Fraud costs Canadians hundreds of millions of dollars every year with scammers and fraudsters only getting more creative and innovative as technology evolves. Luckily, we can protect ourselves by knowing what scams to watch out for, and what to do if we become a victim.
Fraud and Scams are a Reality
It’s one thing to watch elaborate money schemes play out on the big screen in films like Dirty Rotten Scoundrels or Oceans 11. But when real-life con artists rob you or your loved ones of your hard-earned cash or steal your identity, you can lose a lot more than just money. The emotional toll can also be quite heavy when you realize you’ve been taken advantage of.
Real-life fraudsters and scammers are alive and well, operating increasingly elaborate schemes and preying on anyone with a phone, email address, identification, or credit card.
Check out our free on-demand webinar on Dealing with Fraud and Scams.
How Much Does Fraud Cost Canadians?
According to the Canadian Anti-Fraud Centre (CAFC), Canadians were conned out of $380-million dollars in 2021, up a whopping 130% from 2020. In 2021, more than 106,000 cases of fraud were reported – keeping in mind that it's estimated only 5% of fraud cases are reported.
The scams that cost Canadians the most were investment scams, robbing Canadians of more than $113 million, with cryptocurrency investment scams leading the way.
The truth is anyone can become a victim. So it's important to stay alert and be aware of the different types of scams you may encounter day-to-day.
What Are Some Common Types of Scams?
Fraudsters are incredibly innovative and adaptable. They can lurk online or pester you with phone calls and urgent text messages. Some even prowl outside your door, disguised as salespeople or charitable organizations. Let's take a look at some different types of scams.
1. Phone Call Scams
If you have a phone, you've likely received a call from a scammer.
Scammers are increasingly targeting different demographics, homing in on specific communities. They might claim to be from a consulate or international police, instructing victims to go to fake police websites to verify their identity. Or they can convince their victims to hand over their bank information due to "fraudulent" activity in their account.
In other cases, scammers call pretending to be a representative from the Canadian Government, including the Canada Revenue Agency. They might demand payment for “back taxes” through money service businesses, prepaid cards/gift cards, or Bitcoin – you name it.
Other scammers will call disguised as tech support requesting access to their victim's computer to remove a “virus” and then demand payment for fixing their computer.
2. Internet and Phishing Scams
Looking for love? There’s an internet scam for that!
In the virtual world, nothing is sacred and everyone’s a target. From counterfeit merchandise cons and investment scams to appeals for aid from fake charities, there’s an online scam for just about every interest on the internet.
Social media has also opened up new opportunities for scammers. They'll bait their victims with phishing emails and steal their account credentials. Then they'll use their social media account to promote a link enticing followers to make fraudulent investments. In most cases, victims never recover their accounts and their followers can lose thousands of dollars.
3. Emergency Scams
Most of us would go to great lengths to protect our families, and scammers know this. Many play on our emotions with urgent pleas from supposed family members.
For example, some scammers have been known to target seniors with urgent phone calls pretending to be a family member in trouble. They might say they've been arrested and need bail money, or a loved one has been hurt in a car accident, or they've run into trouble in a foreign country.
Whatever the excuse is, their request is always the same: please send money now!
What is the Risk of Identity Theft and Fraud?
Once someone has your personal information, they can access your bank accounts, open new ones, transfer money, apply for loans and credit cards, make purchases, and even obtain government documents and services using your name.
In an interview on the Moolala podcast, Equifax Canada’s Senior Compliance Officer for Consumer Advocacy, Julie Kuzmic, explains how most people don't realize how much is at risk if someone steals your identity.
For example, the first thing most people do if they lose their wallet is cancel their credit cards, followed by replacing their driver's license, health card, and any other documents they might have lost.
But what most don't realize is that if someone has your driver’s license and other information about you (depending on what was in your wallet), they can impersonate you and apply for credit or a loan in your name. They can even convince the lender to send all communication and evidence of the loan to their address – not yours – so you don't find out.
How Do Fraudsters Go Undetected?
A tactic fraudsters have been known to use is that once they've taken out a credit card in someone else's name, they might even pay the monthly payment on time for the first few months. This is so they can build up a decent payment history with the lender and have the credit limit increased on the card.
Ultimately, their goal is to make a couple of big purchases on the credit card and then disappear. That's when their victims are contacted by collection agencies and debt collectors (who may have found their real address on their credit report versus the address given to the lender by the fraudster) looking for payment.
What Can I Do to Minimize the Risk of Fraud?
Anyone in Canada can contact both Equifax and TransUnion (Canada's two credit bureaus) to request an identity alert be placed on their credit report for free. This alert works as an indicator on your credit report telling lenders that any time your credit file gets pulled to process an application for credit, they are to call you at the number you provided to verify it’s you.
Another easy way to protect yourself against fraud is to regularly review your credit report, which anyone in Canada can access for free via Equifax and TransUnion.
Traditionally, the rule of thumb is to review your credit report at least once or twice a year. But reviewing it more frequently (i.e., every couple of months) helps avoid any snags you might run into when applying for credit or finalizing a new car loan.
How Long Does Fraudulent Information Stay on a Credit Report?
Credit reports are based on information provided by lenders to credit bureaus. Therefore, any changes regarding fraudulent information on a credit report have to be made through the lender involved and their communication with the credit bureaus.
The length of time it takes for fraudulent information to be removed from a credit report depends on the lender and their process for handling fraud. It also depends on their policy on fraud and their fraud management team. For example, some lenders may request a police report in order to investigate any potential instance of fraud.
What Can You Do If You Become a Victim of Fraud?
Despite our best efforts, anyone can fall prey to a scam or become a victim of fraud. And if it does happen, there are important steps to take.
1. Gather the Evidence
Collect all documents, receipts, bank statements, letters, and copies of any and all related emails or text messages. These can be important clues in helping investigators stop the scammer.
2. Notify Your Bank
Let your financial institutions know you’ve been a victim of fraud. Ask them to take extra care in handling transactions related to your accounts and ensure to change all your passwords and PINs.
3. File a Police Report
Contact your local police authority and file a report. Also, let your bank and credit card companies know you have reported the crime to the police.
4. File a Report with the Canadian Anti-Fraud Centre
By reporting the incident to the Canadian Anti-Fraud Centre, you’re contributing to a national database that helps fraud investigations across the country.
5. Check Your Credit Report
Make sure none of your personal information has changed. Also, confirm there are no unfamiliar organizations listed in the inquiries section. Finally, verify that all accounts noted in your credit report do indeed belong to you.
6. Place a Fraud Warning on Your Credit Report
If you are a confirmed victim of fraud or identity theft, you can place a fraud warning or fraud alert on your credit report. In doing so, credit bureaus can launch a fraud investigation to assist you in dealing with any fraudulent information showing on your credit file.
Credit Canada Provides Free Help
If you have questions about debt resulting from fraud or a scam, or you just need some free debt advice, Credit Canada is here for you.
We're a non-profit organization that's been helping Canadians get out of debt for more than 50 years. You can always book a free, confidential chat with a certified Credit Counsellor by calling 1.800.267.2272 or contacting us online.