Financial Fraud in Canada on the Rise: Strategies to Safeguard Your Money in 2024

Watch out for the latest financial scams targeting Canadians across the country.

Vikram Barhat 14 June, 2024 | 4:49AM
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Broken keyboard and open lock illustrating cybercrime

As the April 30 tax filing deadline approached, financial fraudsters ramped up their efforts to con unsuspecting victims. With tactics ranging from impersonating CRA agents to issuing threatening messages, these scammers aim to trick individuals into believing they owe money to the Crown, leading to “dire consequences” if immediate action is not taken.

Overall, instances of financial fraud and their consequences are on the rise. The severity of their impact has prompted the Royal Canadian Mounted Police (RCMP) to sound an alarm to be safe and watch out for scams that play on people’s emotions. Yet, the Canadian Anti-Fraud Centre (CAFC) has reported Canadians were scammed out of a staggering $567 million in 2023 alone, up by $37 million from 2022.

Modern technology has increasingly empowered grifters to target not only specific demographics who may be less tech-savvy but also the broader population.

Here are some of the most prevalent financial frauds that Canadians should be vigilant about, along with strategies to avoid falling victim to these schemes.

CRA Scams

These scams typically surge during tax season, with scammers becoming particularly active as the filing deadline approaches. Fraudsters impersonate a government agency such as the Canada Revenue Agency. These scams include threatening messages – via text, email and even by post – about “money owed” to the “tax agency” or a “tax refund” - trying to gain the personal information of unsuspecting citizens and to convince them to send money or “face arrest or legal action”.

To make their demands seem legitimate, they may throw in a law enforcement or legal threat to build pressure.

You can protect yourself by understanding the differences between a call from the actual CRA and a scam. In any case, never divulge your personal or financial information if you receive a call, email or text message from someone claiming to be from a government agency. Instead, hang up and contact the agency using their official public phone number.

It’s also important to note the CRA will never make threatening calls or send a text with a link to claim your refund. Certainly, the CRA will never ask for payment through cryptocurrency or gift cards.

AI Voice Clone Scam

With the advent of generative artificial intelligence that can replicate anyone’s voice, a new wave of financial fraud has been unleashed.

With such AI tools easily available, scammers are using the technology to hoodwink people. Those with little or no knowledge of the upcoming AI technology are particularly vulnerable to the highly convincing cloning job of the new-fangled generative AI tools.

There have already been instances where fraudsters have used AI voice cloning software to call people posing as their friends and relatives in “distress” asking for financial help.

Even Hollywood celebrity Scarlett Johansson has had a brush with voice cloning. Johansson is currently taking legal action against leading AI firm, OpenAI, over an AI-generated clone of her voice without her consent.

Once criminals can clone someone’s voice, they can dupe unsuspecting victims since the caller sounds exactly like someone they know.

By taking some simple measures you can protect yourself from these scams. Upon receiving a call from someone claiming to be one of your friends or relatives and asking for money, don’t rush to comply. Take a deep breath and ask questions to verify who the caller is. Take a moment and ask questions to verify who the caller is.

If someone is posing to be your daughter, ask the caller questions only your daughter can answer. Some families have a special word or phrase that can be used to ascertain each other’s identity over the phone.

If uncertain, disconnect the call. Then, dial the person directly using a known phone number.

In this educational video, Canadian personal finance guru Preet Banerjee does a deep dive into the anatomy of a voice cloning scam and how to protect against it.

Beware of Deep Fakes

A deep fake scam is a variation of the voice cloning scam, except in this AI is used to clone someone’s likeness as well as their voice. As a result, the person in a video clip may make you believe what you’re seeing is real, except it’s not.

An Ontario woman learnt about deep fakes the hard way when she was cheated out of $750,000 by an investment scammer impersonating Tesla CEO Elon Musk.

The imposter used a deep fake impersonation of Musk to convince the victim she was talking to the real McCoy.

AI has the capability to generate a video replicating the likeness of anyone with remarkable accuracy. Not only can these videos mimic the person's appearance, but they can also reproduce realistic movements of their mouth, as well as their voice convincingly. The deceptive illusion thus created can blur the lines between reality and fiction.

Given the rapid advancements in AI, it’s important to use common sense, and not just your senses. The safeguards employed against AI voice cloning scams can also be applied to protect against deep fake schemes. For instance, ask a question to which only the real person would know the answer, and use a unique word or phrase known only within your family to authenticate their identity. When I doubt, hang up and call the person on their known number.

Phishing Scams

Remember those emails from “Netflix” asking you to pay via a link for a “subscription” that’s about to “expire”? Or that urgent-sounding text from “Canada Post” notifying you of the “missed delivery”? With a convenient link to “schedule” the next drop off? Some of us would instantly know they’re phishing scams because we don’t have a Netflix subscription, nor expecting a Canada Post delivery. But what if you are?

Fraudulent emails or fake websites (called phishing), SMS text messages (known as smishing) and phone calls (vishing) all share the same intention: to steal your personal information, or worse, your money.

Cybercriminals often exploit human psychology and manipulation techniques to intimidate, confuse, or pressure individuals into opening malicious links or attachments or revealing personal information—a tactic known as social engineering.

Be wary of unsolicited emails or messages. Never click on suspicious links sent via emails or texts, or on social media. Do not respond to unsolicited emails or texts that seem suspicious.

If not sure, call the service provider directly to verify the legitimacy of such messages and determine if any of these require any action on your part.

Crypto Cons

Scams promising unrealistically high returns on investments have persisted over time. With the increasing popularity of cryptocurrency, fraudsters are now preying on unsuspecting investors, often causing them to lose substantial amounts of their hard-earned savings.

In 2023, CAFC reported that over half of the reported $309 million loss due to investment fraud was associated with crypto investment frauds. These scams typically involve fraudsters placing advertisements on social media platforms and enticing investors via fake profiles across various online platforms including social media, dating websites, and email.

Fraudsters impersonate well-known figures or companies in the cryptocurrency space, promising high returns on investments. Victims are encouraged to send their funds to a wallet address provided by the scammer, only to realize later that it was a trap.

Some scammers artificially inflate the price of a low-value cryptocurrency by spreading false information or rumours to attract investors. Once the price reaches a peak, they sell off their holdings, causing the price to plummet and leaving investors with significant losses.

In some instances, fraudsters create fake Initial Coin Offerings (ICOs) for nonexistent or worthless cryptocurrencies, promising high returns to investors who contribute funds. After collecting a significant amount of money, the scammers disappear with the funds, leaving investors with worthless tokens. In the crypto world, this scam is called a rug pull.

Research thoroughly before investing in any cryptocurrency project to ensure legitimacy. Double-check information from multiple reliable sources and be wary of promises of guaranteed high returns or pressure to invest quickly. Only use reputable cryptocurrency exchanges and wallets recommended by trusted sources, and never share your private keys or login credentials with anyone.

Finally, trust your instincts. If something sounds too good to be true or feels suspicious, trust your instincts and refrain from investing until you have independently verified the legitimacy of the opportunity.

By following these simple steps and exercising caution, you can minimize the risk of falling victim to various financial scams and protect your hard-earned money.

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About Author

Vikram Barhat

Vikram Barhat  is a Toronto-based financial writer specializing in investing, stock markets, personal finance and other areas of the financial services industry, Vikram also writes for CNBC, BBC, The Globe and Mail, and Toronto Star.

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