How to Avoid Investment Fraud, Plus Other Scam-Busting Tips

Senior mature business woman holding paper bill using calculator.

Canadians lost over $200 million to fraud in 2021. Photo: Insta Photos/Getty Images

As the pandemic wears on, Canadians are facing a second threat in their homes.

With many people spending more time online during the pandemic, scammers have had more access to their victims than ever before. COVID-19-related scams have accounted for more than $7 million in losses since the beginning of the crisis, but new tactics unrelated to the pandemic are cropping up all the time. In 2021, Canadians lost over $200 million to fraud.


Lessons From 2021


According to the Canadian Anti-Fraud Centre, investment scams topped the list in 2021, with Canadians losing more than $70 million.

These scams often involve pitches for victims to invest in cryptocurrencies or a company through an official-looking website. Targets of this kind of fraud may also be contacted over the phone, with fraudsters using high-pressure tactics to reel in potential victims.

The Government of Canada advises Canadians to look out for the following red flags when it comes to investment pitches:

  • You’re promised high returns at no risk. A security with a high potential return is seldom free of risk
  • You’re contacted by someone you don’t know. Legitimate investments and advisors don’t approach strangers for money
  • You’re asked to act fast, because this is a “once in a lifetime” opportunity
  • You’re asked to keep the matter secret
  • You’re asked to sign forms or proxies in advance
  • You’re being subjected to pressure sales tactics and attempts are made to make you feel guilty if you hesitate to invest
  • You’re told your securities could be resold or exchanged above their market value provided you pay fees in advance
  • Financial transactions are carried out without your consent
  • You’re told that a regulatory agency has approved an investment. Regulatory organizations never give an opinion on the quality of an investment


Fraud and Online Shopping


The Better Business Bureau (BBB) ranks fraud related to online purchases as the riskiest with Amazon nearing the top of the list of most impersonated brands.

One popular scam the BBB is warning consumers to look out for involves a text message that appears to come from a well-known company like Amazon asking consumers to fill out a survey in exchange for a gift card, discount or product. The BBB says they’re often told it’s a limited-time offer and are urged to act fast. A link in the text message brings victims to a third-party website where they’re asked to fill out a form with their full name, email address and other personal information.

The BBB warns that even clicking the link can download malware onto your device, giving scammers access to sensitive information, including passwords for online banking and credit card information.


Fraud and Loneliness


Among those most vulnerable to fraud are seniors who live alone.

Bea Lockhart, who works as a volunteer with the Senior Support Unit, a Canadian Anti-Fraud Centre (CAFC) program that provides senior-to-senior victim outreach, says loneliness can play a factor in victimization.

“When the phone rings, it’s exciting,” the 76-year-old volunteer says of seniors living alone. “So they listen and they listen too long.”

A 2019 survey of 1,408 Canadians and Americans who were targeted by fraud conducted by the Stanford Center on Longevity appears to confirm the correlation. According to their data, those who engaged with a scam or lost money in a scam expressed significantly higher feelings of loneliness.

Living alone may also have an impact on our ability to screen fraud attempts. The same survey also found that respondents were more likely to fall victim if they didn’t have anyone to discuss the offer with.

Carol Gilmour, coordinator of the Senior Support Unit says fraudsters thrive on creating a sense of urgency with their pitches, especially those made over the phone.

“They want them to act before they have time to think,” Gilmour explains. “On the phone, they don’t give them a chance to check the story.”

For those who live alone, that pressure can feel overwhelming, but the screening process doesn’t have to happen in real time. Gilmour says family and friends can play a significant role in helping seniors protect themselves by introducing fraud into their daily conversations. She says, simply asking them if they’ve had any requests for personal information or money is a great place to start.

“You would be surprised what the answer might be, especially in this pandemic when everybody’s fairly isolated,” Gilmour says.

She also recommends going through their mail for prize offerings and letters sent from other countries and checking bank and credit card statements for unauthorized charges.

Seniors can also arm themselves through education. In the aforementioned survey, researchers found that even having general knowledge about the methods and behaviours of fraudsters had a significant effect on whether a participant engaged with a scam or not.

In fact, with fraudsters adapting their pitches to everything from the pandemic to the holiday shopping season, understanding the commonalities they share may offer the best protection.


More Tips to Protect Yourself


Gilmour and Lockhart identify five basic tips to remember when receiving any unsolicited contact:

1. Don’t Engage

Fraudsters cast a wide net, contacting victims through text, email, social media and even pop-ups that appear to originate from the website their target is visiting. Lockhart says the best defence is not to engage and warns that even the simple act of clicking on a link can give a fraudster remote access to your computer or device.

If you receive contact from what seems like an official source or reputable company online, visit the organization’s website or call them yourself to make contact instead.

2. Scrutinize Contact From Well-Known Organizations

Gilmour says some of the most common scams involve contact from what appears to be a well-known organization, including retailers, charities, government branches like the CRA and bank institutions.

She also warns against trusting the call display as fraudsters have the technology to change both the number and name that appears.

“If they didn’t originate the call, they don’t really know who they’re speaking with or corresponding with,” she says.

3. Don’t Let Them Rile You

Fraudsters try to elicit specific emotions like fear or elation to impair their victim’s judgement. From CRA scams that threaten arrest to the exciting limited time offers, Gilmour says the emotional element is common to most scams.

Even customer service scams involve some element of emotion, whether victims are told there’s a virus on their computer or their bank account has been compromised.

4. Don’t Be Pressured

Along the same lines, fraudsters often apply high-pressured tactics to rush you into a decision.

“Whenever there’s a call to act immediately, that should be a huge red flag,” says Gilmour.

The CAFC’s Take Five campaign encourages people to “pause, reflect and not react under the pressure of fraudsters.”

5. Watch Out for Unconventional Payment Requests

Fraudsters often ask for their money in specific ways that ensure the transfer of funds is both irreversible for their victims and untraceable to law enforcement.

Gilmour says to watch out for a request for payment through money transfer services, gift cards, wire transfers and crypto currency such as Bitcoin. Fraudsters may also send their victim a check or make it look like money has been deposited into their account and ask them to send funds back.


Fooled Me Once …


One of the main goals of the Senior Support Unit is to prevent re-victimization. Unfortunately, because of the breadth of fraud, lessons learned from falling victim once aren’t necessarily protective going forward.

But Gilmour says it isn’t only a false sense of security that makes fraud victims more vulnerable. Mass marketing fraud involves an intricate network of cyber criminals who often exchange tactics and information with one another, including the sale of victim information.

It’s a point that Carol says her volunteers try to drive home during their calls with senior victims.

“We try to show them how serious fraud is,” she says. “It’s just a matter of time before their contact information is sold to another con artist that will target them with a different fraud.”

Some fraudsters even play on a victim’s desire to recover their losses, convincing them they’ve arrested the guilty party and can release their funds for a court fee.


Fighting Back


The Canadian Competition Bureau estimates that only 5 per cent of fraud gets reported, yet losses continue to climb. This year, Canadians have lost $198 million to fraud, surpassing a staggering $106.6 million in losses last year.

Gilmour says that reporting fraud, whether you’ve fallen victim or had a close call, can make an impact.

“We try to get them to be fraud fighters,” Gilmour says of the seniors her volunteers contact. “These frauds are very sophisticated and complex and often involve many jurisdictions to elude law enforcement. Every little bit of information might be part of the puzzle law enforcement is looking for.”

Click here to report a fraud or fraud attempt through the CAFC’s online reporting tool or call 1-888-495-8501.

This article was originally published in 2021. 


How to Protect Yourself From Popular COVID-19 Scams