Albertans struggle to identify red flags of fraud
A study conducted by the Alberta Securities Commission has found that three-quarters of Albertans are confident they can protect themselves against investment fraud, yet they struggle to identify common red flags.
"According to the survey, nearly half of Albertans believe fraud won't happen to them. The survey identifies clear knowledge gaps when it comes to understanding the various ways investment fraud can be conducted," said Hilary McMeekin, Manager of Communications, ASC in a March 9 statement. "By understanding the common red flags of investment fraud and reporting fraudulent activity to the ASC, Albertans can protect themselves and others from falling victim to fraud."
Nearly half or more of survey respondents were unable to specifically identify common red flags, including: promises of high returns with low risk (47 per cent); "exclusive" or "time-sensitive" opportunities (48 per cent); tax-free investments (82 per cent); or celebrity endorsements (79 per cent).
Affinity fraud, which is a fraudulent opportunity introduced through a personal connection, is also an issue, underlined the ASC, particularly since Albertans say their immediate family and close friends are among the most trusted sources of investment advice.
Among Albertans who have been approached with a potential investment scam, 22 per cent were introduced through a personal connection.
"Albertans inherently trust investment recommendations from friends, family or community members, but unfortunately affinity fraud is a common tactic used by fraudsters that continues to impact Albertans every year," said McMeekin. "Investors should be cautious and research every investment opportunity, even ones that come from those we trust. While not all investment opportunities recommended by someone you know are fraudulent, it's important to be vigilant."
The ASC urges Albertans to be aware of the red flags and take simple steps like conducting research, seeking professional advice and visiting CheckFirst.ca to check an individual or company's registration to help determine if an investment is legitimate.