Common scams & schemes

Most individuals or groups perpetrating scams take great care to ensure that they appear legitimate and their malicious intentions remain undetected. By being aware of some of the most prevalent scams, you will be better prepared should you ever find yourself a target of one.

The following are common scams and schemes that could be used to gain access to personal and financial data.

Fraudulent e-mails

E-mail fraud — sometimes called “phishing” or “brand spoofing” — is the creation of e-mail messages and Web pages that are replicas of existing, legitimate sites and businesses. These fraudulent attempts often ask for information such as credit card numbers, bank account information, social insurance numbers, and passwords that will be used to commit fraud. Never reply to an e-mail that requests your personal information. Contact the financial institution immediately, if you receive a suspicious e-mail.

Tax and revenue scams

In recent years, the Canadian Anti-Fraud Centre has noted an increasing number of complaints that individuals had been contacted by someone posing as a representative from the Canada Revenue Agency (CRA). In some instances, Canadians are contacted by phone by one or more fraudsters posing as representatives of the CRA. The fraudsters tell the potential victim some or all of the following: their tax returns have been reassessed, and money is owing to the CRA immediately; failure to pay the outstanding amount could result in arrest or further fines for deliberately hiding income; the matter is confidential, and mentioning it to friends or family will only make matters worse.

The potential victims are then asked to wire funds, purchase and send prepaid cards, or deposit funds directly into a bank account, as opposed to sending the amount to the CRA directly. If the potential victim hesitates or begins asking questions, the caller often becomes verbally abusive, attempting to bully the victim into paying up.

Card scams

Fraudsters have the technology which allows them to "skim" the data contained on magnetic strips, manufacture phony cards, and overcome such protective features as holograms. Card scams can take many forms. Scammers can fraudulently obtain your credit card number and reproduce it on a blank card, make telephone or Internet purchases or sell your credit card information to other scammers. Money wiring scams involve sending money electronically to another city or country. Scammers sometimes pose as contest organizers looking for fees before prizes can be released, shipping companies requesting more money in order to deliver your package or even a friend of a friend who is in trouble and needs money wired as soon as possible. There are many other forms of card and wire scams not mentioned here, but which are equally malicious.

Cheque scams

Fraudulent cheques are used in a variety of scams. For example, a “mystery shopper” scam involves individuals receiving a letter and a cheque from a third party claiming to be contracted by the company. The letter has instructions to deposit the cheque into a bank account and to verify deposit and personal information with the scammer. The individual may also be told to keep a small amount as a reimbursement then wire the rest of the money back to the scammer. Once the fraudulent cheque bounces, the targeted person is responsible for paying the money back to the bank, the wire transfer charges and any other bank fees. Other activity involving fraudulent cheques include lottery/award scams, overpayment scams and inheritance scams.

Investment scams

Investment scams traditionally refer to selling an investment opportunity in shares or other investments that are either worthless or non-existent. An investment scam can occur in any solicitation form (telephone, mail, e-mail, etc.) for investments into false, deceptive or misleading investment opportunities, often referring to higher than normal or true monetary returns which consumers lose most or all of their money. Some examples reported to the Canadian Anti-Fraud Centre included ponzi schemes, franchise opportunities, futures trading, multi-level marketing opportunities, mortgage investment opportunities and pump and dump schemes.

The following are warning signs that you should be aware of in order to protect yourself from investment scams:

  • Urgency to make an investment.
  • Little knowledge/information provided about the investment.
  • Lack of a contract or agreement about the investment.
  • Unusual amounts and frequency withdrawals requested.
  • Requires large dollar wire transfers to foreign countries.

This information is adapted from various sites including the Government of Canada’s Canadian Anti-Fraud Centre.

Fraud prevention & management

Increasing your awareness of financial and other scams is the first steps toward fraud prevention.

A few tips to maximize your own privacy and security are:

  • Never send money or give personal or financial information to anyone you do not know and trust – online, over the phone or in person.
  • Take a moment to think carefully about what you’re being asked to do. Does it make sense? With financial scams, the information presented is often incomplete or inaccurate.
  • The best course of action is to delete suspicious e-mails without opening or replying to them. When in doubt, get independent advice from a trusted source.

Knowing what to look for may help you avoid becoming a victim. Whether or not the scam is successful, you should report your interaction with individuals or groups whom you believe to be acting fraudulently to the appropriate authorities.

Report an incident

Fraudulent or suspicious activity can be reported to the Canadian Anti-Fraud Centre, through its website or by telephone at 1-888-495-8501. This government agency collects information on financial scams and identity theft in Canada directly from the public.

Instances of misleading or deceptive marketing practices should be reported to the Competition Bureau online or by phone at 1-800-348-5358. The Competition Bureau plays an important role in helping Canadians get the information they need to be informed and confident consumers.

Victims of fraud are also encouraged to speak to their local police service by contacting a non-emergency provincial hotline.

  • Ontario Provincial Police: 1-888-310-1122
  • Quebec Provincial Police: 1-514-598-4141
  • RCMP (rest of Canada): 1-613-993-7267

If you believe that your banking or credit card information may have been fraudulently obtained, speak to your bank or credit card issuer. Often, their contact information can be found on the back of your bank and credit cards. You should also contact the credit bureaus Equifax and TransUnion.