March declared international ‘Fraud Prevention Month’

According to Industry Canada, billions of dollars are lost every year to white collar crime, including fraudulent financial, telemarketing and advertising schemes.

As an indication of just how far reaching the problem is, March has been officially declared “Fraud Prevention Month” in Canada and around the world.

This month, law enforcement agencies from Canada and the United States joined forces in Ottawa to explain how partnerships are key in fighting the global threat of fraud — particularly as criminals increasingly use international borders in an attempt to escape consequences of their actions.

“Fraud is a serious problem that undermines consumer confidence and drains billions from legitimate markets around the world. It cannot be solved by law enforcement alone,” said Sheridan Scott, Commissioner of Competition. “As Chair of the Fraud Prevention Forum (FPF), we work closely with partners in law enforcement, consumer and volunteer groups, government and the private sector to fight fraud aimed at consumers and business.”

During March, in conjunction with FPF, over 24 countries who form the International Consumer Protection and Enforcement Network ll attempt to raise awareness of the dangers of fraud by educating the public on how to recognize, report and stop it.

All Canadians are vulnerable to fraud, including the well-educated and well-informed, but older Canadians are particularly so. According to a report prepared by Canada’s Association for the Fifty-Plus (CARP), CARP’s Fight Against Scams and Frauds: 2005 Report and Recommendations:

60 per cent of those who lose money in telemarketing scams are older Canadians

Victims over the age of 60 account for over 84 per cent of the approximate $3 billion lost in Canada each year

“Today’s seniors face scams and frauds that are more complex and sophisticated than ever,” said Lillian Morgenthau, founder and president of CARP. “Modern scam artists are technologically savvy, using computers, the Internet, and websites to take over individual’s identities and steal their money. Then they quickly move this money out of the country so it can’t be traced.”

And in far too many cases, this type of crime does pay. Conviction for fraud in Canada rarely acts as a deterrent, with the pay-off for a crime far outweighing the sentence –often a mere slap on the wrist.

To reduce the risk associated with fraudulent activity, CARP has compiled the following Scam Watch List to warn people of potential scams and frauds:

1.The Shoulder Surfer. A lurking stranger sees and memorizes your PIN number. At the first possible opportunity, he pickpockets your wallet and makes his way to the nearest bank machine to withdraw money from your account. Advice: Always protect your PIN by ensuring no one sees you enter it.

2.The Disreputable Home Repairman. You respond to a flyer left in your mailbox, offering a good price on home repair. The repairman asks for a down payment to buy materials, but then he disappears with your money. Or he may do a shoddy job, overcharging in the process, and leaving you to pay someone else to repair the work. Advice: Ask friends or family to refer you to a trustworthy repair company.

3.The Imposter Bank Inspector. A caller, claiming to be an inspector or official from your bank informs you an audit is being done on your account. The caller then asks for specific banking information, including account numbers, credit card expiry dates and passwords. Having collected this personal data, the con artist then withdraws all your money. Advice: Remember, if the caller is a bank official, he or she would already have this information. If in doubt, ask for the caller’s number and say you’ll call back. Ensure the phone number is the same as your financial institution. If not, alert your bank immediately.

4.The “Phish-erman.” Your bank purportedly sends an email asking you to click on a link to the bank website to verify personal information, including bank account numbers and passwords. In the typical phishing scheme, you are directed not to a legitimate website, but to a replicate site created by thieves to collect your sensitive information. Advice: Delete the email. If in doubt, type in a phony number or password. A legitimate site will not accept it, but a phishing site will.

5. The fake fundraiser. You are contacted by phone, fax or email by a charity that sounds familiar, thanking you for your previous gift and asking you to be generous again by contributing regularly. Advice: Check whether the organization is legitimate by visiting www.cra.arc.gc.ca or call 1-800-267-2384.

6.The overfriendly lender. A “lending company” guarantees a loan for people with poor credit ratings. But before proceeding, the company requests an upfront fee, which may range from hundreds to thousands of dollars. Once you pay, it’s doubtful you’ll receive the promised loan. Advice: Only borrow from reputable financial institutions, and never pay an upfront fee for a loan.

7.The affinity fraudster. A new member of your church, ethnic or social group offers to handle your investment affairs. Because this person is associated with your organization, you feel he is trustworthy. The worst case scenario: your life savings will disappear into his fraudulent hands. Advice: Check credentials and references before allowing anyone to invest your money.

8.The ‘Pump and Dump’ investment broker. A ‘broker’ contacts you, promising massive returns on a penny stock. By promoting or pumping the stock aggressively, the broker convinces enough people to invest, thereby causing the price to rise. And this encourages investors to invest even more. Once enough people have been duped and the stock has been driven as high as it will go, the brokerage will suddenly dump it. Subsequently, the price plummets, and you can find no buyers for your shares – and the broker is not returning your calls. Advice: Don’t invest with anyone who guarantees a high rate of return. Check to see if the brokerage you are dealing with has been certified by provincial securities regulators.

9.The identity thief. By stealing your mail, rooting through your trash, pinching your wallet or capturing your personal banking information online, thieves can assume your personal identity. Once this information is attained, a number of fraudulent activities can be carried out, such as establishing a bank account and writing bad cheques, obtaining credit and applying for mortgages. Advice: Shred financial correspondence. Deal only with reputable online businesses. Monitor your accounts regularly and contact the bank at the first indication of anything suspicious.

10.The big (bad) banker. A seemingly credible businessperson encourages you to invest in an international loan fund, operated by the world’s largest banks. The fund is supposedly used to provide short-term financing to major companies and clients; and because the cash is needed immediately, you’re told they will pay high rates of interest over a short period of time. However, once money is invested in this non-existent pool, it does not resurface. Advice: Always investigate before signing on to an investment scheme.

11.The lottery scammer. You receive email or junk mail informing you that you’ve won a substantial sum of money in an international lottery, but to claim your prize you need to contact the organization and give them the special code contained in the mail. This involves three possible scams: you’ll be asked to pay a fee to access your nonexistent prize; you’ll be asked for bank account information so the prize can be “deposited directly”; or you’ll be asked to phone a 1-900 number, which will bill you at an exorbitant rate for each minute you’re on the phone waiting to claim your prize. Advice: No legitimate lottery requests money in order to claim your prize. To do so is a clear signal that you are being scammed.

12. The Nigerian letter. You receive a letter or email requesting that you help the sender transfer a large amount of money out of Nigeria or some other African state. (Often the sender claims that government persecution is the reason for such clandestine transactions.) In return for your help, you’ll receive one-third of the cash once it’s safely out of the country. You are then told to pay transfer fees to expedite the transaction. Advice: If you receive one of these letters, forward it to [email protected] to help a joint force of the RCMP and OPP catch the scammers.

13.The free or low-cost vacation. You’ve completed a ballot for a chance to win a free or low cost holiday. A few days later, you receive a call to say you’ve won, but to hold your prize, you need to send your credit card number or money in advance to cover the tax. Advice: Only fill out ballots for organizations your recognize.

14.The pyramid selling scheme. This is based on the theory that investors make their money from investors recruited after them. Once no more investors can be found, the last investors at the bottom of the pyramid loses their investment. Participants also risk prosecution since pyramid selling is illegal. Advice: Talk to a lawyer or accountant before investing in any multi-level selling opportunity to confirm it is not a pyramid.

15.The work-at-home scam. You’re asked to send in money (anywhere between $29.99 to $199) to receive a home business “start up” package which is guaranteed to generate huge dollars. After that you may receive a request for more money, or you may receive instructions on how you can place similar ads or notices thereby replicating the scheme. Or you may receive nothing at all and your money will go missing. Advice: If the business promoted really did generate megabucks, it wouldn’t be advertised in the paper or glued to a telephone pole.