Scam artists will use victims' religious, community or ethnic identity to gain their trust. The scam artist will pray with them, volunteer and attend social events for that particular group. Once they have established a strong relationship, they convince people to invest in their scheme.
Binary Options Fraud
These scams direct people to binary options ‘trading’ sites, via social media, online ads, and unsolicited phone calls. Binary options are a form of ‘wager’, where you decide whether a stock or commodity will increase or drop in value within a very short time span. However, the overwhelming majority of these sites are rigged to lure in a victim with small early returns. Once larger sums are invested, the victim is bled dry as quickly as possible. Unauthorized credit card withdrawals often follow suit. There are NO binary options firms registered to trade anywhere in Canada.
These scams often find their victims through unsolicited phone calls or emails which direct the victim to a Forex Website. The websites look legitimate and offers what looks like an exciting opportunity to invest your money in the foreign exchange (forex) market. You’ll be told the person or company investing your money has a great track record and you’ll be promised a high return.
What usually happens is that your money is not invested in anything and is stolen by the scam artist.
In this type of scam, the fraudster will promise you a high return from an investment in another country. They will often tell you the investment is a great way to avoid taxes. What you may not know is that once your money is sent to another country and is in someone else’s control, you may not be able to get it back. The promised high return is often used to attract your attention and is never paid.
The promoter promises investors high returns. They operate by paying interest to investors with money brought in by new investors. These new investors are attracted by the stories of people claiming to be getting high returns, and in some cases by receiving small amounts of money back in the early stages of the scheme. Inevitably the Ponzi/Pyramid collapses and the investors lose their money.
Prime Bank Schemes
Investors are asked to contribute money to use in the purchase and sale of Letters of Credit, Prime Bank Notes or some other similarly named financial instrument. They are told that they can earn very high interest rates by buying and selling these instruments on a quick turnover basis.
Investors are often told that this type of investment is a secret transaction, normally available only to the very wealthy and that they should keep all information confidential. The promoters explain that the money is invested offshore and they present investors with a complicated information document, which gives the impression that the scheme is legitimate. In the end, people lose their money.
Pump and Dump
'Pump and Dump' involves anonymous people talking up a thinly traded stock (which they own) on Internet chat groups quoting supposed “inside information”. People buy into the hype and start buying the stock and its value shoots up. The original promoters sell their stock at the inflated price and the stock price soon drops. The rest of the group is left holding stock that is worth far less than they paid for it.
Recovery Room Scam
Victims who have been previously defrauded are contacted by an individual claiming they can recover all or some of the money lost in the previous scam. They are asked to pay an advance fee to cover the costs of the recovery. In fact, the investor is being scammed a second time by the same fraudsters who keep the fee with no intention of helping the investor.
RRSP Unlocking Scam
A promoter advertises that his company has found a loophole in the tax law which will allow you to access your locked-in RRSP, RIF, LIF, RESP or LIRA funds tax-free. You are instructed to deposit money in a self-directed registered account and buy shares in a shell company. The company then loans you money and keeps the remainder as a fee. If the monies were lent to you, you owe the company a debt and they could require you to repay it. If the company goes bankrupt, the receiver could require you to repay the debt immediately. Most investors don’t understand that they are buying worthless shares or that any money they receive will likely be taxable.