Investor Protection Against Fraud
Headlines bring the truth about fraud home.
But there are ways to protect yourself
Will Rogers said, “I’m more concerned about the return of my money than the return on my money”.
Here’s how it starts.
Someone you know, who tells you they know about an investment opportunity that guarantees an unbelievable rate of return, contacts you. You’re caught with your guard down, because you know this person. They’re part of your church, or bridge club or dog-walking group. They invite you to join, and put you in touch with an investor who slowly but surely talks you out of your hard-earned savings. Time goes by. Then one day you’re reading the newspaper and, just below the headline about a huge fraud scheme, is the picture of the man who earned your trust and took your money.
Sadly, current headlines make this scenario all too real.
It’s not the first time investors have been bilked out of their retirement plans. And it won’t be the last. Just check out the RCMP website to find out just how many ingenious ways there are to cheat people out of their money.
Telephone fraud. Mail fraud. Investment fraud. Internet fraud. It all makes you feel like taking your money and tucking it under your mattress.
What’s more, many of the victims of these schemes are those people who can least afford to be hurt: seniors. Though age is no barrier, seniors seem to be the most vulnerable to criminals who prey upon loneliness, vulnerability and financial concerns. Seniors account for a high percentage of those victimized by scams and frauds. While seniors are the primary targets, people of any age who are under financial pressure may fall victim to scam artists or purveyors of get-rich-quick schemes that now seem to show up in the news regularly.
But there are ways to keep you and your money out of harm’s way.
Don’t trust someone you don’t know
You can check the Ontario Securities Commission (OSC) website databases, or call 1 (877) 785-1555 to see if the person is licensed to sell in Ontario.
Do your homework
Here’s where skepticism helps.
- Do your homework and read up on the proposed investments.
- Understand the risks.
- Ask for and read the prospectus.
- Talk to your accountants and lawyer.
- You should be able to telephone to verify your investment holdings with a third party like the fund company.
- You should receive at statements at the least annually.
- You should be able to view your investments online.
Diversify your holdings
Putting all your eggs in one basket is not a good idea. Not only does diversifying your portfolio help even out the ups and downs of the market, it can also protect you from losing everything.
There are other ways scam artists can reach you. Telephone and Internet fraud schemes are multiplying. The fact is, you should never give personal or financial information over the telephone or the Internet, and no matter how reassuring or convincing the person is on the other end.
- If you are considering giving to a charitable organization that you've never heard of before, research it by calling the Better Business Bureau in your area. Find your local organization at: www.bbb.org
- Check out a company before buying a product or ordering a service on the Internet. There is a mistaken assumption that web sites monitor the integrity of all their links. The Better Business Bureau is a good source of information.
- Be wary of giving your credit card number over the phone or to a web site. Your card could be billed for charges you have not approved.
No one cares more about your money than you do.
The fact is you shouldn’t look to other people to be responsible for your money. Keep watch over your financial future and develop an investment strategy that addresses your needs, time to retirement and values.
Here are some simple thoughts to keep in mind:
- Understand your aversion to risk. Are you a risk-taker? Or is a more conservative approach to investing likely to help you sleep better at night?
- Focus on what's meaningful in your life – your family, hobbies, or church. Your investment plans should reflect these values.
- Only make a change in your plan if there’s a change in your values.
This way, you’re not as likely to jump into some get-rich-quick scheme or new investment opportunity that’s just too good to be true.
Finally, “if it sounds too good to be true, guess what, it probably is”.
