There has been an increase in scams capitalizing on the COVID-19 crisis preying on fear and uncertainty. Learning how to spot the red flags is one of the best ways to protect yourself.
To be successful, a scam must be believable, and many of them are. Over a two-year period, from 2014 to 2016, Canadians lost over $290 million to scams.1 Here is a look at a few of the latest financial scams and some simple ways to prevent them from happening to you.
Coronavirus scams
The spread of the virus that causes COVID-19 has led to fraudsters creating new cons. One scenario is a fraudster using email to pretend to be a public health official, telling the recipient that he or she has been infected. The fraudster then asks for credit card information, supposedly for ordering medication. Other email scams include false websites for public health agencies and malware attachments. Another emerging scam involves a fraudster sending you a message claiming they saw you out in public, contrary to false quarantine laws, and that there will be a warrant issued your arrest. All of these scams are designed to obtain personal and/or financial information, and sometimes even payment.
Avoid these scams: Remember that in Canada, governments do not threaten citizens with prosecution via email, and no public health official would ask for your financial information over email or over the phone. Beware of emails that contain too many spelling or grammatical errors. Before clicking on any links or attachments, examine the URL or filename carefully to help ascertain if they are legitimate. If in doubt, leave them alone.
Emergency scam
Also known as the "grandparent scam,” the typical scenario involves an elderly person being contacted by someone claiming to be their grandchild in distress and in need of money. They often have a story about being injured, jailed or stuck in a foreign country. The victim is urged to wire funds immediately and not tell anyone so that the “grandchild” doesn’t get into more trouble.
Avoid this scam: Before you take any steps to help, verify the person's identity by asking questions only someone you know could answer. Also, tell someone you trust what’s going on.
Antivirus software scam
If you are contacted by someone who says you have a computer virus and that they work for a software company that can fix the issue, beware – it is likely a scam. The fraudster wants you to grant them remote access to your computer or pay for a service to remedy the supposed virus in order to steal your money or your personal information (or both).
Avoid this scam: Be skeptical of unsolicited calls and emails as they can be a red flag for fraud. If you have a computer problem, reach out to a reputable company on your own and never provide your credit card information to an unconfirmed source.
Charity scam
Bogus charities operate on the street, at your doorstep, by phone and online. They may even set up a fake website or use a name very similar to that of a legitimate, well-known charity. Scam charities thrive after natural disasters or health crises, such as the novel coronavirus pandemic, because fraudsters take advantage of those situations to trick people who want to help the victims.
Avoid this scam: Research unfamiliar charities, especially those that approach you, before pledging your financial support. Charities in good standing are happy to provide details about what they do and will never insist that you act right away. Think twice if you are asked to wire money, donate cash or send gift cards – these forms of payment are virtually impossible to trace or recover.
Investment seminars
Scammers target pre-retirees in particular through “free lunch” investment seminars that promote get-rich-quick schemes or risky products that aren’t appropriate for people looking to protect their retirement nest eggs. While the investments themselves may not be scams, questionable high-pressure sales tactics are often involved.
Avoid this scam: Promises of “easy” investment strategies and “guaranteed” high returns typically sound too good to be true and it is best to assume they probably are. In reality, you are likely to lose some or all of your investment with limited recourse to get your money back. Do not be tempted or feel rushed into making an investment decision. Ask questions, do your research and get the details in writing.
Online fraud resources
Con artists count on people not doing their homework. Arming yourself with information is the best way to stay a step ahead of the scammers. The internet can help, and online made-in-Canada resources include:
Canadian Anti-Fraud Centre – Canada’s central agency for information and criminal intelligence on fraud
Competition Bureau of Canada – More advice on fraud prevention
Canadian Securities Administrators – Focused on investment fraud
1 https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04201.html