March is Fraud Prevention Month, and the BC Securities Commission’s InvestRight program is proud to be a partner in the Top Ten Scams campaign. This year is the 10th year of the campaign, which is a multi-organizational partnership, that includes the Better Business Bureau of Mainland BC, the Competition Bureau, Consumer Protection BC, and the Vehicle Sales Authority of British Columbia.

This year’s list includes two scams that investors should be particularly wary of: Affinity Fraud and the Enterprise Fee Scheme.

Affinity Fraud

When a scam artist targets groups of people, we call it affinity fraud.

To be successful, scam artists need to earn the trust of an influential person in a group, family, or workplace. Once they establish this bond, they use this connection to get their hands on the money of other people in the group. In some cases, they may even pay the influencer to help them out, never telling the person that the investment is really a scam.

You can spot the scam and avoid it by knowing the Fraud Warning Signs, and becoming familiar with the Affinity Fraud information on InvestRight.

Basically if someone in your group or community starts promoting secret or special investments with high returns and little or no risk, you should get in touch with the BCSC immediately. 

Enterprise Fee/Recovery Room Scheme

The Enterprise Fee Scheme is the top online scam. The version of this scam that investors need to be wary of is when people who lost money in an investment are asked to purchase or exchange shares for a fee. Fraudsters may tell the investor that the fee will “unlock” a larger sum of money, or that they will facilitate a transfer of shares. Either way, the scam artist takes the money without reimbursing the investor. Securities regulators also call this a recovery room or “re-up” scheme.

In this type of scam, fraudsters use any means possible to contact investors – social networks, e-mail, or cold calls. To avoid this scheme, don’t communicate with unregistered individuals or companies that seek you out to aggressively promote an investment.

We always urge British Columbians to exercise caution when dealing with firms that are not registered to trade or advise in B.C. If you are approached by a person or company that is not registered in B.C. to trade in, or advise on, securities and exchange contracts, please contact us at 1-800-373-6393 or e-mail [email protected].

Suggested Reading

Ponzi Scheme: Investment Scam

World Elder Abuse Awareness Day: Spotlight on Investment Schemes

BC Securities Enforcement Roundup – June 2014

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