Fraud in Canada: How to recognize and report financial fraud

As Canadians navigate threats to their financial security – inflation, interest rates and unexpected emergencies, to name a few – the last thing anyone needs is a fraudster trying to swindle them out of their cash. Yet financial crime is on the rise.

Just two years ago, in 2022, scammers had a banner year, making off with more than $531 million, up from $379 million the previous year, according to the Canadian Anti-Fraud Centre (CAFC). Given that most fraud goes unreported, the true figures are likely much higher.

While older Canadians are often the victims of financial fraud, everyone is at risk. Scammers are increasingly targeting younger generations who are generally more comfortable spending vast amounts of time – and money – online. Indeed, an annual survey by the Chartered Professional Accountants of Canada found that 63% of people between the ages of 18 and 34 have been subjected to financial fraud at least once in their life.1

As advances in artificial intelligence increase the seeming authenticity of these scams, the best way to fend off fraud is to learn how to spot it before it has a chance to take a bite out of your bank account.

Common scams

Identity theft

One of the most vexing forms of financial fraud occurs when a scammer impersonates someone by using private information, such as their social insurance number and date of birth, to open accounts in their name. Identity theft doesn’t just cause short-term financial pain, it exposes victims to the long-term challenge of repairing the damage done to their credit rating.

Phishing scams

Most people have likely received an intimidating text or phone call purporting to be from tax authorities asking them to provide personal information or money by clicking on a link. These popular scams, which are also often done over email, send unwitting individuals to fraudulent websites that are designed to syphon their data and money.

Grandparent scams

With information acquired from phishing scams and social media, fraudsters frequently feast on the fears of older individuals by impersonating a younger relative who is desperately in need of money. This scam, like many others, relies on creating a sense of urgency that prevents potential victims from thinking things over or talking to others before acting. Advances in artificial intelligence are making these ploys even more plausible by allowing perpetrators to mimic the voices and images of loved ones.

Banking/investment scams

In another form of phishing, fraudsters will impersonate reputable banks – even spoofing their phone numbers on call display – in an attempt to convince victims to hand over sensitive financial information. Some of these scams encourage unwitting individuals to invest in fictional financial opportunities, often through the use of cryptocurrency.

Romance scams

This form of fraud, which surged in popularity during the pandemic, works by convincing people that they have made a romantic connection online. After forming an emotional bond, fraudsters leverage this relationship to ask for money for one urgent reason or another. The availability of voice simulators and photo manipulation tools have made it easier than ever for scammers to break hearts and bank accounts at the same time.

Exploiting digital vulnerabilities

Hackers can take advantage of unwary individuals by exploiting weaknesses in digital devices or networks that haven’t been updated or adequately secured. Reusing the same password over and over or sharing sensitive information over public Wi-Fi opens up your data and dollars to theft.

Avoid becoming a victim.

Spread the word.

Once you understand the risks, try to have an open conversation with family and friends about how popular online scams work and how to avoid them. Communication is key to overcoming the stigma that can accompany becoming a victim of fraud; it can also help ensure others don’t make the same mistakes. The more comfortable your family and friends are with talking about financial threats, the less likely they will be to fall victim to them.

Defend your data.

Don’t open suspicious emails or texts, and avoid sharing any personal or financial information online (or over the phone) unless you are 100% certain of the source. Hover your mouse over any questionable links (without clicking on them) to see if they point to a legitimate-looking site. Keep an eye out for spelling (or other) errors in the message that might indicate the sender is not who they claim to be. Websites that are securely encrypted (as your bank’s should be) will have a URL that begins with “https” and not “http.” Financial institutions are not in the habit of randomly calling customers to ask them for their PIN number; if this happens to you, hang up and call the bank back at a number you know to be genuine. You should also shred any documents that contain sensitive information before throwing them out.

Practise good digital hygiene.

Frequently update your passwords, including the one for your Wi-Fi network, to decrease the number of avenues scammers can use to compromise your data. Wherever possible, enable two-step authentication – a process that requires both a password and a text or code sent to a secondary device to verify your identity – to make it harder to access your accounts. You may want to use a password manager, an app that stores all your passwords in a protected database, to avoid writing them down and potentially losing them. Be sure to keep your devices updated, and remind family and friends to do the same, particularly if a vital patch is released to address a glaring vulnerability.

Don’t rush in.

Many online scams work by instilling a sense of fear that prompts victims to take immediate action. Instead of obliging, take some time to think about what is being asked of you, and consider talking to family or friends before responding. Be suspicious of any messages that want you to act secretively, lie to your financial institution or keep important information from those around you. This includes resisting the urge to answer calls from unknown numbers; if the call is important, they’ll leave a message or contact you through another channel.

Keep a close eye on your accounts.

When you do your online banking, be sure to double-check your transactions to ensure there isn’t anything that shouldn’t be there. To increase your sense of security, set up alerts with your bank so that you get a text message or email when your credit cards are used to make a purchase.

What if you’ve already fallen victim?

Contact your financial institution.

Gather all the information (such as texts and emails) related to the fraud and contact your bank as soon as possible. It will likely freeze your accounts before sending you replacement cards. Depending on the details involved, your financial institution may return some or all of the money lost (banks will complete their fraud investigation to determine who is at fault). If you think you might be the victim of identity theft, be sure to change all your passwords, and report the incident to both credit bureaus (Equifax and TransUnion).

Notify the police.

Report the incident and get a file number for any future incidents. Update the police about any suspicious activity on your credit report.

Report the fraud.

Contact the Canadian Anti-Fraud Centre and tell it what happened. If you are one of the growing number of Canadians who have fallen victim to financial fraud, try not to be too hard on yourself. Scammers spend the bulk of their time finding ways to separate people from their money. Don’t be shamed into silence: sharing your story with others might prevent them from going down the same rocky road.

Don’t let it happen again.

Scammers often target the same victim more than once, sometimes under the guise of helping them recover the money they already lost. Beware of promises that sound too good to be true – they usually are.