Protecting Yourself from Scams and Other Shady Schemes

Focus on Fraud Prevention: Part 2

In Canada, government agencies have again been sounding the alarm, warning that various financial scams and fraudulent schemes are on the rise. According to information shared by the Royal Canadian Mounted Police (RCMP), fraud-related schemes cost Canadians a shocking $567 million dollars in 2023 alone, a figure which has increased $37 million dollars from 2022, and $187 million dollars since 2021. Unfortunately, the perpetrators of these schemes often target the most vulnerable Canadians, elders and those with disabilities, and are intent on separating them from their hard-earned savings.

Types of Scams

There are a number of scams that are routinely used by fraudsters, including Ponzi schemes and other ‘investment-related’ scams where the rate of return on the initial investment is promised to be significantly higher than investment opportunities offered by banks or other legitimate institutions. This purported high rate of return is usually coupled with the promise of a very short timeline for the return on the investment, often in an emerging area with little or low regulation, such as cryptocurrency.

Social Media and Schemes

Social media and the proliferation of instant communication with potential targets has provided scammers with new outlets through which to target and access potential victims. Along with email traffic, individuals now receive text messages, direct messages (DMs), and targeted posts from individuals engaged in fraudulent conduct, all with the singular goal of parting Canadians from their funds.

In addition to providing a multitude of targets, misinformation on social media has also increased, with a variety of “get rich quick” schemes posing as financial information for the unwitting. For example, in late August of 2024, American media outlets reported on the viral “free money” trend on TikTok and X (formerly known as Twitter) which creators called the “Chase Bank Glitch.” The social media trend instructed viewers to commit a form of cheque fraud by depositing a fraudulent cheque for a large sum of money and then withdrawing the cash from their bank account before the cheque could clear. A technical issue with Chase Bank’s computer systems allowed bank account holders to withdraw the balance deposited from the fraudulent cheque immediately after deposit, rather than requiring a waiting period. The trend caught on quickly, with a large number of individuals posting about their newly obtained “free money.”

Along with offering users “how to guides” for committing various schemes under the guise of financial information, social media platforms are replete with videos and memes glamourizing the life of individuals who engage in this form of unlawful conduct. A popular video template on TikTok, for example, pans through short clips of luxurious vehicles, jewelry, and exotic destinations with captivating background music, all while informing the viewer that these images could form part of their lives, too, after they “started committing tax fraud.”

Protecting Yourself and Your Finances

We live in a world where scams, shenanigans, and other forms of fraud have, unfortunately, become commonplace. The real question is: Can anything be done to protect individuals and their finances from this misconduct? The answer is yes.

The top three most reported types of fraud are identity fraud, service fraud, and phishing scams. Each of these scams are designed to lure the victim into disclosing confidential and sensitive information about themselves, such as their social insurance number, electronic passwords, PINs, or bank account numbers. It is important to remain vigilant about protecting this information. The simplest way to protect yourself is to avoid sharing these details, especially over the phone or via text message to an individual who claims to represent a financial institution or bank. When in doubt, hang up and call the number on the back of your banking card. In some cases, a quick trip into a local bank branch can save thousands of dollars and countless headaches.

Conclusion

If you are ever approached by an individual inviting you to invest in a “funds” or “opportunity” with the promise of large or quick returns, skepticism is the best course of action. Even if the individual has what they claim are legitimate documents for the investment opportunity, a promissory note or other document may not be the protection it appears to be if things go wrong and the money is gone. In situations like this, consult a lawyer to review any contracts or documents before you sign them and before you provide any funds.  

At the end of the day, fraudsters will always find fresh and creative ways to try to lure new targets into their schemes. The key to avoid becoming a victim is to protect your personal information and seek out independent legal advice before committing to any type of agreement.

Remember: If a financial opportunity, investment, or program sounds too good to be true, it likely is.

If you have questions about fraud, fraud prevention, fraud investigations, or civil fraud litigation, contact Luceo Legal for more information.

This article provides general information only about legal issues and developments; it is not intended to provide specific legal advice.