A polished social media ad and a friendly invite to an “investors” messaging group might seem like an exciting first step towards a lucrative financial opportunity. But wait, this could be the bait of a well-orchestrated scam. According to the Canadian Anti-Fraud Centre, in 2024, Canadians lost $310 million to investment fraud – with many scams taking place online, including on social media networks.
Fraudsters commonly promote and sell their investment scams to potential victims through advertising on popular social media platforms and apps. These ads commonly promote fake “experts” or “advisors” who offer investment opportunities with high returns and the reassurance of little to no risk.
To connect with potential victims and make communications private and harder to trace or report, fraudsters will direct interested investors to a WhatsApp, Telegram or Facebook Messenger group to receive stock trading tips or guidance. Within these private groups, fraudsters work quickly to establish their fake credentials with the claim of being certified or registered. From here, fraudsters can use various tactics, including:
- Pump-and-dump schemes that involve guiding investors to invest in stocks that the fraudster is already heavily invested in, using fake information and promotional material to build excitement. As investors put money in, the value of the investment artificially increases. Once the fraudster can no longer pull in any new investors, they sell their shares for considerable profit and tank the value of the investment for everyone else.
- Providing guidance as an “advisor” and requesting that money be sent to them via wire transfer or crypto for them to invest on your behalf. Once money is sent over, the fraudster may send over fraudulent documents highlighting early but fake returns to establish credibility and incentivize the victim to send more money.
- Directing investors to a fake trading platform to deposit money and start trading. While the platform looks legitimate with charts and simulated trading, money is not actually invested but taken by the fraudster. The fraudster may use the simulated returns in the investor’s account to push them to invest more for greater returns over time.
No matter what strategy the fraudster deploys, the results are the same for the victim. Investors may:
- Lose most or all of their “invested” funds.
- Not be able to access their funds with claims from the fraudster that a tax or fee requires payment, specific forms to be filed or that the investment needs more time to grow.
- Be unable to contact or receive a reply from the fraudster. This is often followed by the fraudster deleting their account and messages and even shutting down fake trading platforms.
Real investment scam ads advertised to Albertans
How can you spot the red flags of social media and messaging app investment scams?
Although it may sound exciting, before you invest in any opportunity promoted online or with someone claiming to be an investment advisor or professional, consider the following:
- Is the ad promoting unrealistic returns or guaranteed profits? Remember, this is a common tactic to lure in victims. No investment can guarantee you returns, especially those claiming to double or triple your money in a short period of time.
- Are you being directed to other messaging apps to continue the discussion? This is a red flag that you may be dealing with a fraudster and should be avoided. These messaging apps are used to keep the conversation private and make it easier for the fraudster to disappear and harder to trace.
- Is the person claiming to be an expert or registered investment professional? Generally, anyone offering investments and all trading platforms dealing with Albertans should be registered with the Alberta Securities Commission. While you can verify the registration of any individual or trading platform, you cannot verify the true identity of a person online. Fraudsters commonly use the names and credentials of registered investment professionals to look legitimate. It is strongly advised that you do not send money to anyone you have not met in person or cannot validate their identity.
What should you do if you think you’ve been scammed?
If you are suspicious about an investment opportunity offered to you online through social media or feel like you were the victim of an investment scam, contact the Alberta Securities Commission below.
File a complaint
1-403-355-3888
complaints@asc.ca
Recently, the Canadian Securities Administrators launched a national ad campaign, as seen above. This campaign is designed to bring awareness to these kinds of investment scams offered through social media and messaging apps. Knowledge is power when it comes to preventing and reporting investment scams. Take the time to share this article with those you care for so they can be empowered to recognize and avoid this insidious form of investment scam.
Knowledge is power when it comes to preventing and reporting investment scams. Take the time to share this article with those you care for so they can be empowered to recognize and avoid this insidious form of investment scam.
