BCSC survey finds that almost half would fall for the "trust trap"
A worrying share of young adults in British Columbia would risk their money in a dubious investment if a friend or family recommended it.
The British Columbia Securities Commission surveyed more than 800 people across the generations to assess their vulnerability to the “trust gap” and found 47% of 18-34 year olds would consider an investment opportunity with a ‘guaranteed’ monthly return of 10-15% with ‘no risk’.
Across all ages polled, 29% said such an investment would be “worth looking into” if a friend or family member gave them the tip; 20% would do so if it came from someone at a social event.
"Fraudsters exploit the trust and friendship that exists in tight-knit groups," said Doug Muir, the BCSC's Director of Enforcement. "Investors need to do their own research before making an investment, and shouldn't just rely on advice from their friends, family or co-workers."
Fraudulent investment offers that exploit family, friendship and social connections are known as "affinity fraud" and are often a component of Ponzi schemes.
People 55 years old or older were the most skeptical in such situations, with only 12% being willing to consider such an investment offer from a friend or relative.
Not just young people
Although young adults are most likely to fall into the trust trap, older adults are also susceptible.
Those aged 35-54 were almost twice as likely to consider such a dodgy investment offer if it came from friends or relatives.
Women are more susceptible than men.
BCSC is urging people to be wary of potentially risky investments with a month-long multimedia “Don’t Be Part of a Fraud” campaign as part of Fraud Prevention Month.
You work hard to earn your money. Don’t let a fraudster get their hands on it. Take our quiz and become more #fraud aware: https://t.co/8gjHnICjPM pic.twitter.com/AuB4wH4ZIh
— BCSC InvestRight (@BCSCInvestRight) March 2, 2020
