Money: How to Avoid Being a Victim of Fraud

Type of Scam

How it Works

What you can do

Loans with Up-Front Fees

A company guarantees you a loan despite bad or no credit, but they require an up-front fee. In most of Canada, it is illegal for a company to request an up front fee prior to giving you a loan. If you send them your money, you will never get the loan and cannot get your money back.

Never pay an up-front fee for a loan. If a company asks you for such a payment, ask them to take the amount of their fee off of the total amount of the loan.

Telemarketing Prize Pitch

You get a phone call telling you that you have won a large sum of money or a valuable prize, but before claiming your prize you must pay for the shipping, duty or taxes.

Hang up. Never give them your bank account, credit card or other personal information (including social insurance numbers, full name, date of birth, full address, mother maiden name, username and password of online services or driver’s license number).

Money Recovery

Someone claiming to be a law enforcement officer calls and says their records show that you have lost money to a company. They will help you recover the money you have lost for a small fee.

Do not believe them. A police agency will never request money in advance for any reason.

Bogus Charities

You get a high pressure call from a charity or if someone calls to thank you for a pledge you don't remember making. They may use a name that is almost the same as the name of a real charity.

Ask them to send you the information in writing. Real charities have no problem giving you this information.

Employment Fraud Middleman Scam

You are hired as the middleman for a company that is expanding into North America. Your “job” is to deposit cheques for the company. They send you a cheque for several thousand dollars. You keep a percentage and forward the rest using your own money to a person or company located outside North America. The original cheque you received was no good. Not only did you lose the money you sent, you must also pay the bank charges for the bad cheque you deposited in your account.

Never pay out of your own money on behalf of an employer.

Pyramid Schemes

How it Works. You pay an up front fee for a “job” or business opportunity that consists of bringing in new investors (this is much more important than selling products). The people at the top of the pyramid make money from investors who join later. You lose your money and may face prosecution, since pyramid schemes are illegal.

What can you do? Legal multi-level marketing companies do exist and it can be hard to tell the difference. Ask for written copies of the company's marketing plan and sales literature. Get the facts about its officers and products. Ask a lawyer or accountant to explain anything you do not understand. Honest companies will happily provide whatever information you request.

Identity Theft

Someone uses your name, your Social Insurance Number, your credit card number or some other piece of your personal information without your knowledge. A creditor informs you that an application for credit was received with your name and address or you receive credit card statements or other bills in your name for expenditures you did not make.

Call the credit card company to explain. Call PhoneBusters Toll Free at 1-888-495-8501 or visit their website at www.phonebusters.com. Victims of this sort of crime can fill out an Identity Theft Statement to notify financial institutions, credit card issuers and other companies that the theft occurred. They will investigate and you will not be out any money. The losses will be absorbed by the banks and or companies who issued the cards.

All victims of fraud should call their local police (in the Toronto area, call Toronto Police Services at 416-808-2222). Canadians can also report fraud online through Reporting Economic Crime Online (RECOL) at www.recol.ca. You can get also get links and information on frauds and scams at www.safecanada.ca, run by The Department of Public Safety and Emergency Preparedness.

CNM