Financial Literacy Newsletter - March 2020

Fraud: recognize, reject and report it

A word from the Financial Consumer Agency of Canada

The Financial Consumer Agency of Canada (FCAC) is pleased to participate in the 16^th edition of Fraud Prevention Month. Organized by the Competition Bureau Canada, this annual education campaign brings together a group of 60 Canadian organizations, ranging from government agencies and law enforcement organizations to consumer and volunteer groups and private companies. The campaign aims to help Canadians recognize, reject and report fraudsters who are costing them millions of dollars every year.

During this challenging time, it’s important to be especially vigilant against fraudsters preying on the public’s fears over the COVID-19 pandemic. Always protect yourself from fraud when using online banking. Enter your financial institution’s website address in your browser yourself and don’t click on links in unsolicited emails. Also, note that financial institutions will never ask you to provide personal, login or account information by text or email. Learn more about how to protect yourself when banking online and what to do if you’re a victim of fraud.

In this special edition newsletter, we are looking at some of the many ways fraudsters operate, including digital fraud, identity theft, fake celebrity endorsement fraud, and mortgage fraud. These resources will help you recognize the signs of possible fraud and prevent it from happening to you or somebody you know.

FCAC and the Government of Canada also offer a wealth of information about these and other types of fraud.

What’s new

• As COVID-19 continues to spread globally, so do new associated scams. Find out about the current reported scams related to COVID-19
• Read FCAC’s latest information on what to do if you have financial hardship due to the COVID-19 pandemic
• FCAC is monitoring the rapid evolution of COVID-19 and assessing its impacts on banks and other regulated entities. Learn about how FCAC is responding
• FCAC released the results of its review of banks’ procedures for handling consumer complaints and its review of the operations of external complaints bodies (ECBs)

Digital fraud: be aware, take charge

By: Financial Consumer Agency of Canada

The theme of this year’s Fraud Prevention Month is digital fraud and we wanted to know: what are the most common forms of digital fraud, and what are some emerging ones? To find the answers, we spoke with Jeff Thomson, Senior RCMP Intelligence Analyst and Acting in Charge of the Fraud Prevention and Intake Unit at the Canadian Anti-Fraud Centre. Here’s an edited version of our conversation:

FCAC: What is the most prevalent type of digital fraud in Canada right now?

Jeff Thomson: There are many. But last year we saw a huge spike in identity-theft-related reporting. This includes:

• Telephone scams soliciting personal information
• Digital phishing scams via email or text, soliciting personal info, which can lead to SIM swapping

FCAC: What does SIM swapping involve?

Jeff Thomson: Increasingly, fraudsters are using your personal information in what’s called a SIM swap scam. You might get an email or a text saying your phone company has qualified you for a year of free data. The link takes you to what looks like your phone company’s page, but it’s a fraudulent page. You register at the bottom and the fraudsters use this registration to contact your phone provider, say that you have a new phone, and essentially swap your SIM out for their own.

(By asking the provider to activate a new SIM card connected to your phone number on a new phone, fraudsters can gain access to all your texts, emails and data.)

FCAC: How long does it take people to realize this has happened to them?

Jeff Thomson: Well basically your phone will go dead. So, it depends on how often you use your phone. Often it happens on a weekend, which makes it a bit harder to get hold of your phone company. There has been a definite uptick in SIM swap reporting (recently), and it’s still on the rise.

FCAC: We’ve also been hearing about something called “synthetic identity fraud,” what exactly is this?

Jeff Thomson: Yes, it’s a big industry as well. Fraudsters compromise enough of your personal info to create a fake identity, either in your name, or sometimes, they use the identity of newborns or deceased people, by gaining access to their SIN numbers. They use these details (often combining details from more than one person) to create a fake identity, and open up new accounts in that name.

FCAC: How is it that they aren’t caught? Is it because SIN numbers are hard to check against names?

Jeff Thomson: Yes, it’s all done through the credit system, and they will have enough to create a credit account using a SIN number, bank account number, and name. Then, they let that account sit there for a year or more to build up its credit rating, making small purchases that they pay off. That drives up the credit limit of the profile.

FCAC: It seems really time-consuming, does this pay off?

Jeff Thomson: They work on weekends and we don’t (laughter). Yes, it’s sophisticated and, to some extent, labour intensive.

FCAC: So basically, people build up their credit and then they go and use that credit and then they disappear? How hard is it to catch those people?

Jeff Thomson: It’s very difficult. You’re chasing a ghost essentially. It’s a completely fake ID.

FCAC: Are there any other new scams people should know about?

There is the evolution of Canada Revenue Agency (CRA) system scam, which has morphed into fraudsters calling to say they represent Service Canada. They say there’s been a fraud and they want you to provide your SIN number, address and date of birth.

(The older CRA scam involved phone calls impersonating a CRA officer, and claiming a person owed back taxes, which led to a request for cash).

FCAC: What are the basic messages you want the public to remember as they go about their lives online?

Jeff Thomson: We stick to: “Recognize, reject, report.” That is to say, recognize that scammers are using the internet, social networking, text messaging, internet advertising, emails and telephones to try to scam you. So, take five, don’t react, and if an offer is not sitting well or there is high pressure, reject it. Take some time to do some due diligence on the offers and the requests. Talk to friends. And finally, reporting is key! If it’s not being reported, we don’t know it’s happening. The information you have could be a missing piece for law enforcement.

FCAC: Thanks for your time today!

Jeff Thomson: You’re welcome.

**

What to do if you’re a victim of fraud

If you think you have been a victim of fraud, here are some steps you should take, according to the Canadian Anti-Fraud Centre.

The Canadian Anti-Fraud Centre is the central agency in Canada that collects information and criminal intelligence on all kinds of fraud. It is a joint collaboration between the RCMP, the Ontario Provincial Police and the Competition Bureau. You can contact them toll-free at 1-888-495-8501.

Automotive consumers should beware of fraudulent information on documents

By: Alberta Motor Vehicle Industry Council

The Alberta Motor Vehicle Industry Council (AMVIC) has partnered with the Competition Bureau’s Fraud Prevention Forum to raise awareness of fraud and educate automotive consumers and industry on how to recognize, reject and report fraud.

AMVIC is seeing an increase in complaints regarding fraudulent information being recorded on bills of sale, financing applications, etc., and wants to remind consumers that it is illegal to provide fraudulent information in order to be approved for financing.

Section 31.2 of Alberta’s Automotive Business Regulation states that all information must be included on the bill of sale and recorded accurately. All fees and charges, the total cost of the vehicle, any deposits or down payments and any remaining balance are examples of information that must be included.

Bills of sale must match the information provided in financing applications. Consumers need to pay close attention to what the salesperson is writing in the application form. If a document requires your signature, it is important to review it before signing it. Read every word and ask questions if you do not understand.

Protect yourself and be aware of the different kinds of fraud related to buying and owning a vehicle. Visit AMVIC’s website or your provincial or territorial government’s car sales regulator or consumer affairs office to learn more.  

Fraud for shelter and fraud for title

By: Financial and Consumer Services Commission of New Brunswick

Mortgage fraud is an issue that regulators, governments and financial institutions take very seriously – and it seems to be on the rise. In fact, a 2017 Equifax study found that suspected mortgage fraud has increased by 52% since 2013. 

In recent years, changes to interest rates and borrowing rules, as well as rising home prices and consumer debt loads have made it more difficult to qualify for a mortgage, leading borrowers to take the more drastic measure of lying on their mortgage application to be approved. In fact, the same Equifax study found that 13% of Canadians would be comfortable lying about their income to be approved for a mortgage. 

You must be honest about your finances when applying for a mortgage. Lying or exaggerating information on your application may be a criminal offence, regardless of the reasons behind it.

Here are some best practices you can follow to protect your name, your credit and your family:

• Use only licensed real estate professionals and mortgage brokers
• Be honest on your application – do not omit, lie or exaggerate information
• Be cautious if you are offered services or monetary kickbacks to help you get a mortgage with a specific lender or to save you money on your mortgage, especially if you have been declined elsewhere
• Never transfer the title of your property to someone promising to help you pay your mortgage
• Never sign anything until you understand and agree to what you are signing
• Never be pressured to agree to or enter a mortgage that doesn’t fit your needs
• Never pay mortgage brokerage or lender fees and payments related to residential mortgages in cash or directly to a person. These fees are collected and disbursed by your lawyer. An exception may be the appraisal fee to the appraisal company once you receive the invoice
• Get all information in writing and don’t rely on a verbal deal
• Do not apply for a mortgage on behalf of someone else or add your name to a mortgage unless you intend to buy the property. If your name is on the mortgage, you will be responsible for the debt if the mortgage holder cannot make payments
• Do a land title search – this will show if anyone else has a financial interest in the home and any mortgage or liens already registered on the title
• Secure your deposit – make sure your funds are held “in trust”
• Ask your lawyer about title insurance to protect against title fraud

Your home is your largest investment and it’s important to protect yourself against mortgage fraud and to resist the temptation to engage in fraud to qualify for a mortgage. The ramifications can go beyond losing the house of your dreams.

Watch out for celebrity endorsements that may be a scam

By: Ontario Securities Commission

If you see an ad with your favourite celebrity urging you to buy something, be careful. Increasingly, fraudsters are faking celebrity endorsements, using images or their likeness without their permission. Often this technique is designed to lure you into falling for an investment scam.

A celebrity endorsement, genuine or otherwise, does not necessarily mean it is a good investment for you. While you may admire or trust a celebrity, their endorsement alone does not guarantee how an investment will perform or whether you’ll make money on it.

It’s always a good idea to research the product or service, including the company or person selling it, to better understand its features, risks and any fees that may apply. Get as much information as possible.

As an investor, it’s important to ask yourself whether an investment product or service really fits your financial goals, and whether the person selling the investment is registered to do so. Making decisions based solely on a celebrity endorsement, either real or fake, could put your finances at risk.

How can you protect your money

1. Check registration

Generally, anyone selling investments or offering investment advice in Canada must register with a securities regulator like the Ontario Securities Commission (OSC). Registration helps protect you from unqualified investment professionals. Visit CheckBeforeYouInvest.ca to search for the name of a person or business.  

2. Recognize, reject and report fraud

Fraud is easier to recognize when you know what it looks like. Fraudsters are known to fake celebrity endorsements, and many investment scams have one or more of these warning signs:

• Promise of high returns with little or no risk
• Claim of a “hot tip” or insider information
• Pressure to buy
• Not registered to sell investments 

Report suspected investment fraud to your provincial or territorial securities regulator listed on the Canadian Securities Administrators’ website.

3. Ask questions

Always ask questions and take your time to make an informed investment decision. And if something sounds too good to be true, it probably is.

GetSmarterAboutMoney.ca has unbiased information on investing to help you with your finances. It also has the latest investor warnings and alerts.

The Ontario Securities Commission (OSC) is an independent Crown corporation that is responsible for regulating the capital markets in Ontario. You can contact the OSC Inquiries and Contact Centre or your provincial or territorial securities regulator for questions about investing, fraud prevention, and any concerns or complaints you have about celebrity endorsements.