Protect Yourself: 4 Top Scams Making the Rounds and How to Avoid Them
As technology advances and more of our daily activities take place online, fraudsters are constantly finding new ways to trick their victims. From peddling shady investment schemes to posing as grandchildren in distress, these criminals prey on the unsuspecting and can cause serious financial harm. According to CPA Canada’s annual fraud survey, almost half of respondents (46 per cent) reported having fallen victim to financial fraud at some point in their lives. This highlights the need for increased awareness and vigilance to protect ourselves from these types of scams.
One type of fraud that is especially prevalent among seniors is the emergency scam, which makes targets believe a loved one is in immediate need of cash. The goal here is to make targets believe that a loved one is in urgent need of money because they are injured, have been arrested, need to pay bail, etc. Often, fraudsters will call on accomplices (fake police officers, court agents, lawyers, etc.) to make their stories more credible, says Sgt. Guy Paul Larocque, CPA, acting officer in charge of the Canadian Anti-Fraud Centre (CAFC). “They might even send an accomplice to collect the money from the victim, which can be very dangerous.”
The emergency scam is on the rise, with $9.4 million in financial losses reported for 2022. Senior citizens are especially vulnerable, accounting for nearly 30 per cent of the financial losses reported by the CAFC. To protect yourself, be wary of calls from someone saying they need money immediately. They want to create a sense of urgency, but you need to take a step back and find out the facts for yourself. If the caller claims to be a law enforcement official, hang up and call your local police directly, using a phone number from a reputable source.
Another type of fraud that is taking a toll on Canadians is investment fraud. This is by far the most financially devastating type of fraud, with losses almost doubling from $164 million in 2021 to $308.6 million in 2022, according to the CAFC. “Most of these scams are related to cryptocurrency investment platforms,” says Larocque. “Individuals often start off with small investments that quickly seem to generate huge profits. They then invest much more—even their entire life savings in some cases. Unfortunately, the platform is entirely controlled by a fraudster who disappears with their money or charges them huge withdrawal fees.”
To protect yourself from investment fraud, it's important to do your homework. Check if the investment platform or seller is on the Canadian Securities Administrators’ “Are They Registered?” list, and if it is on your provincial securities regulator’s list of unlicensed firms. Be reasonable with your expectations. “No investment can guarantee mind-boggling profits, especially if it is presented as risk-free and short-term,” says Larocque. Never hand over control of your electronic devices to a stranger. Watch out for other variations on this scam: fixed income investment schemes, franchise and business opportunities, gem scams, initial token offerings, pyramid schemes.
Online dating scams are another type of fraud that can be financially devastating. With these scams, which accounted for $59 million in losses in 2022, the perpetrator generally creates a fake profile on social media or dating sites, then starts showing interest in a target. Once a relationship develops, they start asking for money, whether it be for travel, a medical emergency, family assistance or other reasons.
To protect yourself from online dating scams, look out for red flags. Be suspicious if someone you’ve never met professes their love for you; if that person always has an excuse not to meet in person; if they try to “guilt” you into sending them money; and if they ask you not to talk about them with family and friends. Always avoid sending money to someone you’ve only met online, no matter how much you think you know them. Remember, if something seems too good to be true, it probably is.
Lastly, phishing scams are a form of fraud that try to steal sensitive information, such as usernames, passwords and credit card details, by posing as legitimate entities. They can be particularly hard to spot, but being vigilant can help. Look out for suspicious emails, text messages or phone calls that ask for personal information or redirect you to a fake website. To protect yourself, always double-check the sender's email address and verify the legitimacy of the request through other channels. Never click on links or download attachments from unsolicited messages.
Fraudsters are always coming up with new ways to scam people out of their hard-earned money, but by staying informed and being cautious, you can protect yourself from falling victim to their schemes. If you suspect that you’ve been a victim of fraud, don’t hesitate to report it to the appropriate authorities, such as the Canadian Anti-Fraud Centre or local law enforcement. Remember, prevention is always better than cure.
As a business owner, I was looking for a Forensic Accounting service that could help me assess and prevent fraud, and Forensic Restitution exceeded my expectations. They provided a comprehensive, detailed analysis that allowed me to make informed decisions and protect my company. Highly recommended!
- R. Woodburn
Uncovering Financial Misconduct: How Forensic Restitution Can Help You Fight Fraud
If you need assistance in uncovering fraud or financial misconduct, please don't hesitate to contact us. Our team of forensic accounting experts is here to help you.