Theft and fraud are closely related offences police investigate today. Theft occurs when a victim is deprived of property or money without their consent. In the case of fraud however, the victim is deprived of property of money with their consent but the consent was obtained through trickery, deceit or falsehood. While anyone can be victimized; women, seniors and people with disabilities are common targets. In the vast majority of the cases the perpetrator is unknown to the victim.
Below are some common fraud schemes:
Advanced Fee Letter Fraud (419 / West African / Nigerian Letters)
Throughout Canada and the United States letters concerning the “request for urgent business transaction” usually the transfer of millions of dollars, are being sent out to consumers and business’ via mail, email and fax transmission. These letters are commonly referred to as Nigerian Letter Scams or West African Fraud Letters.
The scheme begins once a consumer receives a letter. The preferred method of sending these letters is through email. In addition to stressing the urgency and confidentiality of a transaction, these letters will also stress the importance of trust and honesty in order to make the reader believe that there is validity to the letter. For instance, the writers of these letters will commonly claim to be a Doctor and/or a corporate entity with a major corporation of Nigeria. There will also be some mention of government involvement.
Typically, after receiving a letter a consumer would respond either by phone, fax, or email. The response would be a request for further information on the requirements and procedure for the transaction. Once contact is established, the writer of the letter will normally ask for an upfront processing fee and in some cases arrange for a meeting to discuss the transfer of funds. Most letters come with a breakdown of the percentage of money each party involved will receive once the transaction is final. For instance, many letters will offer the following breakdown,
- 30% for the account holder
- 60% for me and my partners
- 10% to be used in offsetting taxes and all local & foreign expenses.
DO NOT open unsolicited emails. Spam usually means scam and the message may contain a virus that can damage your computer.
Copies of the letters (regardless of country origin) can be directly forwarded to the Canadian Anti-Fraud Centre via fax at (888) 654-9426 or by email at firstname.lastname@example.org.
Please contact CAFC by phone at (888) 495-8501 if contact has been made with a “Nigerian” representative.
Generally, this scheme involves company representatives calling individuals and stating, for example, that it is Microsoft calling and that their computer is running slow or has viruses. They offer to repair the computer over the internet, which can involve the installation of software or the customers allowing the representatives remote access to their computer.
Recent variations being reported have involved the suspects identifying themselves as the Canadian Cyber Incident Response Centre and have taken a more aggressive approach with individuals by stating their computer is being used by hackers and that they will be held responsible if they do not allow the suspect to repair their computer.
Allowing a third party to download software or remotely access a computer carries inherent risks. Keyloggers or other malicious software could be installed to capture sensitive data such as online banking user names and passwords, bank account information, identity information, etc.
Should you receive such a call please just hang up. If you have concerns regarding the safety and securities of your computer please contact trusted computer service companies to have them look at your computer for you.
Cheque Overpayment Fraud
Fraudulent cheques are used in a variety of scams such as advance fee letter fraud, overpayment and prize pitch to name a few.
Overpayment scams is the type of fraud where the person receiving the cheque is actually owed money for goods sold. The seller receives a counterfeit cashier’s cheque personal cheque or corporate cheque from the “purchaser” in an amount in excess of the amount owed; is asked to deposit the cheque and wire the excess funds immediately back to the sender/purchaser or the purchaser’s agent or shipper; and, the deposited cashier’s cheque is subsequently returned as counterfeit and charged back to the seller’s account.
Anyone selling goods should be suspicious of any cheque, especially if it is for more than the agreed selling price. Consider an alternative method of payment, such as an escrow service or online payment service. Talk to your bank about the safest way to receive funds from overseas.
To protect yourself against this sort of scam, never agree to a deal in which the payer wishes to issue an amount for more than the agreed price and expects you to reimburse the balance. The scammers use a variety of excuses to explain the overpayment, but any such excuse should be treated with the utmost suspicion.
In order to avoid overpayment scams, remember the following general words of advice:
- Know who you are dealing with; independently confirm your buyer’s name, street address, and telephone number;
- Never accept a cheque for more than your selling price;
- Never agree to wire back funds to a buyer. A legitimate buyer will not pressure you to do so, and you have limited recourse if there is a problem with a wire transfer;
Emergency or “Grandparent” Scam
Though the “Emergency Scam” (or sometimes referred to as the “Grandparent Scam”) has been around for years, the Canadian Anti-Fraud Centre warns the public to be on alert after noting a marked increase in the number of complaints in the last two months.
In the typical scenario, a grandparent receives a phone call from a con-artist claiming to be one of his or her grandchildren. The caller goes on to say that they are in some kind of trouble and need money immediately. Typically they claim being in a car accident, trouble returning from a foreign country or they need bail money.
A typical call can go something like this:
Con-artist: Hi, Grandma/Grandpa
Con-artist: Do you know who this is?
Victims don’t verify the story until after the money has been sent as the caller specifically asks that they do not want other relatives to know what has happened by asking “Can you please help me? I’m in jail (or in the hospital / or in some type of financial need). But don’t tell Dad. He would kill me if he found out, please send the money ASAP. I’m scared”
Wanting to help their grandchild, the victim sends money by a money transfer company such as Money Gram or Western Union.
Variations on the scam exist such as an old neighbour, a friend of the family etc. but predominantly the emergency scam is directed toward the Grandparents.
A very wealthy stranger has died and you are asked to assist with banking and to share the wealth.
You receive a wordy letter, or email message, from a stranger, seeking your assistance in moving large amounts of money, often millions of dollars, to your bank account. You are promised a very significant percentage for little or no effort on your part, perhaps as high as 20%, for simply providing your bank account details. You may be asked to be a trustee or to stand in as a long lost heir of a deceased’s fortune. A web site may even be provided so you can confirm the tragic death of some wealthy individual. The fortune may be said to be in cash in a safety deposit box, evidenced by a Certificate of Deposit. The message may have political overtones or refer to a Diplomat in another country who will broker the transfer of the money, often through some ‘back door’ arrangement. You may be provided an overseas phone number and asked to indicate whether or not you are interested so that alternative plans can be made should you decide not to participate.
Beware of tragic deaths and persons looking for your assistance in moving large amounts of money and to fulfill the role of trustee or heir. Legitimate estates do not solicit trustees or heirs in this manner and do not promise to carry out the exercise ‘through the back door’. If someone promises you 20% of a fortune for doing little else than provide banking details, it is too good to be true, and if it is too good to be true, it probably is not true. This inheritance scheme could end here with the takeover of your bank account and depletion of your funds by a number of fraudulent means. A second phase of the scheme could be invoked, in which you are asked to pay an up-front fee in order to collect your so-called inheritance. You do not normally pay money to collect money. This is also known as an advance fee scam.
The word phishing comes from the analogy that Internet scammers are using email lures to ‘fish’ for passwords and financial data from the sea of Internet users.
Phishing, also called “brand spoofing” is the creation of email messages and Web pages that are replicas of existing, legitimate sites and businesses. These Web sites and emails are used to trick users into submitting personal, financial, or password data. These emails often ask for information such as credit card numbers, bank account information, social insurance numbers, and passwords that will be used to commit fraud.
The goal of criminals using brand spoofing is to lead consumers to believe that a request for information is coming from a legitimate company. In reality it is a malicious attempt to collect customer information for the purpose of committing fraud.
Tips on how to spot and avoid phishing scams:
- Protect your computer with anti-virus software, spyware filters, email filters and firewall programs.
- Contact the financial institution immediately and report your suspicions.
- Do not reply to any email that requests your personal information.
- Look for misspelled words.
Always report phishing or ‘spoofed’ emails.
If you’ve received one of these suspicious emails, report it to email@example.com or the financial institution that it appears to be from.
Pyramid schemes are frauds that are based on recruiting an ever-increasing number of investors. The initial promoters (those at the peak of the pyramid) recruit investors who are expected to bring in more investors, who may or may not sell products or distributorships. Recruiting newcomers is more important than selling products.
No new money is created in pyramid schemes. Investors who get in early take their profits from investors who join later. At some point, no new investors can be found and as a result the last investors, who are at the bottom of the pyramid, lose their money. They also face prosecution, as pyramid schemes are illegal.
Before you invest any money in a multi-level company that could be a pyramid, get all the facts about the company, its officers and its products. Get written copies of the company’s marketing plan, sales literature, contracts and prospectus (a legal document that gives prospective investors information about the company). Avoid promoters who fail to clearly explain their plans. Have a lawyer or accountant explain anything you do not understand. Find out if there is a demand for the product, or if there are similar products on the market. Remember that the greater the promised return, the greater the risk.
Pyramid schemes are illegal under the Competition Act, and serious charges may be brought against you if you are operating or affiliated with one of these schemes.
Effective January 1, 1993, Industry Canada made amendments to the Competition Act, Section 55. A multi-level sales procedure is a pyramid if:
- There is compensation paid for recruiting a new salesperson.
- There is inventory loading, that is, the recruits must purchase an unreasonable quantity of product.
- Purchases are required as a condition of entry. (You may, however, be required to pay for a sample kit, but this kit must be at cost.)
Any individual with false romantic intentions towards a victim and by gaining their affection and trust (sometimes with the promise of marriage) gain access to the victim’s money, bank account, credit cards or in some cases by getting the victims (usually unknowingly) to commit fraud on their behalf. These scams have proliferated with the increase use of social media – social networking sites and dating sites. These sites are most common with scams that require a level of trust between the victim and the fraudster.
In the Romance scam the fraudsters have demonstrated that they are willing to develop the relationship over extended periods of time. This increases the trust level between the victim and fraudster and will result in higher dollar losses. This also results in a negative social impact on the victim as they have developed emotional and psychological attachment to the fraudster. While the fraudster is usually located in a faraway country, eventually want to meet the victim in person. It is at this time the fraudster will advise they can’t afford to travel and will seek assistance from the victim in covering travel cost. Other variations include the fraudster presenting situations of emergency/ urgency, such as a sick family member, and seeking financial assistance from the victim for various costs.
Some incidents have also occurred at the local level and involved the victims actually meeting the suspects to go out on dates and meeting at the victim residence. These cases are creating concerns for personal safety. For example, in one incident the victim reported having her wallet and some jewelry stolen from home.
- Distressed citizen worried about a loved one
- Talking about good friend or loved one in another country that is coming to visit or needs help.
- Mentions Western Union or MoneyGram
- Frequenting the bank more often
- Making unusual withdrawals both in amounts and frequency.
- Making multiple withdrawals ranging from $500‐ $3000 in Cash.
- Making large dollar wire transfers to countries in Africa, Asia or Eastern Europe
If you have received an unsolicited vacation offer please be advised of the following:
- Some of the solicitations are valid, some are not.
- Some offers are subject to you entering into a Timeshare agreement.
- Some offer a high end vacation but reserve the right to change this location subject to availability
Research the company with the Better Business Bureau and other sources from the internet.
If you have not requested information then “buyer beware” should be your thought process. Don’t fall for a high pressure sales tactic, if it’s a deal, it will be available again. If it is a prize you need not pay for it.
If your vacation call asks you to press a number like “9” or “5” it does not allow them to take over your residential line.