Financial abuse - how to avoid becoming a victim

Financial abuse is on the rise. Criminals are finding new and innovative ways to take advantage of people, particularly through social media and the internet.

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Always be on the lookout for financial abuse and take precautions to protect yourself. Here are some strategies to help you avoid becoming a victim of fraud.

Anyone can fall victim to a financial scam 

Understand that many of these criminals can be very sophisticated. Also, victims can often feel too embarrassed to talk to their family or advisors about possible financial abuse because they feel foolish for letting it happen in the first place.  

Keep in mind that many intelligent people have been the victims of financial abuse, so there’s nothing to be embarrassed about.  

Abusers try to isolate their victims

One of the main tactics abusers use is to isolate their victims and convince them that they musn’t tell anyone what’s happening. There have been many cases where financial institutions questioned transactions that the client was requesting, and the client lied to their financial advisor at the instruction of the abuser.

If anyone tells you to lie to your financial advisors or your family about how you’re spending your money, that is a red flag that you’re probably being scammed. The reason they don’t want you to talk to your advisor about it is because the abuser knows that a third party might recognize that they’re trying to defraud you. 

Abusers will apply pressure and use other bullying tactics

Quite a number of financial abuse scams involve pressure tactics and bullying. If you experience this, reach out to your family, your advisors, seniors’ advocates or law enforcement. Share the correspondence you’ve received from the abuser with your financial advisor, as they may be able to determine if it is a financial scam. 

Seniors’ advocate groups, law enforcement organizations, the Canada Revenue Agency and other government authorities have a wealth of information on their websites describing various financial scams and how they work, so your advisors may be able to identify the scam based on the information you send them. 

There are a number of online resources in Canada to arm yourself with details of the latest financial scams doing the rounds. By monitoring these sites regularly, you’ll be better prepared to spot and avoid a financial scam:

Knowing you’re dealing with a criminal whose threats carry no weight will enable you to feel less threatened by them and to simply ignore them.  

Be wary of any new online romantic partners

significant amount of financial abuse is conducted through “romantic scams”, so be very wary of any social media friends whom you’ve never met in person. Never send money or your personal details to anyone you’ve never met in person and don’t know well.  

Be cautious of any unexpected inheritances or paydays

There are also a number of “inheritance scams”, where con artists ask you for money or financial information under the guise of needing it to confirm if you are a long-lost beneficiary of a will.

If you actually are a beneficiary, you shouldn’t need to provide money or financial information. If anyone asks you for this information, you should speak to your IG Advisor first to make sure that it’s legitimate.    

Be very careful when choosing who you grant power of attorney to

If you don’t have any family members whom you feel are appropriate to have power of attorney (or protection mandate in Quebec), ask your IG Advisor to recommend a trust company that provides these services. Paying a fee will be minor in comparison to the potential losses you could experience if your attorney or mandatary takes advantage of their situation to steal from you.

In some cases, these individuals are well-meaning but simply don’t have the abilities required to act in the role. Don’t choose someone simply because you can’t think of an alternative.

Name a trusted contact person

A trusted contact person is someone whom your financial advisor can contact to act as a resource in the event that we’re concerned about you. This could be a concern about your personal or financial well-being, including your health or mental capacity, or if we’re concerned that you may be the victim of fraud, exploitation or abuse.

This contact person doesn’t replace your power of attorney, nor do they control or have access to your finances. They’re simply a “second set of eyes” to ensure that you’re properly protected. Find out more about the benefits of naming a trusted contact person and how to set one up.

Seek professional advice before making changes to your accounts or assets

Don’t add your child or anyone else as a joint owner of your investment accounts without first speaking to your IG Advisor. Generally speaking, adding a joint owner is not recommended and could lead to financial abuse if the joint owner takes advantage of the situation.

What to do if you suspect financial abuse

If you think something is suspicious, the first thing you should do is speak to your family, your IG Advisor or the police. The worst thing that will happen is that they’ll tell you there’s nothing to worry about. Trust your instincts; if you have any concerns about someone in your life who is pressuring you, reach out for help.

If you don’t have an IG Advisor, you can find one here.

Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.

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