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Investment

Scam medium:

  • Email and text
  • Internet
  • Phone and fax

Targeting:

  • Individuals

An investment scam is any solicitation for investments into false or deceptive investment opportunities. These opportunities falsely promise higher-than-normal returns. However, investors lose most or all their money.

Ongoing investment scams include:

Franchise/business opportunity

Scammers offer business or franchise opportunities promising high returns. Recent scams have included:

Often the startup cost for the machines or products is high. Once you've paid, you may not receive the product or the sellers don't place the machines as agreed.

Gem

Gems scams involve high-pressure sales tactics to convince you to buy gems over the phone. The scammer insists the purchase is a sound financial investment because of the resale value of the gems. They ask you to wire money to an offshore bank account. A real gem arrives in the mail.

In the reports we've received on this scam, police say that once the victim has a portfolio of stones, they're told there's a buyer for their collection as long as they add a few more gems. Once the victim pays for the additional stones, the deal falls through.

The scammers also tell victims not to open any of the clear, sealed plastic containers the gems came in, or they will cancel the deal. Victims who opened the containers anyway and got the stones appraised discovered that they were worth about one-tenth what they paid, police said.

Initial Coin Offerings

The virtual currency market is constantly changing. New virtual currencies are developed monthly. Like an Initial Public Offering (IPO), an Initial Coin Offering (ICO) is an attempt to raise funds to help a company launch a new virtual currency.

In an ICO scam, the scammer sends an email soliciting investment opportunities with fake ICOs. They provide official looking documentation, use buzz words and may even offer a real "token". In the end, everything is fake, and you lose your investment.

Ponzi

In a ponzi scam, an investor buys into a scheme offering higher-than-normal returns. The scammer then pays early investors with money from new investors. Investors believe their investment is returning high profits, but the scheme will eventually collapse.

The "pump and dump"

In a pump and dump scam, the scammer promotes an incredible deal on a low-priced stock. However, the scammer owns a large amount of this stock. As more investors buy shares, the value skyrockets. Once the price hits a peak, the scammer sells their shares and the value of the stock plummets. The investors are left holding worthless stocks.

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Pyramid

Similar to a ponzi scam, a pyramid scam focuses primarily on generating profits by recruiting other investors. A common pyramid scam today takes the form of a "gifting circle". Participants gift a sum of money to join and ultimately must recruit others to make their money back. These schemes may offer products, but they usually have very little value.

Pyramid selling is illegal in Canada. It's a criminal offence to establish, operate, advertise or promote a scheme of pyramid selling.

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