To mark Fraud Prevention Month, the British Columbia Securities Commission (BCSC) is encouraging Burnaby investors to “slow down and think” before investing to avoid becoming the victim of a social media-based fraud.
The BCSC said in a news release that it is growing “increasingly concerned” about sophisticated scams targeting people via social media and online dating sites. Fraudsters are using these platforms to manipulate people into establishing virtual friendships or romantic relationships and then requesting money for investment scams after building trust with the unwilling victim, said the BCSC. Although the specifics of each scam may vary, many of them involve crypto assets.
New research from the BCSC highlights the risk of social media-based frauds, showing that a significant portion of Canadians are getting investment information online, seeing investment promotions online and considering or purchasing investments they learn about online.
Thirty-three per cent get investing information from social media at least once per week, and 9 per cent purchased an investment in the past year that they learned about from social media, said the BCSC about a poll it conducted. Of those who recall seeing an online investment opportunity, 55 per cent said it was about crypto assets.
“You should always be extremely careful about unsolicited offers to invest on social media,” said Doug Muir, the BCSC’s director of enforcement. “Fraudsters are adjusting their methods to keep up with the digital world, but they’re using the same old ploys – playing on peoples’ emotions and exploiting their fear of missing out on the opportunity of a lifetime.”
The BCSC urged investors to do the following to help protect themselves:
- Never invest based solely on the advice of someone you met through social media or a dating site. Make sure you know who you’re investing with.
- Don’t get caught up in the hype and rush in. Take your time and think about the investment, and whether you’re prepared to lose it all.
- Be skeptical about what you read on social media. Think about whether the investment is right for you and if it fits into your investment goals.
- Don’t buy if you don’t understand the investment, asset or risks involved. If you can’t understand it and can’t get your questions answered, walk away.
- Use a registered trading platform when buying crypto assets. Check the Canadian Securities Administrators’ National Registration Search to see if the entity is registered with securities regulators.
The national online survey of Canadians was conducted for the BCSC by Innovative Research Group. The survey, which was conducted in January 2022, interviewed 2,799 Canadians. The national sample was weighted to a sample size of 2,000 to be representative by age, gender, region, official language, education and investments.
