Common Investment Scam: Affinity Fraud

“Since I knew them, I thought I could trust them …"

In many cases, affinity fraud starts close to home – literally. This type of investment fraud takes advantage of the trust and friendship that exists within groups of people with something in common, such as religious organizations, ethnic communities, social clubs, and even professional groups. Scam artists are part of – or pretend to be – members of the group and often enlist unsuspecting leaders of the group to help spread the word about the scheme and make it seem credible.

Check out the video clip: “Recognizing and Avoiding Investment Fraud” by the Alberta Securities Commission.

Tips to protect your money:

• Ask questions and demand satisfactory answers.
• Take notes when you talk with salespeople, which you can refer to later or verify if necessary.
• Be suspicious of high-pressure sales tactics.
• Don’t let anyone rush you; an investment decision deserves sufficient time for research and consideration.
• Don’t be fooled by appearances; it’s a fraudster’s job to make great first impressions.
• Seek advice from an independent qualified professional, or even a lawyer, if you don’t understand a document.
• Never accept a verbal agreement; always get it in writing and keep it handy.
• Don’t trust an investment just because of the person involved; even if they are high-profile, or you trust them, they could unknowingly be a victim too.
• Always check registration. In Canada, anyone who sells securities or advises people or businesses about securities must be registered with the securities regulator in each province or territory they do business (with very limited exceptions).

Source: Alberta Securities Commission

Visit the Investments and Fraud and Cyber Crime sections on iiCanada’s Financial Well-Being page for useful resources, tools, and information to protect yourself and your business from scams and fraud.