Famous people are often used to promote products and services or to help raise awareness for events or special causes. Increasingly, some celebrities are endorsing investments or products marketed as investments. Find out what to watch for if you see a famous face promoting an investment product.
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Why is it risky to follow a celebrity endorsement?
You may have seen celebrities endorsing investment products (including crypto assets) on social media, online ads or television. A celebrity could be an athlete, an actor, a singer or a YouTube personality or social media influencer.
There are three reasons it can be risky to follow celebrity endorsements:
- The celebrity may not have the financial expertise or qualifications to endorse a specific product.
- The celebrity may not be endorsing the investment at all, but an impostor is using their name or image to gain credibility.
- The celebrity is paid to promote the product.
A celebrity endorsement does not mean guaranteed investment returns — all investments have risks associated with them. As with any investment, research the company and product before making a decision.
Ask yourself, would you still be interested in the investment if a celebrity wasn’t promoting it?
Focus on deciding whether the investment is right for your investing goals, not on the fame and excitement surrounding the celebrity.
How do fraudsters capitalize on celebrity?
Fraudsters hope a celebrity’s fame and recognition will entice you to buy a product or service. These types of scams can happen online or through social media accounts.
Keep in mind, sometimes, a celebrity’s image may be used in an endorsement without their knowledge or permission. Or a fraudster could impersonate a celebrity.
Protect yourself from fraud by:
- Speaking with a trusted advisor or family member before sending money.
- Being cautious of high-pressure sales tactics.
- Not sending money or other forms of money to someone you haven’t met.
- Learning more about scams that use regenerative artificial intelligence (AI) to imitate voices and faces.
3 things you can do to keep your money safe
Making an investing decision based solely on a celebrity endorsement is extremely risky. In many cases, the endorsed investment may actually be a scam.
There are three ways you can keep your money safe when presented with an investment opportunity endorsed by a celebrity.
1. Find out if they are registered
In Ontario, any business or person selling investments or giving investment advice must be registered with the Ontario Securities Commission. Registration helps protect you from unqualified investment professionals.
Visit Check Before You Invest for more information.
2. Get unbiased information from a trusted source
Research the investment using unbiased sources before you make a decision. This is an important step because it ensures you:
- Understand the risks associated with the investment including the potential losses or return. Check your level of risk tolerance.
- Consider how it fits in your existing portfolio and fits with your investment goals.
- Know the fees you will pay and any penalties for early withdrawal.
Learn more about different investment products – how they work, their risks, and whether they may be right for you. GetSmarterAboutMoney.ca has free resources to help you get started with investing and financial planning that include:
3. Always watch out for fraud
Know how to recognize and avoid investment fraud. If there’s a chance it is a fraud or scam, it can be difficult to get your money back.
Be aware of :
Check out top 10 tips for first time investors.
What to do if you have questions or suspect investment fraud
If you have concerns or complaints about celebrity endorsements contact the OSC Inquiries and Contact Centre. You can also reach out with questions about investing.
If you suspect fraud, contact us immediately. Call toll-free at 1-877-785-1555 or email inquiries@osc.gov.on.ca.
Learn more: What do to if you are defrauded
Summary
A celebrity endorsement does not mean guaranteed investment returns — all investments have risks associated with them. Following any celebrity endorsements can be risky because the celebrity:
- May not have the financial expertise or qualifications to endorse a specific product.
- May not be endorsing the investment at all, but an impostor is using their name or image to gain credibility.
- May be paid to promote the product.
Remember to always Check Before You Invest.
