Scouring the internet for pandemic-related investment schemes
As COVID-19 began to rip through the world, a team of investigators at the British Columbia Securities Commission mobilized to deal with one of its knock-on effects – scammers.
Formed just two days after British Columbia declared a state of emergency, the team began scouring social media and marketplace websites, looking for investment schemes seeking to exploit the pandemic.
The BCSC’s rapid response was driven by its extensive experience fighting investment fraud. Its investigators know that scammers often latch onto the latest trend or natural disaster to lure victims, and that online channels have made it that much easier to lure unsuspecting investors.
Sure enough, the team found schemes that touted spurious methods for detecting, treating or preventing the illness – for example, one ad sought investors for a company that claimed its aerial drones could detect COVID-19. Another come-on, posted on the online marketplace Kijiji, was selling shares of a company that claimed it could cure the illness through “energy fields” that were inhospitable to viruses and bacteria. The investigators also found questionable work-from-home schemes devoted to investing, particularly crypto-asset trading.
When the investigators found concerning investment offers, they needed to establish that there was a B.C. connection. So they determined if the opportunities were available to B.C. residents. Once they had made that confirmation, the BCSC took steps to inform the person or company behind the offer that it was violating B.C.’s Securities Act and ask that it be removed. The BCSC also requested that social media and website hosting companies remove many of the offers – and many of them complied.
Groups disbanded, sites shuttered
Within five months of launching the effort, the BCSC’s efforts led to:
- Removal of about 40 Facebook Groups
- Shutting down of five websites
- Deletion of eight online ads
- Sending 37 warning letters
- Securing one undertaking – a legally binding promise – to refrain from further solicitations.
Of the 111 schemes found by the BCSC, more than two dozen were referred to other securities regulators in Canada and the world. The BCSC also found schemes that did not involve securities, such as promotions of personal protective equipment and even vaccines, which it referred to the RCMP.