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  • How to spot an online scam

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    Published May 16, 2012
    How to spot an online scam
    Although not always obvious, spelling mistakes and grammatical errors throughout a site indicate a scam.

    Have I got a deal for you! BlueHedge Investments, a certified financial corporation, is offering shares in their award-winning investment funds to qualified investors. The upside? Depending on which tier you choose, you’ll receive a minimum 9 per cent a month guaranteed rate of return, with up to 24 per cent possible (depending on capital invested). Your returns are guaranteed, since you’ll be purchasing high quality mid-term notes and debentures issued by some of the largest, most stable banks in the world. And because profits are earned offshore in a tax-free jurisdiction, you’ll pay no Canadian (or other) taxes on your gains.

    Usually, BlueHedge funds are only available to high net worth investors. But for a limited time only (30 days), the company is offering its full slate of investment products to the public. Act now!

    Well, no. Don’t. Instead, run. As far and as fast as you can.

    The site, as slick as a politician’s promise, is a fake — designed by the Canadian Securities Administration to highlight how easy it is to fall for investment fraud. Here are a few things the CSA wants you to watch out for:

    Unbelievable rate of return: The old adage is right: if it’s too good to be true, it probably is.

    Limited time offer: Avoid anything that smacks of overt pressure tactics.

    “Guaranteed Returns” that are “Risk Free”: Unless you’re buying Canada Savings Bonds or a handful of other investment instruments that, generally speaking, offer fairly anemic returns, there is no such thing as a risk-free guaranteed investment. (Especially one that promises 9 per cent or more, per month.)

    Website incongruities: Although not always blatantly obvious, spelling mistakes and grammatical errors sprinkled throughout the website indicate a scam — and one that may have offshore origins. “Provided [sic] a bank card with PIN to access returns through ATM,” for example, or “Your account details are only known to you, we advice [sic] all investors to keep their login details save [sic]. Yes, “savety” first. Please.

    While these are key to this site, there are other things to watch out for:

    Affinity fraud: A way of targeting a collective — from extended family members to an ethnic or religious group — by gaining the trust of certain individuals within the group and then exploiting a network of contacts through them. If that really great new friend of Aunt Helen’s thinks this is a good investment, maybe it is! Um, maybe not.

    Forex fraud: Like the BlueHedge example illustrates, “Forex” — for “foreign exchange” — fraud promises stellar returns (and, often, attendant tax advantages) in an offshore environment. Be wary of any “opportunity” that includes parking your money in an offshore bank.

    Pump and dump: Beware the stock promoter and his oily promises. Although most are legitimate — it’s not illegal to try and sell the merits of a stock to investors — it is against the law to artificially inflate a stock price by “pumping it up” with misleading information and then having the inside players profit from dumping shares once they rise to a certain level. This mainly concerns the so-called penny stocks (low cap stocks), although Enron’s death spiral is a notable exception to that rule.

    There are many other fraudulent activities to watch out for. We’ll examine more in the coming weeks.

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