19.
To help you stay alert, the Alberta Securities Commission, the regulatory agency responsible for administering the province’s securities laws, has created a list of the top investment risks and possible scams to look out for in 2021. Based on investor complaints, ongoing investigations and current enforcement trends, here are the investment risks to avoid this year:
Exploiting the latest crisis to lure potential investors, fraudsters are offering opportunities to invest in new products or services that will prevent, detect or cure COVID-19 or otherwise aid in the fight against this pandemic. Some of these opportunities may not be legitimate.
With limited information and history available on emerging or trendy investments, scammers are spreading misinformation to promote them, as previously seen with cannabis and foreign exchange trading. A false sense of hype and fear of missing out on an exciting opportunity encourages speedy investment in a risky venture.
Always do your research when you hear of an investment with high returns resulting from an upcoming deal involving a letter of intent. Proposed deals can fall through, so if it’s being promoted as a sure thing, be wary.
This fraudster favourite happens when victims are introduced to scams by someone they know like a family member, friend or co–worker — often unknowingly. Fraudsters will target ethnic communities, religious organizations, social clubs or professional groups, often enlisting unsuspecting ambassadors to spread the scheme to make it seem credible.
Unqualified to sell
Generally, anyone offering investments in Alberta must be registered with the ASC. If a financial advisor or anyone else claims that the investment products they’re selling don’t require registration, consider it a major red flag.
With many of our livelihoods affected by the pandemic, scam artists are promoting opportunities to work from home as day traders in the financial markets. They offer to train you for a fee, while claiming that traders keep a large percentage of the profits, get high returns with little risk, and don’t require a license or experience. Often the firms offering these services aren’t legitimate and exist only to steal your money. Even in legitimate circumstances, be aware that trading on the stock exchange or foreign-exchange market is inherently high risk and complicated.
Learn how to protect yourself
“We want to empower people to make the right investment choices for them and provide information to protect against fraudsters who are constantly looking for ways to prey on people’s vulnerabilities,” explains Hilary McMeekin, director of communications and investor education.
Information is the best defense when it comes to protecting yourself. Take some time to do your research. You can find a wealth of free and easy-to-use resources to build financial knowledge and tools to recognize fraud at checkfirst.ca.