Online Investment Scams: How to Avoid a Scam on the Internet

The internet can be a quick, easy, and cheap way for scammers to find potential victims for their investment scams. Often these scams play on peoples’ interest in short-term investment options, new business or investment opportunities, or ways to make money from home.

You can always report an online scam to the British Columbia Securities Commission (BCSC) using our Report a Concern form or through email at [email protected].

How Online Investment Scams and Promotions Work

Anyone with a credit card can deploy appealing promotional advertisements on search engines, social media sites and websites with relative ease.

Advertisements that appear when you browse the internet are tailored towards your internet browsing history. This allows promoters to easily catch your attention by directing advertisements to niche markets. Scam artists can do the same thing by directing their scam promotional ads to demographics that they believe are more likely to fall victim to their scam.

The two examples below are focused on investing, but there are other scams on the internet and social media that go after bank accounts or personal information.

Online Searches and Websites

Be careful when searching for ways to make money online. Online investment scam websites can look as professional as legitimate financial services websites. What starts with a simple “easy ways to make money” search can lead to discovering a fraudulent investment.

Be wary of websites that openly ask you to invest online, whether it’s for their business or for another company.

Consult a registered investment advisor, lawyer, or accountant if you find an opportunity that appeals to you, because sometimes scams look like the real thing. Seeking a second opinion from a professional independent of the investment is always good practice.

Email Scams

Email scams often start as an unsolicited message in your inbox. The sender may even try to look like a company or person you know.

As with any investment communication, be wary of content that pressures you to act fast, put your money offshore, or invest funds with a “sure-thing” or “exclusive opportunity.”

You may also see testimonials from people talking about how much money they earn from home, how easy it is to make a lot of money quickly, or how much their life has changed since starting the investment. Be careful: if it is a scam, these testimonials could be fake or a symptom of a Ponzi scheme.

Investment emails scams may also be phishing scams. Phishing happens when someone tries to steal information using fraudulent emails. Clicking on links in a phishing email can result in malware being put on your computer, which can result in identity theft or your computer being taken over by hackers.

How Online Investment Scams Target Investors

  • Promises of high-return, low-risk investment opportunities. Ads may promote quick and above-average growth and  “guaranteed security”. Refer to current bank rates. Above-average growth involving little risk on your part should always be questioned.
  • Liberal use of financial jargon.  Sometimes, ads use sophisticated language to convince investors that the people behind the opportunity are professional, knowledgeable and experienced. Anyone can use financial lingo to sound convincing, so don’t take it at face value.
  • High-pressure sales tactics. The ad may urge you to act now and invest while the opportunity’s hot. A sales tactic like this doesn’t necessarily mean you’re a target of a scam. The point is you should never feel pressured to invest. If it’s a good opportunity, it will be there long enough for you to check into it first to make sure it’s legitimate.
  • Company’s purported ‘track record’. Many ads promote the fact that the company or person offering the opportunity has been in business a long time, are backed by a large conglomerate, and/or have achieved high performance in years past. A company’s track record should never be the deciding factor when making an investment decision. Research the company’s history and track record but also take other factors, such as your investment objectives, into account before committing.
  • Requests for personal information. Ads may send you to a toll-free line, website or a free seminar so you can request more information or fill out an application form. Check to ensure the investment opportunity is legitimate before submitting information. If it is a potential scam, your personal information could be shared, sold or held for use in future scams.

Watch this video to learn how online investment scams target investors.

How to Avoid an Online Scam

Just as you would in an offline setting, be cautious of people who approach you with a “hot tip” or news report about an investment or company.

  • Never give out your personal information online, including your home address, phone number, full name, or banking information
  • Don’t expect to get rich quick or make a lot of money fast
  • Don’t fall for claims that say this information is only for certain people
  • Install anti-spam software
  • Don’t reply to emails from people you don’t know and never click links or download attachments in unsolicited emails
  • Research opportunities and the person offering you the investment before making a decision by checking the CSA National Registration Search.

Recognizing the Investment Fraud Warning Signs will help you better evaluate an opportunity and avoid falling victim to investment fraud.

Spot Investment Scams Checklist

BCSC InvestRight has a checklist to help investors avoid online investment promotion scams. This free resource shows how to protect yourself and your money from scammers. It also details ways that you could fall victim to online investment fraud.

Download the Investment Promotions Checklist

How to Report a Scam

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.

InvestRight.org is the British Columbia Securities Commission’s investor education website.

Suggested Reading

Take Our Investment Fraud Email Course – It’s Free

CSA Investor Alert: Investment Scams Imitating Well-Known Financial Brands

Identify the Investment Fraud Warning Signs

More Resources

Common Investment Scams

Learn to avoid online investment scams.

Fraud Warning Signs

Learn to avoid online investment scams.