Canadians still appear to believe in the free lunch or pot of gold at the end of a rainbow, at least when it comes to consumer scams.
Men and women in this country paid out more than $90 million to fraud artists in 2016, according to the national Better Business Bureau (BBB). That represented a 50% jump compared to the $60 million bilked out of Canadians in 2015.
Even more troubling, the BBB estimates the dollar losses at only approximately 5% of what Canadians actually paid out in these schemes but were too embarrassed to report.
Still, there is good news; even as con artists become more sophisticated, small changes that cost little money and effort can keep individuals safe from most frauds. Here are the top five scams:
1. Catphishing for love
Here, the target gets sucked into giving their money over to someone on a dating site. The pitch usually consists of a romantic email exchange but numerous excuses as to why a face-to-face meeting is not possible. Then the fake suitor asks for money to help them through a rough patch.
This surprisingly effective scam cost Canadians $17 million in 2016.
What to do: Experts say don’t send anyone cash in these situations without meeting in person. That way you can least find out that your 40-year-old potential romantic partner is not in fact a 22-year-old Bosnian computer hacker.
2. Identity theft
As computers and smartphones become more ubiquitous for Canadians, hackers also are getting better using these devices to steal the identities of naïve users.
Some of this thievery is sophisticated, such as sending viruses to unsuspecting consumers. And some aren’t: Thieves may go through your garbage looking for financial documents with your social insurance number (SIN) or bank and credit card account information.
By whatever means, identity theft cost Canadians a cool $11 million last year.
What to do: When checking email, don’t click on unknown attachments. Experts say hackers have moved towards installing malware on such links. And change the passwords on your online accounts regularly.
3. Buying online
Online retail spending by Canadians is expected to reach $34 billion in 2018, according to Forrester Research.
As Canadians spend more online, however, they’re increasingly vulnerable to online buying scams. Here, you might purchase goods from a company that doesn’t exist or from a website that looks legitimate but turns out to be a false front for a basement scam operation.
Buyers lost almost $9 million in 2016 to fake online purchasing sites.
What to do: Buy only through reputable retailers as opposed to companies you’ve never heard of. Also, you can use third-party payment portals, such as PayPal.
4. Gambling on binary options
Binary options are the latest boiler room type scam in the investment world, not unlike penny stock schemes of past decades.
In this case, over the phone or by email, sellers guarantee potential investors a return on their investment within a certain time period.
Because of the sophisticated nature of the investment product, however, the investor often doesn’t understand the true risk of the financial vehicle. As a result, the novice ends up losing their initial deposit and possibly more as they keep investing in the hope of making up for their first losses.
In other cases, the trolling company is just a fake front and walks away with the investor’s cash.
In 2016, Canadians lost $7.5 million in these scams.
What to do: Experts warn investors to be cautious giving out personal information over the phone or the internet. Also, you should research the company with whom you’re investing. In addition, currently in Canada, there are no businesses authorized to sell or market binary options, according to the Canadian Anti-Fraud Centre.
5. Employment scams
Fraudsters contact someone over the internet with the line something like ‘you are the perfect candidate for our position.’
You might not even remember signing up for a job search with the company or employment site.
Then the scam artist will ask for personal information, such as your SIN or bank account information, to set up your payroll deposits. That’s when you find out your potential employment is an all-too-real financial fraud.
The BBB says Canadians lost more than $5 million in these scams.
What to do: Make sure the company contacting you is legitimate, perhaps by doing an online search. Also, you could call the firm and ask whether they actually sent you a job offer. As the fraudsters get trickier, Canadians can face an uphill battle keeping their money safe. But, similar to snake oil salesmen in past centuries, the majority of scams can be frustrated by simple changes.
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