Residents learn to avoid financial scams at the GFCU AGM
Financial security was the topic of the hour at the Grand Forks Credit Union’s annual general meeting, April 18. The credit union had Brenda Lea Brown come and talk to credit union members about avoiding scams and protecting their money.
Brown promotes the BC Securities Commission’s Be Fraud Aware/InvestRight program. She travels to different communities and discusses what to look for in a scam and how to avoid them.
“(Scams) happen all the time to good people that want to do the right thing with their money,” she said at the Union of Spiritual Communities of Christ (USCC) community centre.
Some of the examples Brown cited weren’t surprising. A new widow’s money was taken from her when she tried to make a sound investment. It was her first time making a large investment and she got help from her neighbour and friend. Both of them were victims of a scam artist.
Other examples seemed like they could happen to anyone. A legal-savvy individual took the time to look into the financial plan and got references from community members. He still made multiple investments with a scam artist and lost all his money.
According to Brown, scammers know how to talk to people. They don’t stand out and they work their way into tight, church-oriented communities.
“There are lots of people that know and trust each other. They put their radar down and shut off their spidey sense,” she said. “They say ‘sure, we’ll invest in you.’”
One of the problems that makes people vulnerable is that they look for reassurance and scam artists are very good at giving reassurance.
“They should be asked questions from their head, not their heart,” said Brown, of the potential investors. They should be asked who the man is and researching to see if he’s already been disciplined.
The scam artists collect the individual’s money and then say they lost it due to some unexpected turn of events. For one scam artist, he blamed the terrorist attacks on Sept. 11, 2001.
“He said ‘who could have predicted 9/11. All the money is gone. It’s not my fault,’” said Brown. “He could have chosen anything.”
Once people have lost their money, there isn’t a lot they can do. The money cannot be reclaimed and only limited action can be taken against the perpetrators.
“Fraud actually does hurt,” said Brown. “They lose their physical and mental health. They lose their relationships. It has a devastating impact.”
A community can be deeply impacted by an ongoing scam, especially when investors have recommended the scam artist to their friends. This breaks trust, which is hard to recover.
Brown gave some recommendations on how Boundary residents can stay safe. First, they need to avoid any financial plans that sound too good to be true.
“Do you know what the rate of return is today?” she asked. A lot of people don’t have any idea. Some scams offer 12 to 15 per cent guaranteed at no risk. In today’s market, even 4 per cent is unlikely. “Lots of people just don’t know. They think 10 to 11 per cent is average.”
Anyone who offers offshore accounts (which are illegal) or that promises you can profit like the pros is probably not legitimate.
Another way to avoid being scammed is to steer clear of sales presentations. The kind of sales seminars that offer a free lunch or send free gifts are often used to scam people. According to Brown, people that listen all the way through sales phone calls without hanging up are more likely to be victims.
Brown advises that everyone gets to know their financial planners. The BC Security Commission has a website that lists everyone that has been disciplined for security issues. Their name stays on the site forever — even after they die.
Potential investors should also be asking questions like “what are the fees?” All transactions have fees. A fee-free program should be a warning sign. Ask what the financial planner is getting out of the program and why he makes certain recommendations.
The BC Security Commission is also able to help out. They can ban people from trading, impose monetary penalties and add individuals to the disciplined persons list. They can also refer them to the crown for criminal prosecution.
However, they aren’t able to approve investments, undo a transaction or arrest criminals.
Brown would like everyone to take advantage of the resources offered by the BC Security Commission and also provide feedback if they have problems.
“If you see or suspect anything unsavory in the security market please call us,” she said. “We can’t pursue something we don’t know about.”
While they can’t get your money back, they can help stop the individual from defrauding others.
For more information check out www.investright.org.