Do you use the Internet to research investments? When you search certain terms, do you look at the advertisements that show up in the results set? Have you ever clicked on one of those advertisements to take a closer look at a high-yield investment opportunity?

A recent educational campaign run by Canadian securities regulators shows that many investors would answer “yes” to all three of the above questions, confirming investors remain vulnerable to online investment fraud.

Last week, the Canadian Securities Administrators (CSA) released the results of a 10-week public education campaign that used online advertisements and social media promotions to point people to a video and website of a fictitious company, BlueHedge Investments. The goal of the campaign was to illustrate how scam artists use online tools to lure unsuspecting investors into fraudulent investment schemes.

The ads and website contain various investment fraud warning signs. Here are a few examples:

  • Guaranteed high returns: BlueHedge offers 9% a month, risk-free investment.  There is no such thing. Every investment involves some level of risk.
  • Offshore, tax-free: The offshore fund option says you pay no taxes. You may be able to reduce your taxes, but you cannot avoid them. Also, once your money is offshore, it’s going to be hard to recover if the investment goes sideways.
  • High pressure sales: The “invest now” option, is an attempt to stop people from taking their time to consider the offer. Investing under pressure without doing your due diligence can have disastrous results.

The website also includes grammatical errors and references to FOREX (international currency trading), a highly complex and risky investment strategy scam artists often say they, or their expert traders, are engaged in.

Essentially, BlueHedge Investments resembles websites that are used promote investment schemes. The difference, of course, is that this website is set up to educate investors. If you click through to find out more about the investment offer, or you try to enter personal information into the website, you go to links with educational information. These materials include videos and links to materials pointing out how to recognize an online scam like BlueHedge Investments.

At the campaign’s conclusion, the BlueHedge website had received almost 18,000 visits from across Canada, with 71% of those arriving to the site because they clicked on online advertisements. We also found that more than 10 percent of those who received unsolicited e-mails from BlueHedge opened them. And, of those, almost 13 per cent clicked on the provided BlueHedge links, which took them to the website.

These results demonstrate people need to be very wary when dealing with online investment opportunities..

Suggested Reading

Top Ten Scams highlight new media schemes

Say No to Craigslist Investment Offers

BC Securities Enforcement Roundup – April 2013

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