Fraudsters and scammers are getting more creative and innovative as technology evolves. They are operating increasingly elaborate schemes and are able to prey on anyone with a phone, email address or a credit card. It’s important to be aware of the different types of scams and to know how to spot them.
When it comes to fraud, everyone is a potential target no matter how intelligent or tech-savvy you may be. Fraudsters will use every trick to convince you to send them money or your personal information.
Licensed Insolvency Trustee, David Macdonald, is also a certified fraud examiner. He has in depth knowledge of how fraudsters operate and how you can protect yourself from even the most well-laid traps.
In this podcast David also discusses:
- How Artificial Intelligence (AI) is making it easier for fraudsters to harvest person information
- What to do if you are a victim of fraud
- How to spot red flags
- Scare tactics to be aware of
- The importance of reporting the crime to the Canadian Anti Fraud Center
If you are struggling financially or have been a victim of fraud, consulting with a Licensed Insolvency Trustee can help you get back on track. They are licensed and regulated by the federal government of Canada.
Read the Transcript
Wayne Kay 00:04
How do you protect yourself against fraud? That’s our topic today with the Debt Matters podcast, where we help Canadians find solutions to their debt with Licensed Insolvency Trustees from across Canada.
I’m Wayne Kay, and in today’s show, fraud. How often are Canadians victims of fraud? We’re hearing about it a lot these days. How do these fraudsters go about getting our personal information? Are there some ways we can recognize fraud? And what do you do if you find out somebody’s trying to defraud you or you feel like you’ve already been a victim of fraud?
Well, to tell us this and more, my guest today, Dave Macdonald with Allan Marshall & Associates, Licensed Insolvency Trustee with two offices, one in Victoria, BC, the other in Dartmouth, Nova Scotia. Thanks for being here, Dave.
David Macdonald 00:56
Glad to be here. Thanks for having me.
Wayne Kay 00:58
I think today’s topic is something we all need to learn about, and that is how to protect yourself against fraud. Is it surprising to you the amount of fraud that’s going on these days?
David Macdonald 01:12
Well, it’s not. I mean, in addition to being a Licensed Insolvency Trustee, I’m also a certified fraud examiner, a CPA, and I’m certified by the American Association of CPAs, as in financial Forensics.
So I’ve had a fairly active fraud practice in the past, and so I have a little bit more of an idea of what’s happening in the marketplace because I’m still getting stats and interviews and things like that sent to me.
In 2021, there were over 106,000 fraud cases reported in Canada totaling over $380,000,000 in losses. That’s according to the Canadian Anti Fraud Center, and those are only the reported cases for that year.
Many small businesses and individuals never end up reporting either out of embarrassment or because they’re told by the police and the banks that there’s no hope of getting the money back, so they don’t bother getting entered into the official statistics. It’s a plague on the Canadian economy.
Wayne Kay 02:11
Wow, that’s a big number. I knew there was a lot of fraud, but I didn’t realize that much. And it’s probably worse now because with AI coming into play, they’re saying that is causing havoc for fraudsters or for consumers being taken advantage of.
David Macdonald 02:30
Oh, absolutely. People are putting so much of their lives on the Internet now, through streaming videos or things like TikTok, that AI is now able to start harvesting that information. And it can do things like mimic a person’s texting patterns, how they write, how they speak, what they sound like.
And they’re starting to use AI tools to put together fraud, where the fraudsters pretend to be somebody that you might know. They’ve got enough of their personal details from their life to throw in a few tidbits of information, make you think it sounds like them. Even worse, the voice can be that person’s voice that’s been rearranged. It’s very difficult for some folks to figure out that that’s not the person that they’re saying that they are.
Wayne Kay 03:16
And I actually know people who have fallen for that grandparent scam where they get the phone call from police saying that they’re such and such. Their grandchild is in jail, they need money, they need $10,000 to put them up for bail and they’ve actually sent the money. But luckily it was somebody who I knew who then contacted police immediately and were able to go get that cash back. But it’s terrifying, the amount of money.
David Macdonald 03:46
Oh, absolutely. As I say, that’s a minor amount. Now, anecdotally in my insolvency practice, I don’t have a stat for this, but we are seeing more and more people coming in that have been defrauded, that have lost savings, that have taken out additional credit to feed to a fraudster and they can’t get the money back and then they’re responsible for the debt. And that is happening more and more.
Wayne Kay 04:09
Really, they’re responsible for it.
David Macdonald 04:15
The banks don’t want to try and get the money back. I mean, they don’t get paid for it. And once a transaction has gone far enough, they can’t reverse it. It’s gone once it’s moved through the financial system.
Wayne Kay 04:26
How much money have you seen? What’s the biggest number you’ve seen?
David Macdonald 04:31
The biggest number I’ve seen was over $750,000 out of a senior that liquidated their life savings, took out a mortgage on their home that has been paid off and the number of credit facilities and they’re on a basic pension. They’re not going to be able to have anything like the retirement that they had dreamed and saved for all their years.
Wayne Kay 04:52
That’s got to be heartbreaking.
David Macdonald 04:55
Absolutely. I mean, we can help them on the insolvency end to get rid of some of that debt, but still the money is gone. You’ll never get it back.
Wayne Kay 05:03
So how are these fraudsters doing it? Are they just literally going on our social media?
David Macdonald 05:10
Well, there’s a lot of that. You know, we hear about things like big companies or organizations having data breaches that can lead to identity theft. But the vast majority of fraud committed against individuals in Canada is because we voluntarily give people our personal information over the phone, over our computers, over our mobile devices. And fraudsters are very skilled at convincing people that they’re somebody that they’re not.
So whether they’re trying to say they’re a friend or a family member like we talked about before, whether they’re a representative of the government or CRA from a financial institution or reputable business like Microsoft or Apple or even pretending to be from a law firm, that’s threatening some type of legal action.
Once they convince you that they’re somebody that they’re not, then they try and use whatever tool they have available to them to try and convince you to give up more of your personal information or to get access to your banking, to your phone or to your computer. All with the goal of getting into your assets and getting access to potential credit that you might have.
Wayne Kay 06:14
So do you have some advice here on ways to recognize fraud?
David Macdonald 06:21
Yes, there’s never an exhausting list because fraudsters are always coming up with new and intriguing ways to try and separate us from our money. But there are a number of red flags that people can look at.
The first one is if you’re dealing with anyone that is trying to get you to do something and they’re playing on your emotions. Things like sympathy or fear or uncertainty, they’re all very common ways to try and put you off balance and have you not think twice about what it is they’re trying to get you to do.
On the sympathy side, a romance scam, those are becoming more and more common as online dating and chat rooms become more popular. Somebody gets to know you online, you get to have an attachment with them, they make you feel very special. Then there’s something – some terrible thing they need help with. So they need a little bit of money sent to them or they need to transfer money to your account or back again or something.
And people, they want to help, that’s human nature. They feel sorry for folks they care about and it turns out they were just trying to string you along to get access to your banking or your personal information to commit more fraud on you. People are very shy about ever admitting to people that that type of scam has happened to them. So again, that’s another thing that doesn’t show up in the stats.
Fear is a big motivator for people. You hear very often that or we’ve all gotten those voice messages sometimes that say they’re from the Canada Revenue Agency and there’s a warrant to be issued for your arrest if you don’t call immediately and make mean. Really, in Canada we have a very fair and straightforward legal system. Nothing happens quickly. There’s always due process. It’s got to go through the courts.
No one goes to jail for owing money or owing taxes. Unless you’re some type of criminal mastermind that’s taken people for millions of dollars. It doesn’t happen that way. But if you can scare somebody and the thought of being arrested or going to jail – it is a very terrifying thing for a lot of people, especially older people or new Canadians are very terrified of running afoul of the legal system. And so trying to use that type of card against someone, that’s a big red flag.
The phone company is not going to threaten to send you to jail. CRA is not going to take you to jail. Anytime you see something like that, it’s definitely a red flag that you’re not dealing with someone legitimately that pressures you to take immediate action. It is another big red flag.
There’s nothing that can’t be dealt with over a couple of days or a week. And if somebody is telling you you’re not allowed to put down the phone or they’re going to be arrested, or you have to log into a website or click on a link on your phone immediately. That’s a clear sign to stop, hang up, disconnect, unplug your computer, however it is you’re communicating with these people and back away.
There is no reason why you should ever need to do something like that. And no organization is going to pressure you to make payments with a non standard method like an e transfer, or buying gift cards or even getting your credit card over the phone. Everything can be paid by cheque. Everything could be for a legitimate organization. It could be paid by electronic bill payment.
Anyone that’s looking for more of your personal details or getting you to pay by a non standard method, that’s a massive red flag that you should be looking at and backing away from.
Wayne Kay 09:40
Okay, good advice. One thing I found is that a lot of scams seem to come in through the home phone and I don’t have a home phone anymore. And I’ve got every phone number that I need that’s already in my cell phone. So if something comes up and it says number unknown or I don’t recognize the number, I don’t answer it.
David Macdonald 10:02
And that’s probably a good thing. But you and I are of a similar generation, younger folks and even some older folks too, they do a lot of stuff by texting. And there is a large number of texts that are coming through now from fraudsters. They can, what we call, spoof the phone number to make it look like they’re texting from another phone number or organization. And they’re sending messages through text, knowing you’re going to see it.
And one of those emotions that they might play on is fear. Or even, you know, you need to contact the Canada Revenue Agency immediately or contact Microsoft or Apple. If you’ve got an Apple device – fix this problem and people see that, it’s hard to ignore when a text comes in, right? And text can contain links to websites, to malicious software or applications that can infect your phone and start gathering up your personal information.
Wayne Kay 10:55
So they’re really good at assuming that we’re all using similar things like we all have an Amazon account or we all have a Netflix account. And so when they say that, well, the payment was missed on this Netflix account. I guess that’s one of those things where we go, oh well that’s interesting, but I don’t have my phone connected to it. So for me that’s always kind of a red flag when I do see those, but I do get them in my email.
David Macdonald 11:23
Yes, as I said, fraudsters are as creative as anyone on the face of the earth in trying to find ways to separate you from your money. That’s kind of their nature. They don’t want to work, they want to take the easy way. And if they can find an easy way to make people respond, that’s what they’ll do. And they’ll try it over and over and over again.
Wayne Kay 11:42
I’m always surprised by the number of people that will pay. They’ll do crypto or go and buy gift cards and to me that’s always like the big red flag then, because I don’t even know how to buy crypto. They said, go send us this. I’d be like, I’m sorry, it’s not going to happen because I have no idea how to do it.
David Macdonald 12:01
And because of that, that’s what makes asking for a payment method like that so appealing to a fraudster. Because you don’t know anything about crypto. Most people don’t know anything about it. My elderly parents certainly don’t, or my kids. Hopefully they don’t know at this age anyway.
But usually they’ll send you some type of link either through your phone or email that you’ll click on and it won’t have anything to do with crypto. It will be just some way to get more access to your devices or to get you to log into a site that looks like a bank site or a legitimate bitcoin exchange or something like that.
They’re just going to harvest more personal information from you like passwords and your email address and where you’re located at. Sometimes it’s a deeper level of fraud than you would expect.
Wayne Kay 12:45
So if all of a sudden the spider senses start tingling in your neck and you go, okay, I believe I’m on with a fraudster, somebody who’s trying to get some info from me, what do you do in that situation?
David Macdonald 12:59
Well, the first thing is that you shouldn’t believe everything that you’re reading or hearing. You should have some doubt about who you’re talking to and every reputable organization out there, you will be able to contact them independently, not the number or email this person is telling you to contact them at.
You can go and find out your bank’s phone number. It’ll be on the back of your bank card, on your credit card. Go hang up the phone, turn off the computer, say, you know what, I’ll contact you guys directly and I’ll confirm this is actually happening. You always have the ability to stop.
Second, and this is probably the most common sense bit of advice, but it happens enough, I’m going to reiterate it. Don’t give out personal information over your devices. Don’t enter it on a website that you’re not 100% sure of.
It happens. Don’t click on links that people are sending to you unless you know exactly what it is. If somebody’s sending you a link to go to your bank, just go to your bank directly. Don’t use the link. There’s no need to do those types of things.
And be extremely careful. If anyone you’re talking with is asking for any type of passwords or access codes or these days the hot ticket is asking to do anything with two factor or multifactor authentication on your device or computer. So anyone that’s asking for those types of things, it is a massive red flag of a scam.
And any reputable organization, they don’t let their call center folks have access to passwords or MFA codes or anything like that. There’s no reason why anybody should legitimately be asking for you for those things to give them to them.
Wayne Kay 14:36
There were a few things that you’ve mentioned during our time here and one of them is shutting the computer off. That just means they can’t get into your computer if the power is off, right?
David Macdonald 14:48
Absolutely. I’ve had this happen to one of my parents and I’ve been briefing them for years on this kind of thing. But still my mom probably clicked on a link that she shouldn’t have and something popped up and then that chat window opened up with someone claiming they were from Microsoft and there was a problem with her computer and the police were going to have to be called unless she started doing some things.
And to her credit she didn’t know what to do. So she didn’t feel right. She just unplugged the computer and that was it. That shut it down. We got a computer guy to come in. He confirmed that clicking on the link had installed some malware on her computer. We had to clean it up before we connected it to anything.
So they hadn’t hopefully had a good chance to go through everything. But these things can happen. Hang up the phone, disconnect the computer if they’re coming to you from that way and go call somebody.
Call a friend, call a family member. Say, hey, something funny is going on and I don’t feel good about it. Tell me what you think about it. A fraudster will always try to isolate you and not give you a chance to talk to somebody else. They will try and keep you on the line.
They will tell you not to leave the computer or bad things will happen. Again, don’t be pressured. That’s not the way that real companies deal with people. Go talk to somebody else. Don’t just be quiet about it. And the sooner you do that, the less chance you have of something bad happening.
Wayne Kay 16:05
So all of a sudden I’ve sent the money and then I run into you and I tell you what I did and you’re like, oh that sounds like fraud. I think you’ve been taken advantage of. And then what do you do? So what do you do if you feel like you’ve already been a victim?
David Macdonald 16:24
Well if that’s happened then the first thing you need to do is contact your financial institutions and maybe even CRA immediately. I know everyone hates calling those 1800 numbers on the back of their credit cards and things because they think they’re going to be on the phone for ages.
But if you ever go into one of those, one of the first options that you’ll have to press one or two or three for is, is there a fraud issue? The banks want you to call them. They make that easier to do than any other service that they offer because fraud costs the banks billions. They will put you in touch with someone at the bank immediately that can lock down your accounts, maybe reverse a suspicious transaction if it’s recent enough, same day. Quite often they can stop a transfer from going through or reverse it.
So the sooner you can call your bank and get them to lock down your accounts and review your transactions, the better. The next thing, change your passwords. We tell everybody, don’t use the same passwords for different accounts. But the reality is I can’t remember 20 different passwords and most of us don’t.
Wayne Kay 17:27
David Macdonald 17:27
Oftentimes there’ll be some type of phishing for information from you and they’re not going to go after that one account right away. They’ll sniff around on as many different accounts that you have as they can using your passwords or variants of your passwords, or if they’ve got things like your date of birth. They’ll try those types of things, putting them in the mix to see if they can get into other accounts before they actually do something.
Call the credit bureaus. We have two credit bureaus in Canada TransUnion and Equifax. And if you think that somebody might have your information or be in the process of frauding you, they can put a fraud warning on your credit files that will let you know if somebody is trying to take out additional credit in your name or if there has been credit taken out recently that you didn’t know about. And that way you can nip that stuff in the bud right away as soon as something happens.
Wayne Kay 18:18
Oh, funny you bring that up because I just heard about that from a friend of a friend two weeks ago. Left their wallets in the grocery cart at a grocery store, came back, they actually saw who took the wallet, but they’d already tried to open new accounts for credit cards with that information because they had their ID and everything.
David Macdonald 18:42
Yes, and worse than that, some fraudsters won’t go for the quick small dollar type of score of opening up a $500 credit card. Some of them will actually set up accounts, farm them, actually spend some money on those cards, pay them off for a couple of months, get a credit increase limit, then get another card or so, and they’ll take you for tens and tens of thousands of dollars by being patient.
So the other thing to do is not just wait till something happens, but people should review their credit reports regularly with both bureaus to see if there’s any funny transactions that might lead to a problem down the road. And again, try and get them dealt with sooner rather than later.
Wayne Kay 19:21
Yes, so much information that I’m learning, and I pay attention to this stuff. You’ve got great info here. Anything else we need to know? Just final words of advice for us?
David Macdonald 19:35
Yes, absolutely. If you do think you’ve been a victim of fraud, after you deal with the immediate firefighting of talking to your financial institutions and CRA and trying to protect anything that’s happening to your credit report, you should speak to the police to get a police file started. And you should contact the Canadian Anti Fraud Center.
This is a government body that’s been set up to collect information about fraud that’s happening in real time and pass it on to Canadian and international law enforcement. If they can get enough information from enough people, they can often build a file, put the information together, and we’re starting to see the rewards from that program now where international fraudsters are being prosecuted in other countries for frauds committed on Canadians.
And again, if there is going to be any type of recovery, it would be through some type of action like that, not necessarily your local police. So we really encourage people that are having problems to speak out and share the information with the government and hopefully not just help themselves, but help other people.
Wayne Kay 20:38
Yes, terrific. Well, that’s great. Thank you so much. This has been a wonderful show and I sure appreciate all the information.
David Macdonald 20:45
You’re very welcome. It’s a pleasure to talk about it. And if anything that we can do will help somebody else from having to go through this, that would be a good thing.
Wayne Kay 20:54
Absolutely, my guest, Dave Macdonald. If you want to learn more or schedule a free consultation with Allan Marshall & Associates Licensed Insolvency Trustee, you can go to the website wecanhelp.ca.
That’s it for today’s Debt Matters podcast. Now you can subscribe wherever you get your favorite podcasts from. And of course, for more information, you can always check out debtmatters.ca. Thanks very much for listening.
About David Macdonald
David Macdonald has been helping people and small business owners resolve their financial problems since 2003 in British Columbia, Alberta and the Maritime provinces. He has been retained as a trusted advisor and service provider by many of Canada’s banks, private lenders, First Nations and the CRA.
David brings a practical, down-to-earth approach to his work, without judgement. In his spare time he volunteers his time to a number of charitable and non profit organizations.