There’s always someone looking to take advantage of others, especially when it comes to internet scams. At Credit Canada, we understand how devastating it can be to lose money to a fraudster, especially if you’re already in debt (many of these scammers specifically prey on people in debt, with scams that guarantee a payout). This blog is designed to make you aware of common internet scams, learn how to spot them, and let you know how to report scams so that others don’t fall victim to them.
What is an Internet Scam?
As people like to say, “This is why we can’t have nice things.” As wonderful as the internet is, there’s always someone trying to use it for nefarious purposes. An internet scam is just like all the other types of scams, except that it’s conducted online. Known as “phishing” (a modified form of “fishing,” as the scammers seek to hook their victims), these internet scams are designed to take advantage of people, using deception to manipulate individuals into sharing confidential or personal information, typically for financial gain.
Unfortunately, phishing scams have come a long way since the days of the Nigerian prince phone scams in Canada (although that one still fools people in its online format), and now even the most internet-savvy individual can be duped by them.
Statistics on Internet Scams in Canada
According to the Competition Bureau, from January 2014 to December 2016, it is estimated that Canadians lost over $290 million to fraudsters. The Canadian Anti-Fraud Centre estimates that, in 2019 alone, residents across the country were scammed out of more than $43 million.
It’s also estimated that only 5% of fraud actually gets reported to police, so it’s difficult for authorities to stay ahead of the game and warn us of potential scams. Why isn’t fraud reported? Some people are simply too embarrassed to admit that it happened to them. We're here to tell you—don't be embarrassed or ashamed. Falling prey to a scammer can happen to anyone (and often does), and by reporting it you can help thwart those online scammers.
15 Scams Canadians Need to Watch Out For
To help ensure you don’t become a victim of an internet scam, we’ve highlighted fifteen examples of internet scams that you should be on the lookout for. While some of these scams can be, and continue to be, conducted via phone or mail, today the majority are executed online.
1. Advance Fee Scams
Advance fee scams are simply those that ask for payment upfront for any type of service, solution, or reward. You’ll find that many of the scams included in our list fall under the broader category of an “advance-fee scam.”
2. Blackmail Scams or Ransom Scams
Let’s face it, people occasionally use the internet for less than noble purposes. Blackmail scammers are banking on this, and will send emails stating that compromising photos have been detected on a computer, or inappropriate websites have been found in the browser history.
The scammer says they will release this information to family, friends, colleagues, or even the government unless payment is made. This threatening email asking for bitcoin or gift cards is usually nothing but a fear-based scam that can be disregarded. Plus, if you keep your nose clean online, you’ll have nothing to worry about anyhow!
3. Charity Scams
While a disaster often unites people and brings out the best in them, there are always people looking to make a buck. Charity scams, or donation solicitation scams, take advantage of tragedies and a person's goodwill during trying times. In the aftermath of a major event, such as a natural disaster or a terrorist attack, scammers claiming to be from a disaster relief fund or the Red Cross and will attempt to solicit donations to aid “victims.”
These scams usually begin with an email and include a link to a phony site where donated money goes right into the hands of a duplicitous scammer. It’s also worth noting that charity scams tend to increase in popularity around the holidays when people are more likely to be in the spirit of giving.
4. Contractor Scams
“We were working just up the street…” Many contractor scams begin this way, with a knock on the door from a person claiming to be a contractor doing work in the neighborhood and wondering if you would like the same repair done on your home. As such, this is one of the few scams not usually executed through the internet that made our list.
These phony contractors are often not credentialed or insured, and will take an upfront payment never to be seen again. Or, they may accept payment and then perform shoddy workmanship using inferior materials and then quickly disappear. Often, this costs the homeowner even more money to fix the damage the scammer created.
5. COVID-19 Scams
One of the latest internet scams on our list, COVID-19 fraud has been rampant in 2020. According to the Canadian Anti-Fraud Centre (CAFC), between March 6 and May 1, 2020, 766 Canadians reported COVID-19 frauds, and $1.2 million was lost to these scams.
COVID-19 scams take the form of fake cleaning scams (bogus companies claiming they can sanitize your home from COVID), utility scams (phonies saying they’ll cut your service unless payment is received immediately), and more. Be sure to check out our blog How to Avoid Scams During COVID in our COVID-19 Financial Resource Centre.
6. CRA Scams
The way this tax scam works is simple: You receive a call from an individual claiming to represent the CRA and they tell you that you owe money in taxes and you must pay up NOW. The caller will threaten that if you don’t make an immediate payment an arrest warrant will be issued or they’ll put a lien on your home.
They might advise you to pay using Bitcoins or prepaid cards, like an iTunes gift card. They’ll also tell you not to speak to anyone about the matter. Now, why would the CRA tell you not to talk to anyone? Because the scammers don’t want you to find out it’s a tax scam, of course!
Remember this: The CRA does not make threatening calls and they don’t request information over the phone or by email – they will send you a letter if you owe them money or if there are any other issues.
7. Credit Repair Scams and Loan Schemes
People with high debt and low credit scores are typically the target of these types of scams. These scams prey on vulnerable Canadians by offering quick debt relief and easy credit score fixes. There are two (very very similar) scams to watch for:
- Credit repair scams, which promise to repair your credit simply by removing negative information from your report, for a fee. Of course, there is no way to remove negative information from your credit report if it is legitimate, no matter how much money you pay.
- Loan schemes, which promise to repair your credit by giving you a loan; making payments on the loan, they claim, will boost your credit score. However, the loan never comes, money continues to be deducted from your bank account, and your score remains the same.
For more information about these scams, check out our blog, Credit Repair Scams: How to Spot Them and Avoid Them. where we cover both of these in-depth.
8. Employment Scams
If you find a job opportunity online, do your research before accepting the position. If you’re asked to deposit a cheque and then send the money back to the employer (often to pay for "supplies" such as a tablet or informational booklet), it isn’t a real job, and the cheque will eventually bounce, leaving you out the money.
Scammers use online classified websites like Kijiji, Craigslist, Monster, Indeed, and Workopolis to recruit potential victims. The most common scams include Mystery Shopper and HR/Administrative jobs.
9. Gift Card Scams
Many fraudsters will ask for money or payment by gift card (this has all but replaced the wiring money scam, which many people have wised up to). Gift card scammers can be found everywhere; they may pose as:
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A business, utility company, or even the government
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An online seller
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A sweepstakes
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A family member in trouble
Of course, they all have one thing in common – payment must be made using a gift card. They will ask you to purchase the card(s) and provide the number and PIN on the back. Then, whatever they’ve promised never arrives (or the bill or problem never existed in the first place). Remember this: gift cards are a gift, not a form of payment. Anyone asking for a gift card as payment is a scammer.
10. Identity Fraud Scams
Scammers may steal your information and identity to secure credit cards, loans, and more. Protect your payment card's PIN when you’re using it in public and never give out your PIN to anyone who calls or emails you, including your bank. The bank will never request your PIN, especially not over the phone.
You should also remember to shred any papers that contain your personal information, including your home address, before putting them in the garbage to prevent fraudsters from getting your personal information – especially credit card offers.
11. Invoice Scams
Fake invoicing is a common scam threatening Canadian businesses. In fact, RBC reports that 52% have experienced invoice fraud. Last year, one Canadian employee paid out more than $235,000 in fake invoices! Of course, fake invoices are not limited to companies; scammers may send or email phony invoices to individuals claiming they owe money on something (often a utility, service, or government entity) demanding immediate payment, or else.
Individuals receiving such an invoice should always contact the sender directly, by finding their email or phone online. Do not contact the invoice supplier using the information on the bill (that is most likely fake, as well).
12. Lottery Scams or Sweepstakes Scams
We’ve all heard this one before: You won a free trip to Hawaii! All you have to do is pay a small processing fee, the taxes, or an insurance fee. Or worse, they will ask you to provide your banking information to deposit your winnings.
The bottom line is to never, ever give out your banking information under any circumstances. You don’t have to pay to receive lottery or sweepstakes winnings. Also, if you didn’t enter a lottery or contest yourself, then you can’t win. So beware of any “winnings” from lotteries or raffles you don’t recall entering.
13. Romance Scams
Romance scams are all too common. Romance scammer tactics involve creating a fake identity on an online dating site and finding someone who’s unlucky in love to warm up to them, sparking a long-distance relationship (there’s generally a reason they can’t meet in person, such as living overseas or military duty).
The online relationship might go on for months, when all of a sudden your “friend” runs into financial problems (usually outside of the country). They will then ask you to send money to help them out. Of course, once you’ve sent the money, this new love interest vanishes without a trace. We recommend against loaning people large sums of money in general, let alone people you’ve never met.
14. Free Offer Scams
Anything that’s “free” should have you raising an eyebrow. Make sure you read the fine print to see what you are agreeing to. Many offers claim you’ll only have to pay the shipping and handling fees, but once the scammers have your credit card information they can bill you for other “purchases” too.
15. Weight Loss Scams
Everyone wants to look their best, and most people think they could stand to lose a couple of pounds. So of course, there’s a scam for that. But, we’re not talking about those “miracle weight-loss pills”; most of those, however shady, are legal.
We’re talking about a weight loss grant. These scams use ads for free weight loss programs and promise to pay most of the weight loss program's fee. After submitting an application, participants receive a confirmation email stating they qualify (of course they do—everyone does). The scammers then refer applicants to a preferred vendor, where they’re required to pay an upfront program fee. Then, after following the rules and losing weight by the deadline, they never receive any money.
How to Spot a Scammer
Now that you have a clearer picture of the type of online scams you’re up against, you should be better able to avoid them. Still, are you wondering how to tell if someone is scamming you online?
There are a few red flags that you should be aware of to spot them right away (and remember, always do your homework and research individuals and companies for legitimacy, and look to see if they’re on any scammer list or list of scamming websites):
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Bad grammar and spelling. Many scams are conducted overseas, and as such, some scammers don’t use English as a first language. So, odd or incorrect grammar choices and misspellings in an otherwise professional-looking solicitation are often a dead giveaway.
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High-pressure tactics. Scammers know that the more time you have to consider an offer, the more likely you are to find holes in it, research their company, or question their motives. So, they’ll often try to get you to “act fast” or claim that the deadlines are just days, or even mere hours, away.
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Upfront payments. Legitimate companies may sometimes ask for some upfront payment as part of a contract. However, when they do ask for this, everything will be clearly defined (and you can check their policies online). Scammers asking for advance fees without a reputable company backing them should be avoided.
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Confusing contracts (or no contract at all). If there’s no contract, show the solicitor the door. If there is, there are 5 things you want to be sure it includes:
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The amount you’re being charged or the details of the payment plan
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Details about the services being rendered
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The date or time period in which the service will be performed
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The name, business address, and phone number for the company
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A statement giving you 3 days to void the contract (this is standard for individuals to reassess their purchase decision)
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The offer is “too good to be true.” You know what they say! This one applies to most scams, from romance scams (the “perfect” man or woman) to sweepstakes scams (you won a free cruise...for doing nothing). So, always reconsider things when they appear too good to be true.
How to Report a Scammer in Canada
The less a person knows the easier it is for fraudsters to take advantage of them, so the best way to prevent internet fraud and other scams is to stay informed and pass the information along to others. It’s especially important to inform those you know who may also be vulnerable to scammers, such as the elderly, people who live on their own or who don’t talk to too many people, or newcomers to Canada. An informed consumer is a smart consumer, and that’s exactly what the fraudsters DON’T want.
There’s no such thing as being too cautious when it comes to protecting your credit and personal information. If something doesn’t seem right, report it to the Canadian Anti-Fraud Centre and any other suspicious behaviour to the police. Simply posting it on your social media page is not enough, as many people take these types of non-official warnings with a grain of salt.
Get Free Non-Profit Debt Help
Whether you’ve been bilked out of money due to internet fraud or you just need financial help, Credit Canada can help. We are a non-profit company that only has your best interest at heart, and we’ve been helping Canadians just like you get out of debt for more than 50 years (check out our Google Reviews, where our average score is 4.9 out of 5!).
If you’d like free financial help or advice, just call 1.800.267.2272 to book a confidential, non-judgmental, and no-obligation appointment with a certified Credit Counsellor. We’re here for you!
Frequently Asked Questions
Have Question? We are here to help
What is a Debt Consolidation Program?
A Debt Consolidation Program (DCP) is an arrangement made between your creditors and a non-profit credit counselling agency. Working with a reputable, non-profit credit counselling agency means a certified Credit Counsellor will negotiate with your creditors on your behalf to drop the interest on your unsecured debts, while also rounding up all your unsecured debts into a single, lower monthly payment. In Canada’s provinces, such as Ontario, these debt payment programs lead to faster debt relief!
Can I enter a Debt Consolidation Program with bad credit?
Yes, you can sign up for a DCP even if you have bad credit. Your credit score will not impact your ability to get debt help through a DCP. Bad credit can, however, impact your ability to get a debt consolidation loan.
Do I have to give up my credit cards in a Debt Consolidation Program?
Will Debt Consolidation hurt my credit score?
Most people entering a DCP already have a low credit score. While a DCP could lower your credit score at first, in the long run, if you keep up with the program and make your monthly payments on time as agreed, your credit score will eventually improve.
Can you get out of a Debt Consolidation Program?
Anyone who signs up for a DCP must sign an agreement; however, it's completely voluntary and any time a client wants to leave the Program they can. Once a client has left the Program, they will have to deal with their creditors and collectors directly, and if their Counsellor negotiated interest relief and lower monthly payments, in most cases, these would no longer be an option for the client.