Connecting with a friend or family member about investment fraud

Current pandemic measures have dramatically changed how we interact with our friends and family. While physical distancing affects everyone, seniors are experiencing increased isolation and loneliness as friends and family are unable to visit in person.

Unfortunately, fraudsters see this as a prime opportunity to become a “trusted” friend in a senior’s life so they can take advantage of them or their retirement nest egg through fraudulent scams or unsuitable investments. Scammers use a variety of methods to target seniors, including emails, mail, phone calls and even in-home visits.

The danger of financial abuse is real. In a 2020 study conducted by the Alberta Securities Commission one third of Albertans 55-plus believe they’ve been approached with a potentially fraudulent investment scam through a co-worker, family member, friend or even a member from a club, group or organization they belong to.

Fraudsters use a variety of tactics to defraud seniors, including:

  • Leveraging their trust and politeness to establish friendships quickly.
  • Instilling fear that they will run out of money in retirement and burden their family.
  • Exploiting current events like the pandemic to offer fake investments in cures and new technologies.
  • Using high-pressure sales tactics.
  • Promising high returns with little or no risk and exclusive opportunities.
  • Unsolicited investment opportunities and friend requests through Facebook and social media.

How can you help protect seniors in your life from investment fraud?

You can help protect your friends and family from investment fraud with open communication about their daily lives and financial decisions. Calling them routinely can help reduce social isolation and disrupt any suspicious activity that might be happening. If you believe someone you know might be at risk, be proactive and do the following:

  • Bring up the topic of investment fraud. Share the dangers of investment fraud during this time and send them information specifically created for seniors.
  • Listen and be engaged. Be open to discussing issues or topics regarding their finances and help them check the registration and history of any individual or firm offering them an investment opportunity.
  • Pay attention to their social circles. Have they been mentioning a new friend or someone who has started providing them advice, financial or otherwise? Ask questions respectfully and monitor any ongoing suspicious activities.

 

If you suspect you or someone in your life may be involved in a potentially fraudulent investment scheme find help and more information at checkfirst.ca.

 

 

 

Scams exploiting fears and isolation of older Albertans amid COVID-19

The COVID-19 pandemic has impacted lives around the world, including families across Alberta and especially seniors, who are isolated from support groups. The recent volatility of the markets, coupled with potentially lost retirement savings and social isolation, has created an environment of fear, uncertainty and vulnerability. Unfortunately, this is exactly the environment that scam artists prey upon.

As COVID-19 continues to spread, associated scams are emerging as scam artists exploit the crisis to profit from people’s fears, uncertainties and misinformation.

There are many types of fraud popping up during COVID-19. One example includes phishing and malware scams where scammers pose as governmental agencies, national or global health authorities, and send phishing emails or texts designed to trick people into downloading malware or providing personal identification and financial information. They can appear to be real, but err on the side of caution and think carefully before providing anyone with this information.

Another common scam are pump-and-dump schemes involving publicly traded small “shell” companies. Scam artists will ‘pump’ up the company’s value by enticing investors to purchase stock with inflated or false claims, then quickly ‘dump’ their stock before the hype ends. This results in a substantial payout for the scam artist while all the remaining investors lose their money. Often pump-and-dump schemes can be related to companies claiming to have products or services that will prevent, detect or cure COVID-19 infection. Be cautious of any claims that a company has a solution to help stop the coronavirus outbreak.

There are multiple ways that scam artists will target an individual. According to a 2020 study conducted by the Alberta Securities Commission (ASC), some of the most common ways Albertans 55+ years of age believed they were approached with a potentially fraudulent investment scam were:

  • Through a friend, neighbour, co-worker or family member, or from a member of a club, group or organization they belong to (32%)
  • By a stranger calling over the telephone (22%)
  • From email spam (23%)

When considering investing in any opportunity, always read the fine print and research the investment – no matter how the opportunity was presented to you. Keep in mind that fraudsters often exploit the latest crisis with the COVID-19 outbreak being no different. Don’t be lured in by promises of easy returns – more likely you’ll be asked for money upfront that you’ll never see again. Also remember that anyone selling investments needs to be registered with provincial securities regulators to do so. For more information on how to recognize and avoid these scams and to check the registration of any individual or firm offering you an investment opportunity, visit the Alberta Securities Commission’s website: Checkfirst.ca.

 

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.

 

Pump-and-dump dangers: Investing in current events & crises

Now more than ever, Albertans are feeling vulnerable. With growing economic uncertainty stemming from a highly volatile stock market and the ongoing global crisis impacting jobs, retirements savings and daily life, Albertans of all ages are looking for a solution to their financial strain. Unfortunately, fraudsters utilize this fear along with emerging industries, global events and major crises to profit from victims. To further their agenda, they may play upon those most vulnerable, including Albertans suffering from isolation, loneliness or fear.

One particular scam that fraudsters use to capitalize on these types of events or crises is a pump-and-dump scheme. This investment scheme works by the fraudster taking advantage of a global event or breaking news to lure in investors with overwhelmingly positive – and usually false – claims about a company or product and the guarantees of high returns. This company is usually a small publicly traded “shell” company with limited or untrue publicly available information that the fraudster already has many shares in. As more investors purchase stock in the company, the more inflated, or “pumped up,” the price of the stock becomes. Before the hype around the company fades, the fraudster will sell or “dump” all their stock for a substantial payout and, by doing so, rapidly deflate the price of the stock resulting in the remaining investors losing all their money.

While it may seem hard to recognize a pump-and-dump scheme, the following are key red flags to watch for:

 

The facts surrounding the investment

Fraudsters will often pump up the price of company stocks with incorrect or false information through hyped-up news releases, social media or paid promotional campaigns. Remember to do your research and don’t rely solely on the information provided by the company as it could be untrue. Always read the fine print for any email promotion or online ad, as it will state that it is a paid promotion and that the third party promoter is not responsible if it is a scam. And during any global health crisis be cautious of claims that focus on vaccines and health-related products and services that are not coming from reputable health organizations.

 

Exclusive opportunities in-person

Has a new friend or acquaintance come to you with the promise of an investment opportunity too good to pass up? Fraudsters target everyone including those in social groups, community associations and seniors groups. While it may seem like your new acquaintance is looking to help you out, that shouldn’t stop you from researching the investment before giving your money away. You may also want to call the Alberta Securities Commission and explain the investment to them. While they cannot tell you what to invest in, they can identify red flags related to your investment.

 

The history of the company

There are legitimate companies out there, but you need to look past what they are currently promoting and understand their history to make sure the opportunity is real. For instance, you may find a small pharmaceutical company that is creating buzz around its up and coming vaccine, but only six months ago was in the cannabis industry. Or the company has no visible history, which is a key red flag that it may be a shell company used for pump-and-dump schemes.

 

It’s easy to get carried away with the newest opportunity, especially when concerned about your financial future. But remember: when investing in any company, always research the investment and keep in mind that fraudsters often exploit the latest crisis and people’s vulnerability to promote pump-and-dump schemes. During this time of uncertainty, stay safe – and that includes watching out for your financial health.