Fraudsters back to the personal approach
A recent study by Ipsos-Reid this summer (CSA 2009 Investor Index) showed us that fraudsters are moving away from using the internet or cold calls as the way to approach people. Instead, they are going back to the old-fashioned personal approach. This is what we call ‘affinity‘ fraud. There is no doubt that this type of financial fraud is probably one of the worst because it destroys trust and relationships between family, friends, neighbours and whole communities.
Recent examples that have received media attention highlight just how pervasive this type of fraud is – Bernie Madoff, Earl Jones, Sung Wan Kim. So while the study shows us that the numbers of people being approached hasn’t changed, the way they are being approach has. (We saw in 2006, much higher numbers citing random, anonymous email and telemarketing.)
Another worrying trend is that the number of people repeatedly victimized has increased since the 2007 study. We don’t really understand why, but we are looking for reasons.
Finally, we see from a whole range of US and Canadian research that suggests there is no single characteristic that describes victims of fraud. However, we do know that they are more likely to be experienced investors, confident and educated – those aged 55 or older and/or with post-graduate degrees.
The lesson here is that no one is immune to fraud. Clearly, fraudsters do target through groups (churches, book clubs, investment clubs) and pursue professionals who earn good money. Everyone needs to know what Red Flags to watch out for.
We recently put together a new program called Protect your money to help people avoid being defrauded. Please go and take a look – it helps you recognize it, report it and protect yourself.
If you want to read other blogs about this subject and others, please go to our InvestRight blog.