Financial fraud could catch your client off guard.

A new study commissioned by the British Columbia Securities Commission (BCSC) finds that fewer than half of Canadians (40%) recognize all the warning signs of investment fraud when presented with various scenarios. The signs are:

  • guaranteed high returns with little or no risk,
  • moving money outside the country to avoid tax,
  • a strong push to act now,
  • an offer available to only a select few or an offer of inside information and
  • being encouraged to invest because friends and family have done so.

A recommendation from friends or family was the least recognized sign, with 55% of Canadians flagging that as an indicator of a possible fraudulent investment. The most recognized warning sign, chosen by 74%, was a guarantee of high returns with little or no risk.

Older respondents were more fraud-savvy, with 65% of B.C. respondents over 55 being most likely to identify all the scenarios as warning signs, compared with 20% of 18- to 34-year-olds from B.C.

Do-it-yourself investors and users of robo-advisors in B.C. were also more aware of fraud, with 68% being aware of all the signs. That compares to 52% of investors with advisors and a mix of investments.

More than one in 10 B.C. respondents (12%) said they’ve sunk money into a fraudulent investment, with men being more than twice as likely as women to say they were victims of investment fraud. Among victims, a slim majority said they lost less than $5,000 (53%).

A TD survey finds that one in three Canadians have been personally victimized by financial fraud, with most fraud victims (83%) reporting losses of up to $5,000.

While almost 60% of TD survey respondents said they were confident in their ability to keep their finances protected from fraudsters, they worry that older family members could be at risk. Despite that fear, only 45% said they’ve had conversations with older family members about financial fraud.

About the BCSC survey: A total of 2,915 Canadians aged 18 and over completed the online survey from Dec. 7 to Dec. 28, 2018. The survey included an oversample of 1,407 British Columbians. Weighting is based on age, gender and region using the latest available Census data to reflect actual demographic composition of the population.

About the TD survey: From Feb. 1 to Feb. 6, 2019, Research Group conducted a national online survey of 1,432 Canadians aged 18 years and older.