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Protecting your Retirement

Older adults are sometimes the target of frauds, scams and financial exploitation at the hands of both unknown fraudsters and those they trust.  This is because they generally have more assets, net worth, and overall wealth. They may be drawing on a monthly pension income or have paid-off assets, such as vehicles or homes.  These factors make this demographic vulnerable to this type of exploitation.

 

On top of preparing for retirement, many pre-retirees are still financially responsible for dependent children. Some also find themselves financially responsible for aging parents. This has many pre-retirees worrying about not having enough money to last through retirement. Scam artists prey on this fear by promising high-return, low-risk investments. These investments are usually high-risk products not suitable for people looking to protect their nest egg as they approach retirement – if the investment exists at all. Either way, investing in this manner could cause you to lose some or all your money. With little time to recover from the losses, many victims find their retirement plans shattered.

Investment fraud is common

You may be surprised to know many people who are comfortable with investing and over the age of 50 fall victim to fraud. Research shows that people with investing experience are more open to investment opportunities and willing to take risks. It also shows that experienced investors are more likely to make their own investment decisions, without getting advice from a financial advisor. Scam artists are good at manipulating people into making poor investment decisions. They hone their manipulation skills and often even trick the savviest of investors. In 2021, the Canadian Anti-Fraud Centre reported that older adults in New Brunswick lost $1.2 million to investment fraud.

New Brunswickers who are exposed to investment fraud are most commonly approached by social media, email, or through a friend, family member, or co-worker. Signs of investment fraud include:

  • being approached out of the blue with a “great investment opportunity”
  • being promised a high or guaranteed return on a low-risk investment
  • being pressured to act quickly
  • experiencing negative reactions from the person selling the investment when asking questions or delaying a response

How you might be approached

Investment seminars: You can be targeted through “free lunch” investment seminars and online presentations. These events have become a popular way of promoting investments. The investments themselves may not be scams, but the high-risk investments being promoted may not be appropriate for you as an investor. This type of scenario typically involves high-pressure sales tactics and attempts to get people to act fast before considering the costs or risks.

Through a group you belong to: Affinity fraud is a type of scam that targets groups, like religious or business groups, ethnic communities, social clubs or social media groups. The scam artist may be a member of the group or may know someone in the group who they might have unknowingly recruited to help with the scam. These scams are often successful because many people are less likely to question advice that comes from someone they know. 

Social media or dating websites: Fraudsters use several tactics and technologies to defraud victims, including approaching them on dating apps or through friend requests on other social media sites. In this growing trend, scam artists may develop online relationships over several weeks before recommending investment opportunities using a fraudulent investing website. Or, they may hack a friend’s social media account and pose as the friend to gain trust before convincing the person of a supposed investment opportunity.

Common Scams

Scammers follow the headlines and often will build a scam around something popular in the news, such as gold or precious metals, cryptocurrency, oil and gas, or green technologies.  Always ask questions and check out any investment before buying. 

“Private” or “Special Deals”: In some cases, companies are allowed to sell securities in the exempt market without filing a prospectus. Although properly used by many legitimate issuers, scam artists take advantage of the exempt market to steal money from investors. They may pose as friends or as legitimate companies, promote "special” or “private” deals, and make false or misleading promises of high returns with little to no risk.

Not being registered with FCNB: An unauthorized distribution occurs when a company or an individual offers or sells securities without being registered or without providing proper disclosure to investors. All companies and individuals who sell securities must be registered in the province where they conduct business. Always check that the individual and business selling you securities is properly registered with FCNB before handing over your money.

Check Licence and Registration

Or contact FCNB directly.

Learn more about Frauds and Scams or download the Investment Fraud Checklist.

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