Looking to invest? Don’t get caught up in something that looks too good to be true: something with lucrative – and quick – returns. Do your due diligence before committing financially.

Global News reported on a Toronto-based mortgage firm facing two lawsuits after Peel Regional Police launched a criminal investigation. One investor indicated that he’d been allegedly -promised a 20 per cent return through mentoring and real estate investing.

A warning about the company was issued by the Financial Services Commission of Ontario (FSCO). It offers a search engine for people to check a mortgage company’s licences. It warned that the firm and six people involved were allegedly not licensed to conduct mortgage business here in Ontario.

Customers were led to believe they’d receive a “superb rate of return” by investing in the mortgage firm. Allegations haven’t been proven in court, however. Mortgage rates aren’t that high in Canada, so how could the company produce hugely inflated returns if they were just giving out mortgages?

We’re a greedy society and want to get rich quick. Victims get hooked into scams because of the promise of huge returns. What happens often is, the investor gets paid a dividend from a small investment that lures them into handing over a larger sum of money.

As a potential investor you should conduct due diligence into any investment, whether it’s a share broker, mortgage firm or a new bank. Check if a person or business is licensed by its overseeing body and whether or not there are any complaints or lawsuits filed against them. As investors, we’re vulnerable because we don’t usually understand the intricacies of the market and we trust the professionals to guide us and believe we won’t be lied to.

Part of your due diligence should include assessing your own personal liquid financial situation. Consider if you’ll have enough funds to cover expenses if the investment falls through. You could also do a search for previous/existing customer reviews for other people’s experiences. You could also ask the company for several (about 10) references and call them randomly. It would be hard for the company to hide any complaints. It’s those complaints that are the red flags. If returns seem too high for market, ask the company/the person to explain.

Be wary too, of the people offering you fraudulent investments: they’re usually very charismatic and will try to invest a lot of time to “grooming” you as an investor. Con artists could even spend up to six months wooing a potential victim before even asking for any money. They’ll seem nice and go out of their way to help you. Getting $25,000 from you (and every other “investor”) is easy money for them but a huge loss for you.