Spot the Red Flags of Fraud

Can you spot the 6 red flags in this video?

  1. Unsolicited Contact with Casual Familiarity: The character starts with, “Hey! I’m Alex. I just got back from a business trip overseas. Thought we might have crossed paths.” This mirrors a common scam tactic where perpetrators establish false familiarity to quickly break the ice and build trust with victims. [0:02]
  2. Frequent Travel Claim: By mentioning overseas business trips, the character creates an image of success and professionalism, which fraudsters frequently use to appear credible and sophisticated. [0:04]
  3. Unrealistic Returns: Claiming to have doubled or quickly increased their investment returns is a typical tactic to lure victims into the too good to be true scam. [0:10]
  4. Risk-Free, High-Return Claim: Offering a “risk-free big return” is a major red flag, as legitimate investments never guarantee high returns without risk. [0:16]
  5. Addressing Scam Concerns Directly: The line “Are you worried this is a scam? Listen, I’ve worked in finance for nearly two decades” is a common scammer tactic to preemptively counter skepticism by overemphasizing their credentials
    and reliability. [0:18]
  6. Unrequested Personalized Guidance: “Let me guide you through it, step by step,” plays into building a sense of partnership and mentorship. While it is normal to receive personalized guidance when dealing with a registered financial adviser, it is not normal when approached by a stranger. [0:27]


Discover more investment fraud red flags

Have you seen these flags in the wild?

If you encounter one or more of these flags, it is important that you report it. If you believe an individual or firm has violated securities laws, acted fraudulently or otherwise improperly, you should report it to your local securities regulator. 

It is important that you report people or businesses that may have broken the law to the securities regulator in your province or territory. Securities regulators can investigate potential wrongdoing and impose sanctions on individuals and firms that violate securities laws. 

Securities regulators can:  

  • Help you find information about investment products and services; 
  • Provide free resources to help you; 
  • Tell you if an adviser or firm is registered in your jurisdiction and check their qualifications; 
  • Tell you if an adviser has been subject to disciplinary proceedings and if there are any terms and conditions on their registration; 
  • Answer your questions if you suspect a fraud or scam; 
  • Advise you on your options if you are concerned that something has gone wrong with an investment; 
  • Outline the steps you can take to file a complaint against an adviser or firm. 
report fraud

Tools to help you protect yourself

A complete list of red flags is available on our website.  

By boosting your investment knowledge, you will be better equipped to identify red flags and to avoid fraud. Here’s a list of tools that can help you: