The recession, low interest rates and low-yield investments have many Canadians concerned about their retirement prospects. It is a fertile time for con artists.
As Fraud Awareness Month kicks off this week, the RCMP is reminding potential investors of the old adage: “If it sounds too good to be true, it probably is.”
The Financial and Consumer Affairs Authority of Saskatchewan (FCAA) enforcement branch reports it has received numerous complaints from investors who suffered significant financial losses after being convinced to move investments from their safer low-return instruments to “high rate of return products.
In a press release last week, police described a typical scam.
“A very common sales pitch being given to pending retirement aged investors is that; ‘the clock is winding down on the time for you to build up your retirement funds, and at the presently low interest rates, you will fall short of money to retire on the release stated. To ensure that you will be able to live a comfortable retirement, you need to make more money now!’”
The FCAA encourages people to ward off the temptation of these kinds of offers by recognizing the red flags. High return investments almost always carry greater risk, if a salesperson says the instrument has minimal or no risk it is highly suspicious.
A legitimate investment advisor will be prepared to present detailed written information.
Warnings of urgency about the opportunity being available only for a very short time are not a good sign.
The FCAA reminds investors to consider the following when making any investment decision:
Get as much written information about the investment as you can and be sure you take the time you need to understand what you are getting into.
Ask questions if the information is unclear, and get opinions from persons who are independent from the person trying to sell you the investment such as your professional advisor, banker, accountant, lawyer, trusted friend or family member.
Ask yourself if the rate of return seems realistic? If everyone else is offering three per cent, why is this person able to offer 9 or 12 or in some cases 25 per cent?
Find out if the salesperson is registered to sell investments in Saskatchewan and if the investment is qualified to be sold in the province by calling the FCAA.
Do not necessarily trust a slick presentation, many scams have very professional looking websites created to mislead investors.
Each week during March the RCMP will feature a different topic and a live Twitter chat on Thursdays from 1 to 3 p.m. featuring fraud investigators.
This week the topic is ransomware. Ransomware is a form of software introduced to via a virus that restricts access to a victim’s computer and attempts to extort money in order to unlock the system. Members of the public can follow @RCMPSK or @GRCSask for the Twitter chat on ransomware March 7.