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Dale Jackson

Personal Finance Columnist, Payback Time


Authorities in Britain are cracking down on binary options fraud, raiding 20 offices in London this week after nearly 700 people reported losing more than $30 million in the first half of 2017.

Binary options are not permitted to trade in Canada, but telecom knows no borders and countless Canadians have already fallen victim. Last year, an Edmonton business owner reportedly died by suicide after losing over $300,000 in what can be described as a binary options scam.   

Legitimate options are hard enough to understand, but binary options are basically all-or-nothing, high-risk bets aimed at investors with little to spend and dreams of getting rich quick.

It’s likely this scam doesn’t even involve investing in anything, and the scammers are simply pocketing the cash.

The Ontario Securities Commission has a checklist of questions you should ask yourself if you suspect you are being scammed.

Are you dealing with a registered adviser?

Anyone selling securities or offering investment advice in Ontario must be registered with the Ontario Securities Commission (OSC), unless they are exempt from this requirement. To check whether someone is registered, call the OSC contact centre at 1-877-785-1555.

Can you verify the investment with a credible source?

If you receive an unsolicited investment opportunity, get a second opinion from your registered financial adviser, lawyer or accountant, or call the OSC Contact Centre for assistance.

If you are promised a guaranteed return, is the guarantee given by a reputable financial institution?

Ask for proof of the guarantee in writing and remember: a guarantee is only as good as the person or company offering it.

Is the risk you are taking reasonable for the expected return?

In general, returns on low-risk investments are in the range of current GIC rates offered by banks. If the expected return is higher than those rates, you are taking a greater risk with your money. Make sure you understand and can afford the amount of risk you’re taking on.

Do you understand how the investment works?

If you don’t understand the investment, don’t invest.

Have you had enough time to make a decision?

Don’t give in to high-pressure sales tactics like limited-time offers. Take your time making investment decisions and never sign documents you have not read carefully.