Does the F-word create an opening for fraud?

Canadians who place too much trust in family members could be putting themselves at financial risk

Does the F-word create an opening for fraud?

With all the reminders that have come in observance of Fraud Prevention Month so far, Canadians are likely a little more equipped against attacks from unfamiliar sources. But even with that, they may leave themselves open on another front.

The Alberta Securities Commission (ASC) has released the results of a new Angus Reid poll, which showed that 75% of Albertans are confident they can protect themselves against investment fraud, but struggle to identify common red flags such as promises of high-returns with low risk (47%); “exclusive” or “time-sensitive” opportunities (48%); tax-free investments (82%); and celebrity endorsements (79%).

One potential issue flagged by the ASC concerns affinity fraud, wherein a fraudulent opportunity is introduced through a personal connection. A fifth of survey respondents (20%) indicated a willingness to put money toward an investment recommended by friends or family, with 44% saying they’re unlikely to ask more questions after a personal connection shares financial information. Among those who said they’ve been approached with a potential investment scam, 22% said it was through someone they personally know.

“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 ASC Manager of Communications Hilary McMeekin. “While not all investment opportunities recommended by someone you know are fraudulent, it's important to be vigilant.”

The findings are similar to those announced last week by the British Columbia Securities Commission (BCSC), which found that 29% of British Columbians across all age groups would consider looking into a ‘no risk’ investment opportunity with a ‘guaranteed’ monthly return of 10% to 15% if a friend or family member gave them the tip. Those between 35 and 54 years old were apparently more susceptible to such a “trust trap,” as they were almost twice as likely to say they’d consider such an offer from friends or relatives.

Such misplaced trust isn’t just restricted to the realm of investing. In its latest Fraud Prevention Poll, RBC found 55% of Canadian respondents admitting that they’ve shared their banking PIN or passwords with others.

“You should always protect your PIN and passwords and choose one that follows security best practices,” said Jason Storsley, vice-president, Fraud Management at RBC. “In the wrong hands, this information could be detrimental to your financial security.”

The RBC poll also found that 41% of Canadians have potentially compromised their security by doing at least one of the following:

  • Set the same combination for their phone unlock code and their bank PIN;
  • Base their bank PIN on their birthday;
  • Have a written copy of their PIN in their wallet;
  • Assign the last four digits of their phone number as their PIN;
  • Set “PASSWORD” as their password for websites;
  • Use a combination such as 1234 or 5555 for their credit card PIN; and
  • Have their PIN written directly on their debit or credit card.


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