The Internet and social media enable scam artists to:
- reach thousands of potential victims
- hide their real identity
- artificially drive up the value of certain investments
- use spoofed websites to defraud their victims
Be cautious on-line. Here are 7 tips to help you avoid Internet and social media fraud.
1. Look for signs of possible fraud
Here are four warning signs:
Someone you’re unfamiliar with offers you investments on the Internet
- Did you ask this person for any investment advice?
- What does the person stand to gain from sharing a “hot tip” with you?
- Who is this person really?
Be extra careful, because there’s a strong chance of a fraud attempt.
The investment you’re being offered is too good to be true
“No risk” investments do exist. However, the return on them is usually quite low. It might be 1.5% annually, for example.
Generally, the higher the expected return from an investment, the higher the risk.
What about an investment that’s both very profitable and low risk? If an offer seems to be too good to be true, it most likely is.
You’re asked to act fast
The offer is appealing, but you have to make a decision very quickly. “It’s urgent!” “It’s a once-in- a-lifetime chance!”
What the scam artist really wants is to prevent you from thinking it over or talking it over with other people.
Take the time to check whether the person and the firm they work for are authorized to sell you the financial products being offered. If you’re not given enough time to do so, simply say “no thank you.”
The person claims to have privileged information
Why would someone want to share privileged information with you about a big jump in the value of an investment?
Remember: it’s illegal to provide that type of information. It’s called insider tradingInsider trading is illegal if it consists of buying or selling securities using information that is not available to the public. The disclosure of privileged information can also be considered part of illegal insider trading..
If someone very generously gives you a “hot tip,” it’s likely that the information is false.
2. Don’t invest in a pump and dump scheme
The manipulation of an investment’s value (pump and dump) is a form of fraud that has been around a long time. Internet and social media make it much easier to commit this type of fraud. Here’s how it works.
- The fraudsters own a large number of sharesA share, also referred to as stock, is an equity security that entitles you to an ownership interest in a company.
The company can distribute a portion of its earnings to shareholders by paying them a dividend.
The shares of companies listed on an exchange are bought and sold at the exchange.
When a company ceases to operate, the proceeds from the sale of its assets are used to pay its debts and taxes, and the rest of the money is distributed to shareholders. in a company that is practically worthless. Very few investors are interested in it.
- The fraudsters make false or misleading statements on Facebook, Twitter or blogs. They talk about hot tips and refer to privileged information. Their goal is to make investors believe that the company has very good potential, that its value will increase, and that it’s a worthwhile investment.
- By reading the comments, some investors allow themselves to be convinced to buy these shares. This artificially inflates the price. The fraudsters then sell their own shares and make a profit.
- The fraudsters then stop talking about the company. No one claims anymore that the company has very good potential. The share price drops quickly. People who bought shares lose their money.
Always take the time to find out more about the investments you’re being offered.
- Ask the opinion of a representative authorized by the AMF.
- Read the prospectusA prospectus is a detailed information document that a company must prepare to be able to sell securities (such as shares) to the public.
It must provide full, true and plain disclosure of all material facts likely to affect the value or market price of the security in question. .
- Check whether the investment has been discussed in credible specialty publications.
- Don’t rely on the testimonials of people you don’t know.
- If the information comes from a friend, be wary. Your friend may not realize that the person who gave them the information might be a scam artist.
3. Protect yourself from identity theft
Identity theft involves obtaining personal information about someone and using it to commit fraud.
Here are some examples of what a fraudster can do with your personal information:
- Empty your bank account
- Make purchases with your credit card
- Sell your house and acquire the money
- Borrow money in your name
To lower your chances of becoming a victim of identity theft, limit access to your personal information.
When you create a profile on social media, such as Facebook, you usually need to provide some personal information, such as your date of birth. You can change your confidentiality settings to hide this information.
The following is information you may not want to share publicly:
- your pictures
- your list of friends
- your date of birth
- your home address
- your place of work
- your marital status
- your spouse’s name
The following information should never be made public:
- Your social insurance number
- Your credit and debit card numbers
- Your passwords
- The answers to “secret questions” that your financial institution uses to identify you (your birthplace, your mother’s maiden name, etc.)
4. Strengthen your passwords
Use a password that’s difficult for others to guess.
- Avoid using words from the dictionary.
- Avoid using phone numbers.
- Avoid using information that is easy to find, such as your child’s name or your home address.
- Use upper and lower case letters, numbers and punctuation marks.
Change your passwords every six months, for example, when the time changes in the spring and fall.
5. Distinguish between real and fake friends
Even if you know, or think you know, certain people or companies, you’re not required to:
- Accept their invitation to become a “friend” on Facebook
- Network with them on LinkedIn
- “Like” their company’s page or a group’s page
Be careful with games and apps!
Has a friend offered you a free game or app? Keep in mind that you’re taking a risk by accepting it.
You may be asked to provide personal information in order to get the game or app. You won’t have any control over how the information is used.
If the game or app was developed by scam artists:
- The personal information you transmit with your phone could be stolen... even after you’ve closed the game or app.
- Your device could be infected by a virus or malware.
6. Use private messaging
If your message contains personal or investment information, send it directly to the person by private messaging. Don’t post the information on your Facebook wall or on Twitter.
7. Be cautious with public computers and connections
Exercise caution when using public computers and Wi-Fi connections.
These connections can be hacked. Don’t use them to check your bank account or other websites containing financial or personal information.
Make sure you log off your profile when you close your session. If you have to enter your password in a public place, do it discreetly. Someone might be watching over your shoulder!
Phishing involves leading an Internet user to a spoofed website by sending them a link that seems legitimate.
Internet links posted on Twitter and Facebook are often shortened (for example, goo.gl/58xIH9). Even if you know the company for which a link is being provided, make sure it really is that company’s site and not a spoofed website designed to extract information.
For example, a link may lead to a site that’s identical to your financial institution’s site and whose address is very similar. Thinking that you’re on the site of the financial institution, you enter your user name and password... The fraudsters then use this information to empty your real account.
Avoid links from companies that you’re not familiar with.
Don’t click on links that are sent to you by friends without any comments or explanations, especially if the person isn’t in the habit of sending you investment links. Your friend’s profile or inbox may have been hacked.End of the warning
Are you a victim of fraud? Report fraud!
Register of firms and individuals authorized to practise
Check whether your representative is authorized to sell. you the product he is offering youEnd of the insight
Videos - Available in French only
- Video Témoignage d'une victime de fraude
- Video Votre représentant est autorisé ou non?
- Video Comment régler un différend avec votre représentant?
- Video Quelles questions devriez-vous poser à votre représentant?
- Video Comment dénoncer un placement frauduleux?
- Video Seriez-vous capable de détecter une tentative de fraude?
Documentation and tools
- Red-flagging financial fraud (pdf - 2 MB)This link will open in a new window Updated on 23 October 2015
- Choosing an Investment Dealer or Representative (pdf - 3 MB)This link will open in a new window Updated on 22 August 2016
- Trust must be earned! (pdf - 1 MB)This link will open in a new window Updated on 15 September 2014