To be successful, a scam has to be believable – and scam artists are successful. Over just two-year, from 2014 to 2016, Canadians lost over $290 million to scams.1 However, you can distinguish fact from fiction and protect yourself from fraud by staying aware and learning to identify the red flags. Here are simple ways to prevent some of the day’s most popular financial scams from happening to you.
Also known as the "grandparent scam”, the typical scenario involves an elderly person being contacted by someone claiming to be their grandchild in distress and in need of money. They often have a story about being injured, jailed or stuck in a foreign country. The victim is urged to wire funds immediately and not tell anyone so that the “grandchild” doesn’t get into more trouble.
Avoid this scam: Before you take any steps to help, verify the person's identity by asking questions only someone you know could answer. Also, tell those who you trust what’s going on.
Antivirus software scam
If you are contacted by someone who says you have a computer virus and that they work for a software company that can fix the issue, beware – it is likely a scam. The fraudster wants you to grant them remote access to your computer or pay for a service to remedy the supposed virus in order to steal your money or your personal information (or both).
Avoid this scam: Be skeptical of unsolicited calls and emails as they can be a red flag for fraud. If you have a computer problem, reach out to a reputable company on your own and never provide your credit card information to an unconfirmed source.
Bogus charities operate on the street, at your doorstep, by phone and online. They may even set up a fake website or use a name very similar to that of a legitimate, well-known charity. Scam charities thrive after natural or other disasters because fraudsters take advantage of those situations to trick people who want to help the victims.
Avoid this scam: Research unfamiliar charities, especially those that approach you, before pledging your financial support. Charities in good standing are happy to provide details about what they do and will never insist that you act right away. Think twice if you are asked to wire money, or donate cash or gift cards – these forms of payment are virtually impossible to trace or recover.
Scammers target pre-retirees in particular through “free lunch” investment seminars that promote get-rich-quick schemes or risky products that aren’t appropriate for people looking to protect their retirement nest eggs. While the investments themselves may not be scams, questionable high-pressure sales tactics are often involved.
Avoid this scam: Promises of “easy” investment strategies and “guaranteed” high returns typically sound too good to be true, and it is best to assume they probably are. In reality, you are likely to lose some or all of your investment with limited recourse to get your money back. Do not be tempted or feel rushed into making an investment decision. Ask questions, do your research and get the details in writing.
Online fraud resources
Con artists count on people not doing their homework. Arming yourself with information is the best way to stay a step ahead of the scammers. The internet can help, and online made-in-Canada resources include:
Canadian Anti-Fraud Centre – Canada’s central agency for information and criminal intelligence on fraud
Competition Bureau of Canada – More advice on fraud prevention
Canadian Securities Administrators – Focused on investment fraud
Royal Canadian Mounted Police – Identity Theft and Identify Fraud Victim Assistance Guide