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Internet Fraud and Scams Fact Sheet

Scams and frauds can happen anywhere, and anyone can be a victim. It’s important to understand how they work so that you can protect your hard-earned money. Here are some of the more common scams that you may encounter off and online.

Identity Theft

Identity theft refers to the use of someone else's personal information (name, mother’s maiden name, social insurance number, etc.) to commit crimes (RCMP – Internet Theft).

In January 8, 2010, it became illegal to possess or use another person's identity information with the purpose of committing a crime or to use that information in a deceptive or dishonest manner.

Identity Fraud

Identity fraud is the act of using the identity of another person (living or dead) or inventing a fake identity to commit fraud, (for example: applying for a credit card in the name of someone who is deceased).

The individual committing the fraud looks for personal information such as a full name, date of birth, social insurance number, full address, username and passwords for online services, credit card as well as banking information, and signature with the intention of using it.

Debit and Credit Card Fraud

Debit card fraud happens when a thief “skims" or swipes the information from the strip on the back of your card, or from the chip to create a duplicate of your card. This is done by using a “skimming” machine which scans the back of a debit/credit card and captures the important features of your bank card (bank number, account number, etc.) without actually making contact with your card. In some cases, the machines that read your bank card information can also capture your PIN.

Credit card fraud can happen several ways as well, including being “skimmed”. Your card could be lost or stolen and used to purchase goods and services. A criminal could obtain your card data and use this information to manufacture a counterfeit card, or the data could be used to make telephone or Internet purchases (also referred to as “card not present” fraud).

Phishing

Phishing is a term used for e-mails, text messages and websites that are fabricated by criminals to look like they come from a trusted source. They are used to collect personal, financial and sensitive information.  It’s also known as brand spoofing.

The content of a phishing e-mail or text message is intended to trigger a quick reaction from you. It can use upsetting or exciting information, demand an urgent response or employ false information or statements. Phishing messages are normally not personalized. 

Typically, phishing messages will ask you to "update," "validate," or "confirm" your account information. They might even ask you to make a phone call. Watch out for these catch phrases: 

  • “E-mail Money Transfer Alert:  Please verify this payment information below…”
  • “It has come to our attention that your online banking profile needs to be updated as part of our continuous efforts to protect your account and reduce instances of fraud… “
  • “Dear Online Account Holder, Access To Your Account Is Currently Unavailable…”
  • “Important Service Announcement: You have 1 unread Security Message!”
  • “We regret to inform you that we had to lock your bank account access.  Call this number to restore your bank account.”

Often, the message or website includes official-looking logos and other identifying information taken directly from legitimate websites. Government, financial institutions and online payment services are common targets of brand spoofing.

Advance Fee Fraud

Some companies will use mass marketing scams to provide loans to people. They often target people who have bad credit rating and wouldn’t qualify for a loan elsewhere, using phrases such as “Have a bad credit history?” or “Don’t have a credit rating?”

Once a user is hooked, they will initiate the fraud process by requesting a lump sum of money upfront in order to secure the loan. Once they receive your money, they often disappear.

Prize Pitch (Lottery)

A prize pitch scam is a mass marketing scam where victims will receive notification by mail, phone, or e-mail indicating that they have won a prize.  However, in order to collect the prize the victim is required to pay fees or taxes in advance.  Once the victim has provided the money, they may never hear from the organization again or they will receive further requests for money.

If you have won a prize in Canada, know that there are no fees or taxes to be paid. Be sure to keep track of contests, draws and lotteries that you enter. Also, challenge a caller who says you've won a prize to tell you where and when you entered.

Cash Transfer

Scammers will often tell a sob story, which consists of a heartbreaking event, followed by their need for emergency funding at which point they will ask for a small donation from you often via email transfer. To complete this transaction they will require your bank name, address, telephone number, name of beneficiary and your account numbers. The sender will often never be heard from again, unless it is to request more money. 

Telemarketing Fraud

Telemarketing fraud can happen in several ways. One common way is when a telemarketer calls your number and pretends to be offering you an exclusive deal and once you are interested, they will ask for your credit card information. They may also request that you make a charitable donation for disaster relief efforts, sometimes by claiming they are affiliated with the Red Cross or UNICEF.

Do not be afraid to request further documentation and answers about the company/group to verify their validity.

Online Shopping Fraud

People can buy or sell almost anything over the Internet. Unfortunately, criminals can use the anonymity of the Internet to steal from unsuspecting buyers and sellers.

For example, scammers may sell a product – often at a very cheap price – just so they can steal your payment card or personal information. They may also take your money and send you a worthless item, or sometimes, nothing at all.

Online Auction Fraud

Online auction sites are virtual flea markets that present new or used items that you can bid on. Online auction scams can include the false representation of an item, non-delivery of goods and services, as well as non-payment for goods delivered.

Online auctions can be rigged by scammers, who will often use “dummy bidders.” This is seen when you are selling a product, and the scammer can enter a low bid followed by a very high bid under another name. Just before the auction closes, the scammer withdraws the high bid and the low bid wins.

What You Can Do

Youth:

  • Most online shopping sites will contain a step by step procedure to illustrate safe payment methods. Look for it and be sure to use it. If you do not find it on the website, be sure to check out the website’s credibility at Canadian Anti-Fraud Centre.
  • Make sure the webpage you are using is official and trusted.
  • Always check your bank statements to ensure that all the spending that is being done on your card is being done by you.
  • If you have any doubts about an organization, contact the Better Business Bureau.
  • Be watchful of contests that offer highly valued items at a significantly low price.
  • Be wary of contests that only offer the prize for a “couple of hours.” Contact the Canadian Anti-fraud Centre  to verify the credibility of organizations.

Here are some helpful tips for youth and adults to stay safe and protect their hard earned money:

  1. Use strong passwords:  Use a combination of capital letters, lower cases, special characters and numbers. This method makes it difficult for people to figure out your password.  Change your passwords frequently.
  2. Secure your computer:  activate your anti-virus and block spyware software to ensure safer connections.
  3. Be social media savvy: keep your social media profiles on private and don’t provide any information that is not required.
  4. Secure your mobile device: your cellphone, laptops and tablets can be vulnerable to viruses and hackers.  Only download applications from trusted sources.
  5. Install the latest operation system: always download and install the latest version of available software as it is much safer, and less convenient for hackers as it fixes “bugs” that allow hackers access.
  6. Protect your data: use encryption (protective security) for your sensitive files and back up all your important documents.
  7. Secure your wireless network: lock your home Wi-Fi and avoid conducting financial transactions on these networks.
  8. Protect your E-Identity:  don’t give out your private information on the Internet.

If you suspect  that you or someone else is a victim of identity theft or fraud, or if you unwillingly provided personal information or financial information, make sure to:

  • Step 1 - Contact your local police force and file a report.
  • Step 2 - Contact your bank/financial institution and credit card company.
  • Step 3 - Contact the two national credit bureaus and place a fraud alert on your credit reports.
  • Step 4 - Always report identity theft and fraud. Contact the Canadian Anti-Fraud Centre