Fraud victims tend to stay mum

…just under 900,000 Canadians [4%] have been victims of a financial fraud, the survey said…37 per cent of the fraud victims saying they had been defrauded more than once…simply too much fraud… fraud attempts were twice as likely to be successful if the victim was experiencing a stressful life event.

The Globe and Mail
October 6, 2006

Fraud victims tend to stay mum
Angela Barnes

More than a third of Canadians believe they have been offered a potentially fraudulent investment opportunity, but only a few ever reported the attempt, according to a survey by the Canadian Securities Administrators.

Fewer still admitted they have been victims of a financial fraud.

Although 36 per cent of those questioned reported being approached with a possible fraudulent investment opportunity, only 14 per cent said they had reported the attempt to authorities. Four per cent of those questioned indicated they had been taken in a fraudulent scheme, the council of securities regulators from the provinces and territories, said.

The CSA study involved both a 2,000 person phone survey and 5,568 on-line surveys.

Still, based on an adult Canadian population of about 22 million, that suggests that just under 900,000 Canadians have been victims of a financial fraud, the survey said. Yet, the same survey also found that Canadians readily recognize the "red flags" of a fraudulent investment, such as being given no written material, or being pushed to "act now" or being promised high returns with little or no risk.

Some individuals were particularly unlucky when it came to investment fraud with 37 per cent of the fraud victims saying they had been defrauded more than once.

The results also showed that fraud attempts were twice as likely to be successful if the victim was experiencing a stressful life event.

In almost two-thirds of the successful frauds, less than $5,000 was invested, but 12 per cent involved more than $25,000. In most cases — 71 per cent — none of the money was recovered.

So, who is most likely to get approached with a fraudulent investment scheme? Active investors, especially those in the middle-income households and those in Ontario and Atlantic Canada. Quebeckers were least likely to report being approached. Only 23 per cent of Quebeckers said they had been approached. The equivalent percentage for Ontario, the home of Canada's largest stock exchange, was 41 per cent and for Atlantic Canada 43 per cent, the CSA said.

Those who use the Internet or the phone to order goods or services and those who hope to score "the big one" through lotteries or contests also increase the risk of being targeted in such schemes. Residents of Quebec (24 per cent) and of the Prairies (17 per cent) are the most likely to say they never purchase goods or services through the Web or by phone.

But why didn't the targets contact authorities? The most common explanation — or excuse — was that there is simply too much fraud. Some said they had neither the time nor patience to follow up on the high volume of fraudulent offers, being unsure if it was a fraud, preferring to ignore it or flagging it as "just spam." Of those who had actually been caught up in a fraudulent investment, most simply assumed the authorities were already aware of the scheme.


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Risks: Investment made during stressful life event, Can't collect on court decision, Defrauded more than once, Fraud is so widespread it is not even worth reporting it, Shame, Canada: white-collar crime haven, Police can’t/won't investigate losses less than $250,000, Canada, 20061006 Fraud victims

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