I trusted my friend’s investment tip and sent my entire $180K nest egg to a foreign firm that’s now collapsed. What now?

A foreign investment firm was offering returns in the double digits. Michael’s friend shared a screenshot of his dashboard that showed a climbing balance. “I’ve already made money on it,” he said.

Michael is 46 and works as a warehouse supervisor in Winnipeg. He isn’t reckless with money, but he trusted his friend, whose enthusiasm was convincing. So Michael wired nearly $180,000 — all his savings — to the firm, without digging much deeper.

A few months later, the company announced “temporary liquidity issues.” By year’s end, the CEO was in an overseas courtroom and customers learned their money had been funnelled into high-risk, unregulated bets before the whole company collapsed. Michael and his friend lost everything.

The worst part? This is a real life phenomenon, and It happens more often than most people realize.

How big is this problem?

According to the Canadian Anti-Fraud Centre (CAFC), Canadians reported more than $630 million lost to fraud in 2024 alone. But the CAFC estimates that only 5% to 10% of fraud ever gets reported — which means the actual number is realistically almost in the billions (1).

The Canadian Securities Administrators (CSA) clearly states that investment fraud is on the rise, especially among Canadians under the age of 55 (2). Nearly one in four Canadians say they’ve been approached with a possible fraudulent investment — a five-point increase since 2020. And 46% of Canadians have now encountered investment “opportunities” advertised on social media.

Fraud affects more than just your finances. The emotional toll — or in Michael’s case, the devastation — can stay with you long after the money has disappeared.

How these scams work

Investment fraud doesn’t usually start with a sketchy stranger. Rather, it begins with a convincing story.

The setup varies: a friend’s referral, a social media post, a professional-looking website or even an unsolicited, official-sounding email. They all share a similar formula — a seemingly exclusive opportunity with promises of returns you can’t get anywhere else, and some version of social proof to make it feel real.

In Michael’s case, it was screenshots. In other cases, it’s a slick online dashboard showing your “balance” increasing in real time. However, the dashboard is fake, and the money is already gone.

Scammers have become increasingly sophisticated. Between June and November of 2025, the CSA and the Canadian Investment Regulatory Organization (CIRO) worked to deactivate more than 3,900 fake investment platforms and cryptocurrency scam websites (3) — these include only the ones the regulators found. Artificial intelligence (AI) tools now make fraudulent emails, websites and communications much harder to distinguish from the real thing.

Once your money crosses a border or lands in an unregulated investment, getting it back is extremely difficult. Prevention is the only reliable protection.

Red flags that something isn’t right

Before you hand over money to any person or company, these are the patterns to look out for:

Guaranteed returns. No legitimate investment can promise you’ll make money. Every legitimate investment carries risk. Anyone claiming otherwise is uninformed or lying.

Pressure to act. Scammers manufacture urgency. “This window closes Friday,” or “Other investors are already in,” are a couple common persuasion tactics scammers use to rope people in. If someone discourages you from taking the time to think or research further, walk away.

Vague details about where your money goes. Before you invest anything, they should be able to clearly explain what you’re investing in, who’s managing it and how returns are generated. If you can’t get clarity, that’s your answer.

A “secret” system or insider edge. There’s no such thing. Anyone claiming to have cracked the code to risk-free wealth is running a scam.

A friend vouches for it. This one is a real kicker, but it happens. Fraud spreads through trust. Your friend may genuinely believe in it — because they were also deceived.

What to do before you invest

The single most important step you can take is to verify that the person or firm offering the investment is registered. In Canada, anyone selling securities or offering investment advice must be registered with the securities regulator in their province or territory (4).

Use the CSA’s National Registration Search to check on firms before you commit a single dollar. If a firm isn’t registered when it should be, stop — regulated firms must meet strict standards, maintain audited financials and answer to oversight bodies (5). Scammers avoid registration because it brings scrutiny they can’t bypass.

You can also search the CSA’s Disciplined List and Cease Trade Orders database to see if any actions have been taken against a firm or individual.