EDMONTON — The Alberta Securities Commission is warning investors to beware of scams that could cost them money or earn them a reputation for fraud.
The regulator says scammers like to target baby boomers by preying on their fear that they haven’t saved enough for retirement.
The “hot” investment tip usually involves a high rate of return with little or no risk.
Such promises are a red flag for fraud, said Alison Trollope, a spokeswoman for the securities commission.
“Baby boomers are the largest and wealthiest generation in Canadian history, so to scam artists they are fantastic targets,” she said.
“We all know what our mothers told us: ‘If it sounds too good to be true it probably is.’ What we say is if it sounds too good to be true, it is.”
The commission has some other tips for people pondering what to do with their money as the Feb. 29 RRSP deadline approaches.
Trollope said investors should avoid unregistered sales people and companies.
When in doubt, people can check the registration by visiting the regulator’s website.
The securities commission is also warning against making investment decisions based on information from Facebook “friends” or social media chat rooms.
The tip someone hears about from a relative, co-worker or stranger could be based on untrue information planted by a scammer in the hope of ripping people off.
Trollope said some fraud artists create false company websites that look legitimate, complete with images of buildings and pictures of executives.
The bogus sites don’t contain biographical information on key staff such as the CEO or chief financial officer.
“Scam artists use these tools because they can remain nameless and faceless.”
The commission is also warning people to beware of offers from stock promoters to pose as a shareholder or director of a company in return for cash. Trollope said such scammers want to use people with clean records as a front for illegal stock schemes.
People caught acting as a front by signing their name to documents could be charged with fraud.
It doesn’t take much time or effort for an investor to protect themselves from investment fraud, Trollope said.
The key is to check on the company first and understand your risk profile before laying any money down.
“You want to ensure that you understand an investment before you invest, not afterwards. A lot of people will invest first and ask questions later, and that is a recipe for disaster.”