VANCOUVER, Jan. 31 /CNW/ - The British Columbia Securities Commission is
warning the public to look out for possible affinity frauds when using social
networking websites that facilitate or advertise meetings related to
investment products and seminars.
Websites, like Meetup.com and Craigslist.org, allow people to create
groups around investing strategies or advertise seminars for new investment
"We are concerned scam artists are using social networking websites to
lure people to meetings that may promote fraudulent or unsuitable investment
products," says BCSC Executive Director Brenda Leong. "Investors need to do
their own research before making an investment and should not simply rely on
'expert' advice given at a seminar or meeting."
Social networking websites create an environment ripe for affinity fraud.
Fraudsters can take advantage of the fact people can share information with
both their real and "virtual" friends by posting it to their profile, joining
a group or simply forwarding the information to others with their approval.
Communication tools provided by some social networking websites make it easy
to advertise and promote investment scams to a wide audience for free.
"People need to be cautious when acting on or passing investment
information to others. Victims of affinity frauds are often family, friends or
community members who tell each other about the fictitious investment scheme,"
says Leong. "Fraudsters can exploit social networking websites to reach
people's contacts that may include past friends, associates or even people
they've met randomly over time, and create a larger network of potential
Fraudulent investment schemes usually exhibit one or more of the following
- Promise of high returns
- Great investment opportunity - your friends can't be wrong
- Secrecy - an insider opportunity
- Tax-free investment or use of a structure to evade taxes
- Lack of receipts or documentation about the investment
Leong is warning investors approached about an investment with these
characteristics to make sure they do their research before investing. Part of
this research is to examine thoroughly the backgrounds of the principals
behind the investment deal or the seminar.
"Investors should be checking to see whether the people selling or
promoting the investment are registered to sell securities. Do they have a
regulatory history, or have they ever run into financial troubles such as
bankruptcy? Also, investors should visit the offices of the business to ensure
they are operational and not simply a mailbox," Leong says.
For resources on how to conduct background checks or what to watch out
for to prevent falling victim to investment fraud or making an unsuitable
investment, visit the BCSC's InvestRight.org website.
"Our research tells us few people are reporting investment fraud to the
proper authorities," says Leong. "The BCSC is urging people to report
suspicious activity. This information can help us act more quickly to disrupt
and stop the activity, and prevent investors from being victimized."
People are encouraged to report suspicious investment activities,
problems with investment or concerns about an adviser to the BCSC's inquiries
line at 604-899-6854 or 1-800-373-6393 (toll-free in BC & Alberta).
InvestRight is the BCSC's one-stop resource for investors to educate
themselves on how to make informed investment decisions. Its comprehensive
website at www.InvestRight.org provides a wide range of tools to help
investors develop critical thinking skills they need to protect themselves -
information such as how to do background checks, investment products, a scam
meter and video clips from victims of investment fraud. The BCSC's RED-FLAGS
communications campaign alerts investors to common sales pitches used by scam
artists along with a province wide seminar program.
The BCSC is the independent provincial government agency responsible for
regulating trading in securities within the province. If you have questions,
contact Ken Gracey, Media Relations, 604-899-6577.
Learn how to avoid investment fraud at the BCSC's investor education
For further information:
For further information: Ken Gracey, (604) 899-6577, or (B.C. & Alberta)