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Online Banking

August 2016

Don’t Fall for Fraud

Taking a few simple steps can keep you and your family safer.

Don't Fall for Fraud The Better Business Bureau reports Canadians lost $61 million to fraud in 2015. That figure is probably just the tip of the iceberg once you add up losses from those too reluctant to admit they’ve been duped.

For the con artist no reward is too small. Research shows one-third of scams net under $1,000 with the majority taking in less than $5,000. But that doesn’t mean fraudsters can’t score big. Case in point: The Madoff investment scandal in 2008 where thousands of investors, including professional money managers, were bilked out of billions of dollars.

Sometimes the target isn’t money. Personal information like banking details or health records make a tempting prize for identity thieves.

The good news is you can learn to recognize fraud and take steps to stop it in its tracks.

Scams to watch for

Common to most scams is an exchange of money or personal data in return for a product, service or benefit that either doesn’t exist, or isn’t as advertised.

There are bogus contests, fake charities and phony medical treatments. You might receive an urgent call from your “grandchild” who’s in a jam and needs cash, or an offer of a phantom job. Even the search for love can be a trap. By BBB estimates, “catphishing” and related romance scams netted fraudsters over $15.6 million in 2015, placing them at the top of the heap in dollars lost.

The fraud generating the most complaints in the past year? The CRA income tax scam. In a recent version of this ruse, scammers posing as Canada Revenue Agency representatives demand you come up with alleged back taxes, threatening you with legal action if you don’t pay.

Perhaps the most potentially devastating form of fraud involves investing. In the worst cases, it can swindle victims out of their life savings.

Investment fraud looks to exploit the greedy and fearful sides of human nature, usually with the lure of high returns with little or no risk. Often there’s an invitation to tap into “secret” get-rich-quick methods known only to a fortunate few. To convince you, you may be told the government or a regulatory body has given the investment their seal of approval.

As the Madoff case illustrates, the investment world is fertile ground for pyramid and Ponzi schemes. One tactic is when fraudsters infiltrate social, ethnic or religious groups and co-opt their members to participate in a seemingly legitimate opportunity. They then reward early participants, to encourage those “lucky” few to put in more of their hard-earned savings, or rope in new investors, until the sham collapses and the victims are left to share the losses.

Think it can’t happen to you?

Even if you’re a savvy individual, don’t think for a second you’re immune to fraud. When it comes to investing, criminals understand people in mid-life worry about paying for their children’s education or outliving their money – fears con artists prey upon.

Surprisingly, being an experienced investor can make you a target for fraud. Crooks know you’ll be receptive to new investment ideas and have the confidence to invest without first vetting the offer with a lawyer, financial advisor or other professional.

Research by the BC Securities Commission further reveals that people susceptible to investment fraud often have an erroneous view of what’s a reasonable rate of return to expect from current markets. What’s more, those who put themselves in risky sales situations, like attending sales presentations or conversing with strangers about an investment over the phone, are also more likely to be fooled.

Once you’ve been defrauded there’s a good chance you’ll be approached again. Nearly a third of fraud victims are contacted a second time for more money, often by the same perpetrator, before catching on to the hoax.

What you can do to protect yourself

While fraud is an ever-present threat, it isn’t one you’re defenceless against. Here are four ways to protect yourself.

1. Guard your personal information

Despite its wondrous benefits, technology has a dark side: it helps scammers ply their trade.

Suspect emails, fake websites, phony links and text messages, even the old fashioned phone call, are doors through which crooks can steal your personal information, infect your devices with malware, or con you. Ransomware – encryption software which locks you out of your files until you pay up – is quickly moving up the danger list.

Do the following to help thwart scammers:

  • Ensure you have anti-virus software installed on all your devices, and keep your security software, operating systems and applications updated.
  • Change your passwords regularly, making sure new passwords use complex character combinations that will be hard for thieves to crack. Surprisingly, many people still use simple, easy-to-guess passwords that leave their accounts highly vulnerable. Even Facebook CEO Mark Zuckerberg had social media accounts compromised because his password was easy to guess (“dadada”).
  • Back up your systems, documents, photo albums and other digital assets daily to a separate storage device or cloud-based service. By having a current copy of your data, you’ll reduce the ransomware threat significantly.
  • Eliminate old-school risks. Shred bills, statements and plastic cards you no longer need so sensitive information doesn’t fall into the wrong hands.

2. Know who you’re dealing with

Appearances can be deceiving. That’s true whether you’re dealing face-to-face or in cyberspace.

If you’re giving money or personal information to another party, it’s always safer if you initiate contact. Avoid calling telephone numbers or clicking links in emails you receive unless you’ve already established a trusted relationship with the sender. Have your doubts? Just don’t reply. Even the act of unsubscribing to spam helps crooks by confirming your address.

Always do your own research using multiple sources when evaluating any offer. Fortunately, there are resources available to help you sniff out con artists. For instance, securities industry professionals doing business in Canada must register with the securities regulator in each province where they operate. You can check a financial advisor’s status through the Canadian Securities Administrators’ National Registration Search and its companion tools, or by contacting the BC Securities Commission.

Not sure about a charity you’ve been asked to donate to? Visiting the Canada Revenue Agency’s registered charity listing is a smart first step.

3. Know where you stand

Spotting if anything’s amiss in your financial life is difficult if you don’t know where you stand.

Make it a habit to routinely check bank statements, online accounts and credit card bills so you can identify unfamiliar transactions sooner rather than later.

A wise precaution is to set up security alerts for your BlueShore accounts. When you do, you’ll receive a text or email message anytime there’s suspicious activity, for example, three unsuccessful log-in attempts or a change made to your personal access code. (See Privacy – Our Obligation for more details on how BlueShore Financial protects and manages your personal information).

It’s also a good idea to request a copy of your credit report from credit reporting agencies Equifax and TransUnion at least annually. Doing so will give you a heads-up to any unusual activity such as someone applying for credit in your name.

If you become the victim of fraud make sure you report it to the Canadian Anti-Fraud Centre.

4. Get a second opinion

A hallmark of fraud is urgency. Scammers will press you to act fast to take advantage of their “once-in-a-lifetime” opportunity or risk missing out for good. Be vigilant at sales presentations and seminars if the discussion quickly shifts from providing information to getting you to sign on the dotted line.

Never rush to make a decision before you’re ready. Step back and get a second opinion from an independent expert, like a financial advisor, accountant or lawyer you trust.

Fraud Prevention Tips for Your Small Business

A new survey from the Canadian Federation of Independent Business reveals one-quarter of small businesses experienced an increase in fraud in the past three years (2012-2015). Threats ranged from fraudulent payments and ransomware, to bogus directory listings and office supply scams.

Here are just some of the ways you can protect your business from fraud:

  • Be wary about giving out information about your business unless you know how it will be used.
  • Set up procedures to check the authenticity of invoices and accounts before making payment.
  • Restrict the number of people with authority to authorize purchases, and ensure they’re aware of common and emerging scams.
  • If you have a website, confirm renewal notices come from the company you registered your domain name with, and that the domain you’re renewing is correct. Watch out for variations like .com instead of .ca, or other minor differences which may indicate a scammer’s at work.
  • If you have any trademarks, don’t respond to renewals and invoices that do not come from CIPO or your trademark lawyer – they are a common scam.

Talk to us

Don’t let fraud happen to you or those you care about. If you’re looking for a sound opinion on an investment opportunity or want more advice on how to best protect yourself, speak with your BlueShore Financial advisor. Also visit our Security section on our website – there is a wealth of additional information on how you can protect yourself in many other ways.

The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any mutual funds or other securities.
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