Scammers have thousands of tricks up their sleeves, but there are a few that tend to make their way to the top of the list year after year. Experts say that’s because they play on typically universal desires: love, financial security, social belonging, etc.. Last year was no exception. Love and money scams were at the top of the list (dollar-wise) in 2020.
Most people don’t want to believe they could be duped by fraud. That’s probably why the Canadian Anti-Fraud Centre (CAFC) estimates that just 5% percent of fraud cases are reported. This is particularly true of romance scams, the costliest of all fraud types in Canada in 2020.
“These romance scams are the least reported because by the time the victim figures out that it’s a scam, they're too embarrassed to admit they fell for it,” says Carolin Robinson, Manager of Risk at Vision Credit Union. If you’ve fallen prey for a romance scammer, you’re definitely not alone. Robinson says this type of fraud has impacted many people in Vision’s communities and it effects thousands of people across the country every year.
Romance fraudsters use dating or social networking sites to contact their victims. They research their targets on these platforms and create fake profiles designed to appeal to their victim, with background stories that provide a plausible reason for not being able to meet in person. They quickly profess their love to gain their victims’ trust, affection, and money. This type of fraud plays on emotions and may last for months, years, or until the victim has nothing left to give.
How to protect yourself from romance fraud:
Red flags:
Who wouldn’t love to get rich quick; to get the inside track on a profitable venture and finally say goodbye to money worries? “These scammers play on people’s desire to make it big and they promise huge returns for investments,” says Robinson. “They make it so tempting, but as soon as you give them the investment money, it’s probably gone.”
At $16.5 million in losses reported to the CAFC, investment fraud was Canada’s second costliest type of scam in 2020. Investment fraud is a deceptive, misleading or fraudulent investment opportunity, typically offering higher than normal monetary returns. Victims often lose most or all of their money and run the added risk of having their identity stolen, accumulating losses for unauthorized withdrawals on their credit cards and incurring high interest payments on investments that do not exist.
Popular investment fraud scams
According to the CAFC, pyramid scams, which focus of on generating profits by recruiting other investors, had a resurgence in 2020. One popular version took the form of a “gifting circle”. Participants gift a sum of money to join and ultimately must recruit others to make their money back. These schemes may offer products, but they usually have very little value.
Drafting off the success of Bitcoin, with its well-publicized investor success stories, the virtual currency market is constantly growing and adapting. New virtual currencies are developed monthly. Like an Initial Public Offering (IPO), an Initial Coin Offering (ICO) is an attempt to raise funds to help a company launch a new virtual currency. In an ICO fraud, the fraudsters solicit investment opportunities with fake ICOs. They provide official looking documentation, use buzz words and may even offer a real "token." In the end, everything is fake, and you lose your investment.
How to protect yourself from investment fraud:
Red flags:
Watch for our series of articles on how to protect yourself from fraud with advice from Robinson and other experts. For more tips on how to prevent yourself from falling victim to scams, check out the
Competition Bureau’s fraud page.