Scams are certainly nothing new, but did you know that hundreds of millions of dollars a year are scammed from ordinary Canadians just like you with financial scams ? That’s a scary thought. That’s why we took the time to research the top financial scams in Canadian history. Here you’ll find out everything there is to know about financial scams and, more importantly, how you can identify and avoid them.
Why You Need to Know More About Financial Scams
You may think you’re way too smart to be vulnerable to scammers, but the truth is, anyone can fall victim. Professional scammers are well-equipped to fool even the smarted people. You’d be surprised how easy it is for true professionals to scam thousands or even millions of dollars out of people who never thought it could happen to them. In this article, you’ll learn more about big scams, how they work, and how you can avoid them.
The Cryptocurrency Scam
This new form of digital currency is spreading across the world like wildfire. The only real danger with crypto is that is unregulated. So not only have financial investors taken an interest in it, but scammers have also. There are actually several ways that scammers can steal funds from unsuspecting investors. They can hack your crypto account or trick you into sharing this information.
What’s more, the police are not able to recover stolen crypto funds. If you have been scammed, you are still encouraged to report it to the police but you shouldn’t expect to recover the crypto. Because of the lack of regulations, there is not much anyone can do to help victims of crypto theft.
How to Avoid Crypto Scams
Before investing in cryptocurrency, you should inform yourself on how crypto works and how you can protect yourself. You can start by taking cyber security courses to prevent data breaches and protect both your personal information and your crypto. If anyone approaches you online to help with your crypto investments, do not share any information with them like your social security number, your address, full name, birthdate, phone number, or account numbers they will do financial scams. If you are interested in delving into crypto, start by meeting with a financial advisor at a major bank or lending agency who can explain the proves to you and secure your funds.
READ ABOUT : 10 Must-Ask Questions for Your Financial Advisor
The Romance Scam
It’s sad to say, but so many people fall victim to romantic cat phishing every single year. Expert scammers know exactly what to say and how to approach their victims. They prey on the victim’s desire to love and be loved in return, fulfilling their wildest romantic fantasies from a distance. Most scammers use the image of another person and pretend to be someone they are not. In reality, they are usually entire operations of hundreds of scammers, each working several victims at a time.
Romantic scams begin as any online romance might but eventually, there is some sort of emergency that comes up in which they require money. They may even pay it back the first couple of times. Eventually, they begin to request more and more money and they do not pay anyone back. This has left millions of Canadians in complete financial ruin. Life savings have been lost to romantic scammers. What makes it truly abhorrent is that these scammers play on the emotions of good-hearted, good-natured human beings simply looking for love.
How to Avoid Romance Scams
Online dating can be a safe space for people, but you do need to beware of scammers anywhere you go. Here are some red flags to look out for that could indicate someone is attempting to scam you:
The person appears to be perfect in every way (remember, no one is!)
· They rarely make any live video contact
· They ask about your financial status
· They ask for money
· They claim they are suffering from a serious issue that is extremely urgent to push you into making a decision quickly
If any part of you doubts the situation, follow your gut instincts. As wonderful as it is to find love, remember that love doesn’t cost anything. Someone who is only with you for access to funds is not the type of person you want in your company anyway.
The Income Tax Scam
This particular scam has been on the rise in recent years in Canada. financial scams call up unsuspecting Canadians claiming to have a tax refund ready for them. Users simply have to click on a link and provide their banking details to access their refund. The idea of possibly getting money back from the Canada Revenue Agency (CRA) is appealing to nearly everyone. Who doesn’t want an unclaimed refund?
These scammers can reach out by text, phone, or by email. They will either direct you to a link to enter information or request it over the phone. Many Canadians, particularly seniors, have been scammed out of thousands of dollars thanks to these CRA fraudsters.
How to Avoid a CRA Scam
There are a few things you should know about the CRA to prevent being scammed. Like the bank and other financial or governmental institution, they will never ask you for personal information like a social insurance number or bank account number. This information is to remain private. In the event is needs to be shared, this will be done either on a call you initiate or via a secured server.
If you doubt the authenticity of a CRA call, let them know you would like to call back. If it really is the CRA, they will accept. If it is a scammer, they will try to persuade you not to hang up.
Another key topic to keep in mind is that the CRA will be calling you if there is an unclaimed refund. It is your job or your accountant’s job to discover tax rebates and refunds and claim them accordingly. If you do not, the government will not be calling to offer you those funds. After a certain amount of time, the refunds expire. It is always your responsibility to ensure you file your income taxes correctly.
READ MORE ABOUT: How to Deal with CRA Tax Debt
The Employment Scam
More than $5 million a year is lost to employment scams. Essentially, these scams offer job seekers excellent job opportunities under the false pretense of a very high salary. Especially in today’s jo market and with the rising cost of inflation, job seekers are quick to jump on these types of opportunities, thinking brighter days are up ahead. These scams usually involve asking the potential employee to hand over their banking details for direct deposit or to complete a preliminary “test.”
Millions of Canadians on the hunt for better working conditions have fallen victim to these scams. Honest, hard-working people just like you. In most cases, the job seekers were found on reputable websites like Indeed or LinkedIn. The red flag is that they have been offered a job they didn’t apply for.
How to Avoid Employment Scams
If you haven’t applied for a job, it is highly unlikely you will receive a complete job offer just based on your online profile. Most companies require an in-depth interview process before hiring, particularly in higher paid positions. If someone reaches out to you with a job offer, that’s the first red flag that this may not be legitimate.
The next red flag is asking for personal information. No one needs your personal information until you have accepted an offer. Any company that asks for money before hiring is one to be weary of.
Another way to avoid employment scams is to verify the business offering you the job with the Better Business Bureau (BBB). This can help you instantly see whether or not a company is legitimate. This step alone can help you avoid employment scams.
The Advance Fee Loans Scam
This scam involves asking victims to secure their loan with cash up front. No reputable lender will ever ask for a security payment beforehand. Many people who find themselves in financial difficulty feel they have limited options when it comes to getting a loan and may be inclined to fall for this scam. This scam is a very costly one that costs Canadians millions of dollars annually.
If a lender insists you need to pay the security fee to acquire the loan, the BBB highly recommends you walk away and see a loan elsewhere. You can secure a loan through a known and reputable financial institution. If the bank refuses to loan you money, you can also work with direct lenders who do not check your credit but instead, verify your income in their approval process. A direct lender will not ask for a security deposit to secure the loan for you.
How to Avoid an Advanced Fee Loans Scam
If something sounds shady or unusual, it’s likely a scam. This is not the way traditional or reputable lenders work at all. If you are asked to pay this security fee, no matter how big or small, walk away. Head to a bank or well-known lender that is verified by the BBB. Even if you have very poor credit, you have more options than you think when it comes to securing a loan.
Online Purchases Scam
Creating a website is so simple, it can literally be done overnight. And that’s exactly what scam artists do. They create fake websites claiming to sell goods. They receive the payment and never send any goods out. This is one of the most prevalent financial scams of our time. In Canada, as much as $10 million to $15 million a year is lost to online purchase scams. If something about the website seems off, look into it before sharing your personal information. Keep in mind that recovering these funds is highly unlikely as the police have a hard time locating the scammers at all.
How to Avoid the Online Purchases Scam
Start by shopping only from major brands that you already know and trust. Yes, other websites may seem cheaper, but they may also be fraudulent. If you are about to make a purchase through a website you have never used before, here are some things you can do to stay safe:
· Check for online reviews
· Look for their social media channels and see if they are legitimate
· Verify the business with the BBB and be weary of businesses unknown to the BBB
The Wire Transfer Scam
This scam typically happens at the corporate level where it appears as though CEOs are redirecting funds through emails. Unsuspecting employees may receive these emails and click on the links which in turn give scammers access to the business’ data. Every year, nearly $20 million is lost to wire transfer fraud. The fraudsters can also reach out via text message or phone. The real danger with wire transfer scams is that they are quick and irreversible. Once the funds are stolen, it would be impossible to recover the funds.
How to Avoid Wire Transfer Scams
To protect your business from wire transfer scams, you should take care to ensure you have a technical team in place to monitor for this. These experts in tech can uncover potential frauds and alert employees to be careful.
As an employee, you should be careful not to click on anything you are unfamiliar with. If you receive a suspicious email, communicate with your tech team to report it. They will look into the source of the email, text, or phone call and verify the legitimacy.
The Travel Scam
Travel scams are pretty common and they have a high success rate for financial scams. Over 60% of people exposed to travel scams fall victim to them. Essentially, fraudster travel agents advertise exceptionally low prices for holiday vacations. This can sound very alluring to most people. They will typically ask for a deposit to secure the unbelievably low pricing. Once they receive it, you never heard from them again and there is no vacation to look forward to either.
This scam attracts so many people because everyone would love to save on travel and experience the world. If you have a family, you know family trips can be nearly unaffordable so the prospect of paying less – much less – is exciting to lots of people
How to Avoid Travel Scams
If an offer seems to good to be true, it probably is. Verify the legitimacy of the travel agent or travel company with the BBB before you proceed with a deposit. Most of the time, you’ll uncover the financial scams right here. You should also verify the advertised price for the same vacation with other well-known travel companies. Compare the pricing and see whether this incredible sale is feasible. Travel deals are typically extended to all travel agencies, not just one. If the big guys aren’t offering the same deal, it’s a red flag you should not ignore.
The Effects of Scams on Your Credit
If you are scammed out of a lot of money, you may run into debts. Unfortunately, these debts need to be paid and cannot be eliminated. If your credit card is scammed, you may be able to refute the charges and have them reversed. But in the case of the scams listed above, where funds are taken, recovery of those funds is impossible. Unfortunately, the effects of such a huge loss of income can leave you in financial scam peril and force you to take out loans to stay afloat.
If you have been a victim of scams or fraud, the first thing you should do is report it to the police. The next step is to call the credit bureau and see what can be done to manage the situation with as little damage to your credit score as possible. In some cases, concessions can be made but not always. And unfortunately, the money that is lost, is lost forever.
If you are unsure whether or not you have been frauded, contact your local police department. Explain your situation to them. They are very familiar with scams and should be able to tell you if you have fallen victim to one. Again, anyone can be vulnerable to a scammer so be aware and vigilant at all times