Investment watchdogs warn of COVID-19 fraud schemes, ask Canadians to report them
Companies are claiming to have products or services that will prevent, detect or cure the coronavirus infection
TORONTO — Canada’s stock market regulators warned investors on March 19 to be wary of companies that claim to have products or services that will prevent, detect or cure the coronavirus infection.
There’s currently no vaccine or any natural health product that is authorized to treat or protect against COVID-19, Health Canada says. Any claims to the contrary are suspicious, the regulators said.
“When investing in any company, carefully research the investment and keep in mind that fraudsters often exploit the latest crisis,” the regulators’ national group said in a statement March 19.
The statement was issued by the Canadian Securities Administrators, on behalf of government stock market and investment regulators across the country.
The CSA said a common investment fraud is the “pump and dump” scheme.
In that type of scam, a fraud artist creates or buys a shell company and circulates positive, false information to pump up the value of its stock — which the scammer then sells or dumps before investors catch on and the price falls.
“If you believe that you or someone you know has been offered a fraudulent opportunity related to the coronavirus, please contact your provincial or territorial securities regulator,” the CSA said.
The Canadian Anti-Fraud Centre — which also has warned about financial scams — has also detected various attempts to sell decontamination services, face masks, or private tests for COVID-19.
Since March 5, the CAFC — which works with the RCMP, Ontario provincial police and the federal Competition Bureau — has received 29 reports linked to COVID-19.
Among those, was an incident in which the victim attempted to purchase a COVID test online. The victim hasn’t received the product even though the company claims it’s been delivered.
“Only hospitals can perform the tests,” according to the CAFC website. “No other tests are genuine or guaranteed to provide accurate results.”
The anti-fraud centre said it also had reports that suspects have claimed to be with Red Cross offering free masks — so long as the consumer paid the shipping fee.
“The CAFC has yet to see any victims associated to this pitch so it’s unknown what kind of charges are placed on the victim’s credit card, CAFC spokesman Jeff Thomson said in an email.
Pitches like the free mask scam may seem to make sense.
For example, a Red Cross Canada does sell masks through its online store and it does sometimes do fund raising, but a spokeswoman said it doesn’t have a COVID-related campaign in Canada.
A visit to the redcross.ca shows a “scam alert” at the top that provides details of how the fraud works.
Several anti-fraud experts say to watch out for messages that incite panic and fear, request personal information or money, or come unsolicited by email, social media, phone calls or at the door.
The CSA said in its warning on March 19 that it’s aware of instances where Canadians are targeted by scam artists using fear around the current economic conditions.
“Investors contacted by anyone with warnings about their investments or finances should never give out any personal information,” the CSA advised.
It also advised investors who want to pursue the topic to initiate a call to the investment adviser or bank separately, after independently verifying the phone number is legitimate.