The red flags of money-making opportunities


(NC) Ever spoken to someone who says they’re a financial expert who has a great money-making opportunity for you? Maybe they’re asking you for a loan or an early investment that’s risk-free and will pay you a high return on your money. The financial expert seems genuine, honest, and is close to your group of friends.

But the truth is, while this opportunity sounds exciting, it has all the red flags of fraud.

This type of fraud is called affinity fraud or friend fraud. It takes advantage of the trust, relationships and friendships that exist among people within groups like religious organizations, ethnic communities, social clubs or professional groups.

Scam artists are part of, or pretend to be, members of the community. They’ll often enlist unsuspecting ambassadors to spread the word about the scheme and make it seem credible. Even friends and family may unknowingly fall victim to their scam and try to get you in on the opportunity.

While devious and sometimes hard to spot, affinity fraud usually includes:

  • “Exclusive” and “time-sensitive” money-making opportunities;
  • Anyone using personal connections to legitimize an investment;
  • Referrals from group members;
  • Low-risk, high-reward promises;
  • Different names for “opportunities,” including loans, promissory notes, shares, assets and units.

When it comes to your money, the best decisions are informed ones. Always err on the side of caution and do your research before giving anyone your money. Do an internet search on the individual and make sure they are registered to sell investment opportunities, and check that there has been no disciplinary action taken against them.

While we would all like to find and capitalize on that next great investment opportunity that guarantees wealth, as the saying goes, “if something sounds too good to be true, it usually is.”

To check if someone is registered and if any disciplinary action has been taken against them, contact the Alberta Securities Commission, whose mission is to foster a fair and efficient capital market and to protect the public.