Scam Artists Using Social Networking Sites to Hook Victims

(March 17, 2008), Winnipeg, Manitoba – The Manitoba Securities Commission (MSC) is warning the public to be alert to the potential for fraudulent or unsuitable investment products when using popular social networking websites like Meetup.com, Craigslist.org and Facebook, which allow people to create groups around investing strategies or advertise seminars for new investment products.

“We are concerned scam artists are using social networking websites to lure people to meetings that may promote fraudulent or unsuitable investment products,” says Len Terlinski, Investigator with the MSC. He indicates social networking websites have created environment ripe for affinity fraud- Affinity fraud refers to investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group.

“Fraudsters can take advantage of the fact people can share information with both their real and “virtual” friends by posting it to their profile, joining a group or simply forwarding the information to others with their approval,” he states. “Communication tools provided by some social networking websites make it easy to advertise and promote investment scams to a wide audience for free,” Terlinski concludes.

Terlinski says people need to be cautious when acting on or passing investment information to others. “Unfortunately, the victims of affinity frauds are often family, friends or community members who tell each other about the fictitious investment scheme,” says Terlinski. His advice: investors need to do their own research before making any investment and should not simply rely on ‘expert’ advice given at a seminar, a meeting or over the Internet.

According to the MSC, there are steps investors can take to protect their hard earned money, including:

• Check out the registration and background of anyone dealing with investments by contacting the MSC.
• Obtain written documentation on the investment product and the business.
• Ask questions if you don’t understand the investment.
• Ask an independent third party to review the investment.
• Take your time. Don’t give in to high-pressure sales tactics.
• Never pay cash or wire money for an investment

People are encouraged to report suspicious investment activities, problems with investment or concerns about an adviser to the MSC at (204) 945-2548 or toll-free in Manitoba 1-800-655-5244.

The MSC is a special operating agency of the Government of Manitoba responsible for regulating trading in securities within the province. www.msc.gov.mb.ca

CONTACT:

Ainsley Cunningham, Education and Information Coordinator The Manitoba Securities Commission (204) 945-4733 Ainsley.cunningham@gov.mb.ca