How to spot the warning signs of investment fraud
Investment fraud is rising as online scams promise high returns with little risk. Stay alert, verify sources and platforms, and research every opportunity to protect your money and information.
Investment scams can come in many forms, but surprisingly, they often go unreported. According to the Canadian Anti-Fraud Centre, Canadians lost over $704 million to fraud and deceptive investment schemes in 2025, bringing total losses since 2022 to over $2.4 billion. Since only 5% to 10% of incidents are reported to authorities, these figures likely represent just the tip of the iceberg.1
5 common investment scams
Identifying common investment scams and staying alert is key to protecting your hard-earned money.
1. Pump-and-dump scams
Fraudsters conduct pump-and-dump scams by artificially hyping a stock they already own using social media buzz and messaging apps like WhatsApp, Discord, and Telegram. Posing as knowledgeable investors, they pressure unsuspecting buyers to invest, “pumping up” the stock value before “dumping” their shares and cashing out once the price rises. This causes the stock’s value to crash, often leaving it worthless.
Increasingly common, pump-and-dump scams rely on high-pressure tactics, a promise of guaranteed returns, and targeted social media hype. They are typically built around a stock or crypto asset that has no real track record, a limited business history, and cannot be found on legitimate and trusted financial platforms.
2. Affinity fraud and long-haul schemes
Affinity fraudsters exploit the trust within tight-knit communities, such as professional organizations, religious congregations, or ethnic groups, leveraging the fact that people are more likely to trust those who share a similar background, values, or beliefs.
Similarly, long-haul schemes involve scammers building relationships over time to lure investors with promises of outsized rewards such as high returns, gifts, or exclusive pre-IPO opportunities. These scams often start small, but fraudsters gradually pressure victims to invest more money. They often present glamorous lifestyles and fake profits to appear credible and encourage larger investments. Once investors start sending money, the fraudster disappears, and the promised investment returns never materialize.
3. Offshore investment scams
Offshore investment scams promise huge profits to investors who send money “offshore” to another country. The pitch often includes propositions aimed at avoiding or reducing taxes on investment returns. Once your money is sent offshore, fraudsters take control of it. It may be impossible to track down the funds and recover them. Not only is there no recourse to Canadian courts, but if the promised tax savings are fictitious, investors can also end up owing the government back taxes, interest and penalties.2
4. Initial coin offering (ICO) scams
Like an Initial Public Offering (IPO), an Initial Coin Offering (ICO) is an attempt to raise funds to help a company launch a virtual or cryptocurrency. In an ICO scam, the fraudster sends an email soliciting an investment opportunity in a fake ICO. They provide official-looking documentation, use buzzwords, and may even offer a real token, but ultimately, the ICO is fake, and the scammers disappear along with your investment funds.
5. Log-in and password theft
Email, social media, and website phishing scams are commonly used by fraudsters to steal login credentials, passwords, credit card information, and other sensitive personal data. Scammers send emails that appear to come from trusted organizations such as banks, post deceptive messages on social media platforms, or create fake websites that closely resemble legitimate companies and financial institutions. Often, they use a combination of all three tactics to appear credible. By tricking investors into entering their login details, multi-factor authentication (MFA) codes, and personal information, fraudsters gain unauthorized access to legitimate investment accounts and then withdraw or steal funds.
Investment fraud: What to watch out for?
If it looks too good to be true, it probably is too good to be true! Always be skeptical when it comes to schemes that promise risk-free investments with guaranteed returns. Most scams rely on emotional appeals and high-pressure sales tactics and are built on little or no evidence.
Here are some things to keep in mind before opening your wallet for the next “incredible’” investment opportunity:
• Watch out for higher-than-normal returns and fake account balances.
• Take your time. Don’t feel pressured or rushed into buying an investment before you’ve had a chance to do some research and think about the opportunity and what it entails.
• Think twice before taking any investment advice from influencers, celebrities, or even friends and family. Always ask: What do they gain if you invest?
• When it comes to cryptocurrency, do your due diligence to ensure investments are legitimate. Watch out for fake cryptocurrency websites.
• As a general rule, be skeptical of any investment opportunities or invitations that are sent or offered to you without your prior knowledge or consent.
Remember that any investment that claims to have no risks is likely a scam. Very few investments are risk-free. One investment rule of thumb is that the greater the potential return from an investment, the greater your risk of losing money. Any promise of quick profits with little or no risk is a classic warning sign of fraud.
How to Protect Yourself from Investment Fraud
The first line of defense starts with you, the investor: doing your due diligence doesn’t end with choosing the specific securities you want to invest in. It also applies to where you do your investing. Here are some important warning signs and strategies to consider that can give you extra protection from fraud:
• Phone calls: Ask questions such as the company’s name and employee identification details.
• Websites: Avoid clicking on unfamiliar links. Instead, type the URL directly and verify it before entering any login information.
• Social media promotions: Review the details carefully: do they promise quick success within a tight deadline at a low cost? Never share personal information.
• Search engine results: Double check the URL of any search result. Does it look suspicious? Verify the URL on your browser before entering log-in details.
Also, make sure that your devices are running up-to-date operating systems and software with the latest security features enabled. Here are some ways to get extra protection:
• Cybersecurity: Implement strong cybersecurity protections on all your devices.
• Passwords: Keep your personal information safe by creating strong passwords and using a reputable password manager.
• Two-step verification: Enable multi-factor authentication (MFA) on all your accounts whenever it is available. If you are not actively using a platform and did not request a login, but receive a verification code, treat this as suspicious, contact the organization associated with the platform or change your password immediately.
• Remote access: Avoid giving service providers remote access to your personal computers or other devices.
• Avoid suspicious links: If you receive a suspicious text message or email, do not click on any links or download any attachments that look suspicious.
• It’s easy to learn a lot about someone simply by trawling the internet. Before making an approach, scam artists will typically research their potential victims online, including reviewing social media posts or dating app profiles in order to maximize their chances of success. Keep in mind that once a scam artist receives money from you, they’ll often hold onto your information for future use or sell their list of names and contact information to other fraudsters for profit.
For more information about staying safe online and how to identify financial fraud, phishing, and spoofing scams, visit the fraud prevention page on the National Bank website.
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