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  • Types of investment scams

Five tips to avoid the dangers of affinity fraud

Many don’t realize this, but one in four Albertans are approached with fraudulent investment opportunities through friends and family – people we trust. According to the Alberta Securities Commission (ASC),  this type of scam is called affinity fraud and almost always involves either a fake investment or one where the scammer lies about the critical details, such as the risk of losing money or where the money is going. With affinity fraud, scam artists often target organized groups such as community clubs, religious organizations, immigrant communities, seniors’ homes and professional associations.

While members of these groups are sometimes fully aware of their intent to deceive, other times they are unknowingly involved. And often, you may not realize that what you are putting your money into is considered a ‘security’. Fraudulent investments take on many forms –  from shares to promissory notes, units, trades, or some other creative monetary term. No matter what it is called, securities laws apply whenever you are giving someone money with the expectation of a return or payment. It is critical, therefore, that you know how to protect yourself from investment fraud no matter the source.

This type of fraud is identifiable and avoidable. By following this checklist, you could help to save yourself or a loved one time, money and heartache:


Never rely solely on referrals from friends and family members.

If they have failed to do their research and invested in a scam, they may unknowingly lead you down the same path.

If it sounds too good to be true, it is.

Don’t be drawn in by promises of spectacular returns and low risk; these are classic warning signs of fraud.

Don’t be pressured into making a decision.

Take your time to understand the business and the risks involved. Scam artists will pressure you into making a quick decision. They are doing so to exploit your fear of missing out on a “valuable” and “time-sensitive opportunity” — and to limit the amount of research you conduct.

Be wary of investments offering little information.

If you are being offered an investment and the promoter “doesn’t have time” to provide details or you are told to keep the opportunity confidential, this could be a warning sign.

Check the salesperson’s background.

Anyone offering securities in Alberta generally must be registered with the ASC. The ASC can also tell you if the salesperson has ever been subject to enforcement action.


Many people who fall victim to affinity fraud fail to report it because they feel ashamed, embarrassed or want to protect their friend or loved one. This enables other people to fall victim to the same scam and makes prevention difficult. If you suspect you or someone you know has been approached with a potentially fraudulent investment scheme, you can find help and more information about the red flags of investment fraud at checkfirst.ca or contact the ASC at 1-877-355-4488.



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