Harpreet Sahota, a short-haul trucker living in Vaudreuil-Dorion, Que., was finding herself exhausted this summer, sometimes working six days a week and still not having much to show for it.
Then she got laid off for a couple weeks and decided she needed a new source of income — to find a way to work less, but still have enough to live comfortably.
That’s when an enticing ad popped up on Facebook, offering her an investment opportunity. Sahota clicked and entered her contact info.
But one particular offer that soon followed, involving bitcoin transactions, never produced any sort of return and led to huge losses.
“Within five minutes, I started receiving calls from these different financial companies,” she said, and one called LegalTrader.com caught her attention.
The representative promised a return of up to 70 per cent on her investment.
“I thought, why not?”
It started with about $300 to open an account, but that small investment quickly snowballed into an avalanche. Sahota says smooth-talking representatives soon convinced her she was getting big returns on her investment, telling her she should invest more to make more.
So she sent more money. Then she was told she was losing funds, and she needed to invest more to get back on track.
“I took $15,000 from my credit line,” she said.
“And we had some gold jewellery that my mother had for my marriage, saved, and we ended up selling that and using that money, and maxed out my credit cards.”
While LegalTrader’s website looks professional, searching the company’s name turns up plenty of websites and forums accusing it of being an illegitimate business that scams people out of their money.
But Sahota, despite knowing there were some red flags, decided to go ahead with it anyway, convinced by the company’s agents that she would hit pay dirt.
She made direct transfers and payments with her bitcoin wallet, a method of paying with cryptocurrency.
“I got myself into debt,” she said.
Sahota spent more than $102,000 on investments and fees. When she tried to withdraw the funds, she was told the payments would come by bitcoin transfers, but those transfers never came.
RCMP says crypto scams increasingly common
Unfortunately, cryptocurrency scams are becoming increasingly common. This kind of fraud in particular went up 400 per cent in Canada between 2017 and 2020.
“Fraud is big business for organized crime around the world, and criminals are always exploiting new ways to take your money,” said the Royal Canadian Mounted Police (RCMP) in a recent statement.
From cryptocurrency scams to those involving fraudulent investment firms, the RCMP says there are many ways Canadians are duped out of their money.
In some cases, the RCMP explains, “scammers are known to be spoofing credible financial institutions in an effort to con victims into believing they are legitimate and transferring them funds.”
Canadians have lost more than $120 million in 2021 so far, up from $53 million in 2017. In Quebec, more than $10 million was lost in 2017, while that number shot up over $15 million this year, according to RCMP data.
The RCMP says there are several ways investors can protect themselves, starting with buying crypto-assets through a registered trading platform.
Sahota has filed a complaint with Quebec provincial police.
Canadians can check the Canadian Securities Administrators’ National Registration Search to see if the entity is registered with securities regulators, the RCMP says.
People should also resist pressure tactics, and be skeptical of “guaranteed” high returns, the RCMP says.
“Fraudsters work hard to override your instincts with complex documents and use overcomplicated, inconsistent, jargon-filled explanations,” the RCMP says.
“If you can’t understand it and can’t get your questions answered, walk away.”
People hide behind bitcoin’s anonymity, expert says
David Khalif is the co-founder and head of operations of Viridi Funds, a registered investment adviser based in the U.S. that specializes in cryptocurrency.
Unfortunately, when people hear all the hype around cryptocurrencies like bitcoin, they are easily drawn into what they think is a surefire way to make easy money, he said.
But the first thing people like Sahota should consider is that they don’t need to hire a company to invest in cryptocurrency, he said. It can be done on your own.
When someone says, “send me some money, I will invest on your behalf,” people should be concerned, because once you send money via a bitcoin transaction, it’s gone, Khalif said.
“There’s no saying, ‘hey customer support, give me my money back.’ There’s not even a really good way to sue them, because in many of these cases, these people are anonymous,” said Kahlif.
“That’s why I always urge people to be very careful about the too-good-to-be-true, emotional side of investment.”
There are also cases where these fraudulent firms will use fabricated numbers to convince people their investments are paying off, convincing them to invest more money, Kahlif said.
He said, at the very least, people should be researching these firms extensively before investing.
Trying to get the word out, while Meta cracks down
Sahota has been trying to get the word out on social media about these scams. She made a Facebook group, and she has heard several, similar stories — including another Quebecer who lost thousands to LegalTrader.
“I decided to take action and guide other people and combine everybody together so we can take action together,” she said.
And it all started by clicking on a Facebook ad.
When CBC Montreal sent a screengrab of the ad to Meta, Facebook’s parent company, a spokesperson issued a statement, saying the ad was in violation of Meta’s policy on unacceptable business practices.
In particular, Meta does not allow ads that “scam people out of money or personal information.”
The statement says Meta is working to combat online scams, security breaches and fraudulent advertising.
“We have begun to use proactive detection technology to help remove content that violates our policies,” the statement says.
But people continue to be part of the equation, as teams review content and users are able to report anything suspicious, the statement says.
“Everyone on Facebook and Instagram play a part in keeping the platform safe and respectful,” Meta says.
LegalTrader did not reply to several requests for comment sent by email, and the phone number listed on the site appeared to be out of service.