Common types of fraud and how to prevent them

There are many types of fraud, with new ones invented regularly. Remaining cautious and aware is your best defense. It’s helpful to know that fraudsters use three powerful and effective things to get you to cooperate:

The hope of a benefit: “You’ve won a prize!” “This is a guaranteed investment!” “I love you!”

Fear: “You owe taxes.” “You will be arrested.” “Your loved one is in trouble.”

Your natural willingness to help: “Help us catch these crooked bank employees.” “Be our secret shopper.”

These are designed to manipulate your emotions, prevent you from thinking rationally, and make you take actions you normally would not.

Help us help you prevent fraud.

Someone has called, mailed or emailed you to say that you have won a lottery, but you never actually entered a lottery. Fraudsters will tell you that you have won a significant amount of money, but you need to send payment for taxes or other fees in order to receive your winnings.

If you send money, they will request more, inventing new reasons like lawyer or banking fees. They will ask you to wire money, often out of Canada. This is a common scam which has caused some people to lose a good part of their life savings.

You receive an email, text or phone call that appears to be from a well-known Canadian bank, saying there is a problem with your account and asking you to confirm personal details and account information. They might ask for your help to catch a crooked bank employee. This is always a scam.

Recently, scammers have been telling people they are calling from the bank and they need help with an investigations. They tell you to hang up and call your local bank branch right away. When you hang up to make the call, they don’t actually disconnect, so when you dial your bank, they stay on the line and pretend to “answer” your call. They ask you to withdraw a large sum of money and send it to a foreign address, or hand it over to someone in person, so they can examine the serial numbers on the money, fingerprint it, and see if it is counterfeit — all while promising to return the money to you, which never happens.

No reputable business or bank will contact you to confirm information or to ask for help in an investigation, and the police or any banking institution will never ask you to use your own money in any investigation. Fraudsters are trying to get this information in order to steal someone’s identity and commit frauds in their name.

Tips

  • If you receive a call, hang up – get your bank’s phone number from your records or on their website to notify them
  • Ensure you hear a dial tone before you start dialing the number

Hackers monitor email accounts for e-transfer payments. Many people send the password needed to deposit the funds in the same email or a separate email, or they give the recipient a hint that can easily be determined by the hacker.

Anyone with the link to the e-transfer and the password can intercept an e-transfer and take your money. In most cases, your bank will not reimburse you.

Protect yourself from cyber-hackers and e-transfer intercepts:

  • Your e-transfer cannot be intercepted without the password. Change your email password often and don’t record your password on any mobile device or computer.
  • Don’t share any password or account information with anyone in an email, including your e-transfer password.
  • If you send someone an email transfer, do not share the password the same way you send the link – communicate in person or over the phone, or on a secure channel, like an encrypted messaging app or a separate text message.
  • Do not use hints that can anyone can easily guess – if hackers are monitoring your email, they may also be monitoring your social media, and could have access to your personal information.

In this popular scam, people are approached by strangers, telling them that bad luck or ill health will happen to them or to their loved ones unless the stranger blesses their money and jewelry. The jewelry and/or money is placed in a bag and they are told not to open it for a few weeks, at which point they discover it is full of worthless items. Elderly Chinese women are often targeted because of cultural beliefs.

This scam targets companies who use wire transfers and have multiple suppliers. Hackers monitor company emails looking for invoices sent by suppliers, and then create an email that is only one or two characters different from the email address of the real supplier. They email new bank account information to your business, tricking staff into sending a wire transfer to the hacker instead of the supplier.

By the time the scam is detected, it is too late for the wire transfer to be stopped.

Hackers can also pretend to be the CEO or CFO of a company and send an email to their payroll or accounts payable staff, asking them to pay a bill or to change an employee’s bank account information. The result is the same. The person receiving the false email is tricked into believing the email is from the person or company being impersonated, and sends the money to the hacker.

Tips to prevent business email compromise:

  • Use email authentication software and keep your anti-malware software up to date.
  • Don’t open attachments from unknown email sources. If you click on an email attachment or a link in an email, hackers could gain access to your computer with malware or a virus.
  • Always verify any information provided. Have payroll or accounts payable call and verify new banking information provided. Don’t use the phone numbers provided in the email – look up the number from old invoices or emails, or on the internet.
  • Forward business emails instead of replying. The correct email address has to be manually typed in or selected from the address book, and ensures that you are using the intended recipient’s correct e-mail address.

Fraudsters pretending to be from the Canada Revenue Agency are calling people and saying there is a problem with your taxes and there is a warrant for your arrest, or that you face deportation.

A recent variation of this scam has fraudsters pretending to be from Service Canada, claiming your social insurance number has been used illegally, and you either owe money or have a warrant for your arrest.

In both scenarios, the caller demands payment to cancel the warrant or stop deportation proceedings. They instruct people to buy pre-paid gift cards (such as iTunes) and provide the codes over the phone, or to deposit cash into a Bitcoin ATM.

The CRA will not call you and threaten to arrest or deport you. The CRA does not accept payment by credit card, pre-paid gift cards, iTunes cards or Bitcoin. Learn more

One of the most common phishing emails is when a sender claims that they have implanted malware on your computer to keep track of your online activity, like the visits they claim you have made to pornographic websites. Or they may claim to have sensitive or pornographic photos or video from your computer or webcam.

Sometimes the email will include a password you have used in the past. The criminal threatens to share these images or videos with your friends and family unless you pay, often in a cryptocurrency like Bitcoin.

The truth is that the criminal has simply obtained a list of emails and associated passwords from a past data breach and emailed everyone on the list. The password is likely out of date and no access to your computer has been gained.

What to do if you receive a phishing email?

  • Don’t reply or send money
  • Don’t worry – the scammers don’t have any data on you or your family members, or where you live
  • If the email includes a password you are still using, change it immediately – advice on creating suitable passwords can be found at GetCyberSafe.gc.ca
  • If you have been a victim of a phishing scam and have paid Bitcoin, report the incident to your local police department

If you need emotional support, contact VPD Victim Services at (604) 717-2737.

Many people have shown up at a concert or sporting event with tickets they have purchased online or through a stranger, only to find out they are fake and they are out the money they spent.

Unless you deal with a reputable ticket broker or re-seller that offers you a guarantee, you can’t determine if the tickets are genuine or not.

Fraudsters call seniors pretending to be a grandchild in trouble. They may trick you into saying the name of your grandson or granddaughter, and then claim to be that person. They might say they are in jail, that they don’t want their parents to know, and they need grandpa or grandma to send money to help them out. A second person may get on the phone claiming to be a lawyer, telling you to wire money, often outside of Canada.

Many seniors have been victimized in this way, as fraudsters prey on your love and concern for your grandchildren.

This scam can involve someone coming to your door offering home repairs or inspections. They offer a special price, as they are working in the area. They often ask for large advance payments, which they take without doing the work, or they charge a large sum for minor or shoddy work.

No reputable company will ask for payment up front. 

Tips

  • Get a number of quotes from different companies before you contract out work on your home to ensure you’re not being overcharged
  • Ask for references and contact them

Contact the Better Business Bureau to make sure the company is in good standing

Scammers and hackers use money mules to help launder the proceeds of their crimes, and hide their identity from police.

Money mule recruiters pretend to work for well-known businesses in Canada and internationally, using legitimate employment job search websites.

When you are “hired”, your “employer” might say they are sending you money to deposit in your account so you can pay a client or supplier. Or they may ask you to forward money to another person to pay for the computer or office supplies you are going to need.

The purpose is to get you to receive stolen money in your bank account. The fraudster wants you to forward the money in a way that is hard for police to trace. If police start investigating, you could be the suspect because the funds were received into your bank account.

Some victims of lottery scams have been used as money mules. They are asked to receive money and forward all or a partial amount somewhere else to pay for taxes or fees on their prize. Sending money to collect a prize is always a scam.

In the online dating version of this scam, the fraudster sends you a cheque he claims he cannot cash, and asks you to forward the money back to him. If the cheque is the result of criminal activity, your account has just been used as a money mule.

If you are told that you will receive money and to forward part or all of that money to someone else for any purpose, know that this is a scam — no matter how reasonable the explanation.

Help prevent becoming a money mule:

  • Don’t accept any job that asks you to transfer money or pay invoices from your personal banking account.
  • Don’t send or forward cash to anyone you do not know or have not met in person.

If you believe your bank account has been used as a money mule:

  • Stop all communications with the suspect(s).
  • Contact your bank or credit card company.
  • Keep all the information you have been sent by the suspect(s), including emails, text messages, QR codes for cryptocurrency wallets, etc., and contact VPD to report the fraud.

If you were recruited through a legitimate job searching website, report the fraudulent activity to the website.

You believe that the owner or landlord is showing you a property you are interested in renting. Or maybe you live elsewhere and are unable to view a property in person before agreeing to rent it. So you pay a deposit, but when you show up to move in, the property was never available for rent and you are out your deposit.

If the price is too good to be true, or they ask for cash only, a cash security deposit, or money to be wired, that should be a red flag.

Tips

  • Don’t send money to anyone you have not met in person and/or for property you have not seen in person
  • Ask for identification from anyone showing you the property and write down their licence plate if they arrive by car
  • Search for owner information in the Land Titles office to confirm you are dealing with the owner

Romance scams are still very common, and people, young and old, have been victims. They take place online, usually on dating sites. Fraudsters use various tactics and excuses, and usually have their intended victim move off the dating site and start communicating by text message or phone.

Some suspects spend weeks or months convincing their victims of their genuine affection and sincerity before they ask for cash or a cheque to help them get out of some type of trouble. Some victims send money more than once, sometimes over a period of months, before they realize they have been duped.

Help prevent romance scams:

  • Be wary of anyone you have never met in person and do not send them money.
  • Take it slow and research what you can about the person on the internet.
  • Do an image search with pictures the person shares with you.
  • Never share intimate photos or videos of yourself that could later be used to blackmail you for money.

Find more information on how you increase your safety if you are dating online.

You receive an email from someone you don’t know asking you to be a secret shopper, or perhaps you apply to an online ad. As payment, they offer to mail you a cheque, which turns out to be more than you are owed. They ask you to deposit the cheque, then send the overpayment amount back to them, perhaps keeping a small part of it as compensation for your trouble. The original cheque is later rejected by your bank as fraudulent, and you are out the money you forwarded to the fraudsters.

Tips

  • Don’t accept any unsolicited job offer or “work from home” jobs that involve collecting debts or payments or using your own bank account to receive cheques
  • Research any potential employer through the Better Business Bureau

Vancouver businesses, particularly restaurants, are being targeted in a service provider scam. Recent examples involve someone claiming they are from BC Hydro, and that the business has an outstanding electricity bill.

The caller threatens to cut the power within hours if they don’t receive payment. Staff are directed to deposit money into a cryptocurrency machine in order to avoid having their power cut.

See more information on the BC Hydro website.

Variations of this scam can happen with any service provider, such as telephone or internet. Remember to hang up and call your service provider with a telephone number verified on the internet, and not the number provided by the caller.

Legitimate Canadian service providers or government agencies will never demand payment in the form of cryptocurrency, such as Bitcoin.

The tiny little SIM card in your smartphone contains a lot of your personal information and data. A scammer doesn’t need to physically have your phone to gain access — all they have to do is get a little information and convince your cell phone provider that you are remotely swapping your SIM card to another phone. If they succeed, your phone will be deactivated and the scammer will begin receiving all your texts, phone calls, and access to any apps and information on your phone.

How does a scammer access your personal information to make this fraud possible? Often through phishing – unsolicited emails or texts with malicious links or fake login screens — or through mail theft. They can also access any information you share publicly online. If they have your phone number, you may receive a call or text you believe is from your cell phone carrier, asking you to verify information, like your account numbers or passwords.

Once the fraudster convinces you cell phone company to switch your SIM card to their phone, they can go in and change your passwords on every account associated to that phone number for recovering passwords.

Tips

  • Use caution with what you share online – don’t use your phone number and other identifying information
  • Create a PIN for any password or login changes, particularly for your cell phone provider account, and use two-factor security when possible
  • Use complicated passwords and make answers to security questions difficult to guess
  • Don’t use apps to sign into other apps, like Facebook – they only need to enter one to gain access to all connected apps
  • Make sure your phone is wiped clean when you are done with it, and destroy the SIM card if you can’t use it in your new phone

Options to report fraud and cybercrime

Do you want to make others aware of a scam in our community?

Report it to the Better Business Bureau’s Scam Tracker.

Check it out and see what scams are happening in your area.

Other resources

What does Nana say?

Find out what the five main types of online fraud are and how #NANAsays you can prevent them.