Test your knowledge of fraud

1. Extortion scams

You receive an alarming call from someone who claims to be from a government agency. They say a recent audit of your account shows that you owe them money and that you must pay immediately. What do you do to verify this claim?

1. You give the caller your contact information and tell them that you will not be sending any money until you receive a copy of the caller's identification card by email or fax.
2. You hang up and call the official phone number of the government agency they claim to be from and inquire about the status of your account.
3. You pay the amount claimed and insist that a detailed receipt or acknowledgement letter be sent to you afterwards.

• The answer

  The correct answer is B.

  This is a typical example of an extortion scam. The scammer pretends to be either from the government or from the police and might even threaten to send officials to arrest or deport you. The goal is always the same: to bully and scare you into paying a phony debt or ransom.

  Be vigilant when an unexpected call instills panic and includes demands for immediate payment by a money transfer service or a prepaid card. If you suspect that a communication is fraudulent, do not continue the contact, and do not provide personal information or payment.

  Do not be fooled into believing that a call is legitimate just because the caller's phone number appears to be a local number.

  If you have any questions or concerns, contact your local police or the agency the caller claims to be calling from.

2. Romance scams

You met someone on an online dating site a few months ago. Although the two of you have developed a romantic attachment, you have not yet been able to meet. The person claims to be a soldier stationed overseas. You've messaged each other daily. They've sent you gifts and flowers. You believe they are sincere. One day, they inform you that their daughter has been involved in an accident and there is an urgent need for money to pay for home care services. They ask for your help. What should you do?

1. Send money to help the daughter, given the urgency of the situation.
2. Send half the money because you want to help, but you also want to protect some of your savings.
3. Be suspicious. Do not send any money right away despite your desire to help.

• The answer

  The correct answer is C.

  Romance scams continue to cause severe financial harm to consumers in Canada and elsewhere. Be suspicious when someone you've never met professes their love for you. Do not send money to strangers under any circumstance. Fraudsters have shown a willingness to develop relationships with a target over an extended period of time before successfully convincing them to send money.

3. Purchase of merchandise scams

When shopping online, you want to avoid being charged for merchandise that never gets delivered to you. Amid many choices, what should you do to pick a trustworthy website?

1. Shop around using various sites.
2. Inspect the website thoroughly.
3. Ask the supplier questions to ensure that the contact information they provide is valid.
4. Research the reputation of the online business.
5. Use a payment method that offers protection to customers.
6. All of the above.

• The answer

  The correct answer is F (all of the above).

  While non-delivery of merchandise is a scheme most often linked to Internet auction fraud, it may also occur when buying products from a seemingly legitimate website.

  To avoid these scams:

  • thoroughly research any online store or website before making a purchase to ensure the company is legitimate; a simple online search of the name of the business may lead you to credible sources showing the offer is a scam
  • carefully read the online store's terms and conditions
  • inquire about returns and warranties
  • inspect the website thoroughly for any spelling mistakes or grammatical errors; such errors are a tip‑off that the site might not be from a credible company
  • be suspicious of overly complicated return policies that involve lengthy processing times and delays
  • ensure that the company's email address is still active
  • use a credit card or debit card when shopping online, as they sometimes offer extra measures of protection

4. Counterfeit products and fake reviews

You log on to your favourite social media website and notice a post from a business offering various brand name items at a bargain price. Several users have commented on the post, praising the authenticity and great prices of the usually expensive items being offered.

True or false: Given the fact that the advertisement is posted on a trusted social media site and endorsed by seemingly legitimate users, the website must be a great find.

1. True
2. False

• The answer

  The correct answer is B (false).

  If it seems too good to be true, it probably is! Never take ads at face value just because they are displayed on trusted social media sites. Many fraudsters create fake reviews to promote bogus products. Furthermore, when searching for a product using an online search engine, don't assume that a website is legitimate just because it is listed as one of the first "hits" in the search results. When in doubt, do additional research on other websites.

5. Overpayment scams

You've posted and sold an item on an online buy-and-sell site. The buyer sends you payment by cheque for a sum greater than the agreed-upon amount. When you advise them of their mistake, they instruct you to just return the difference through a well-known money transfer service. What should you do?

1. Agree to the buyer's proposal—this seems like a reasonable request and the buyer has already provided you with their cheque.
2. Refuse the cheque and consider reporting this to the authorities.
3. Accept the cheque but give the buyer the difference in cash rather than through a money transfer.

• The answer

  The correct answer is B.

  When selling merchandise online, be aware that not all offers to buy are reputable and that if the buyer pays with a cheque, the cheque may be fraudulent.

  If this is the case, then the scammer is hoping that you will transfer the "refund" for the overpayment before you discover that their cheque or money order was counterfeit. This can lead to the loss of merchandise or loss of funds, or both.

  Beware of overseas buyers who want to buy items sight unseen!

  Also remember that sending funds through a money transfer service (for example, MoneyGram or Western Union) is just like sending cash. Once the funds are picked up, it is nearly impossible to get your money back.

6. Subscription traps

Three months ago, a friend of yours ordered a free sample of beauty products through an ad that popped up on social media. The free trial offer required your friend to only pay for shipping fees. Now, unexplained charges have appeared on their credit card statement. The charge appears again the following month.

Even though your friend received the promised product, they likely have been caught in a subscription trap. How can you prevent this from happening?

1. Be wary of free trial offers.
2. Research the company offering the product.
3. Read the terms and conditions carefully.
4. Check whether the order form has pre-checked boxes.
5. All of the above.

• The answer

  The correct answer is E (all of the above).

  To avoid these scams:

  • trust your instincts
  • research the seller before you sign up for their free trial
  • pay attention to any negative reviews and complaints online about that company
  • check to see whether the order form has pre-checked boxes
  • read all terms and conditions carefully

  When checking the terms and conditions, take special note of the requirements for cancellations and product returns, as well as any hidden charges. If you can't find the terms and conditions or can't understand them, don't sign up. Keep in mind, however, that having terms and conditions doesn't guarantee protection from falling into a subscription trap.

7. CEO scams

You receive an urgent email from your CEO requesting money to secure a major business deal. The message even uses the CEO's full name, so it looks legitimate. While it strikes you as an unusual request, time is of the essence and you don't want to let your boss down.

True or false: You should transfer the money, but only after replying to the email message.

1. True
2. False

• The answer

  The correct answer is B (false).

  In a typical CEO scam, the fraudster will impersonate a company executive—either by gaining access to their email address or creating a similar one (a "spoof")—and send realistic-looking emails that try to trick you into wiring money to a third party. The emails will make the requests sound urgent and confidential. Don't fall for it!

  Use these tips to help keep fraudsters out of your business:

  • ensure that your computer systems are secure and running up-to-date antivirus software
  • encourage all employees to use strong passwords to protect their email accounts from hackers
  • double-check with executives when you receive a wire-transfer request from them by email, even when it seems legitimate
  • do not use the contact information provided in the email—look up their phone number
  • look carefully at the sender's email address—it may be similar to the real one with only one or two characters that are out of place and that you might not see without looking closely
  • establish a standard process for money transfers that requires multiple approvals
  • limit the amount of employee information available online and on social media—fraudsters use it to find potential victims and to time their fraud attempts

8. Door-to-door scams

A salesperson comes to your door asking to inspect your company's HVAC system. Having let them inside, they inform you that the unit will have to be replaced immediately to avoid damage to your residence. They indicate they have a repair crew that just happens to be in the neighbourhood today and can do this supposedly necessary work right away if you sign a release form now.

True or false: You should sign the form. It's best to avoid problems down the line.

1. True
2. False

• The answer

  The correct answer is B (false).

  Do not fall for a door-to-door scam! Here are a few tips to avoid getting caught:

  • do not sign a contract under pressure or make any commitments to the salesperson before doing your own research
  • know who you're dealing with—ask the salesperson for photo identification that shows their full name and the name of the company they work for
  • check with your current supplier to verify whether you have any obligations under your existing contract
  • never share personal information or copies of any bills or financial statements with a door-to-door salesperson
  • read the fine print on all material the salesperson provides
  • know your rights before you sign any contract at your door—the salesperson may be working for a private company that is unaffiliated with either your current supplier or a government agency

9. Health product scams

True or false: Websites that offer health products with claims of a scientific breakthrough and include complex technical information, success stories, and physician endorsements must surely deliver on their promises.

1. True
2. False

• The answer

  The correct answer is B (false).

  If you are learning about an alternative treatment or health product for the first time online, be suspicious. Fraudsters load their sites with confusing technical medical terms to convince you they know what they are talking about.

  Ads that are long on technical jargon may be short on proof. Here's how to avoid these scams:

  • look for well-known, independent, credible sources of information before you buy
  • consult a health care professional before trying any new medical treatment
  • know that some websites create fake success stories to make their products or services appear more desirable
  • remember that the "doctor" in that website photo endorsing a product or treatment could very well be an actor!

10. Fake charities

While looking for recipes online, you notice an ad from the “Transnational Monetary Relief Foundation.” The ad is requesting a monetary donation to help victims of a recent earthquake, hurricane, or flood.” You naturally feel for the victims and want to help. What should you do?

1. Send cash immediately.
2. Collect money from all your friends so you can make a real impact.
3. Find out more about the "Transnational Monetary Relief Foundation".
4. Send the link to all your friends online.

• The answer

  The correct answer is C.

  Our natural instinct to respond helpfully to a humanitarian crisis provides an excellent opportunity for scammers to take advantage. Be on the lookout for scammers who falsely present themselves as belonging to a humanitarian relief group. Their true goal is to prey on your kindness and to profit from a disaster.

  To ensure that your company's donations go to legitimate charities, do the following:

  • don't give cash or financial information if you have any doubts about the legitimacy of a website, organization, or individual asking for money
  • verify that the organization that approached you is registered in the Canada Revenue Agency's charity listings
  • do not click on untrusted links you receive via email or social media—it is safer to approach a relief organization directly to donate.

11. Phishing scams or identity theft

You receive an email from your bank. It says that the personal information in your profile has expired and needs to be confirmed to keep your account open. The email features a link to what looks just like your bank's website and asks you to use that link to provide your personal information, such as your date of birth, social insurance number, or credit card number.

What should you do?

1. Reply to the email asking for more information.
2. Click the link because you trust your bank to treat your information confidentially.
3. Contact your financial institution immediately to report this suspicious activity.

• The answer

  The correct answer is C.

  This type of scam is known as phishing or "brand spoofing."

  The word phishing comes from the analogy that Internet scammers use email lures to "fish" for passwords and financial data from the sea of online users. To do this, scammers create email messages and websites that are replicas of those of existing, legitimate financial institutions, tricking people into submitting confidential information, including passwords and financial data, with the intent to commit fraud.

  To protect your business from this kind of scam:

  • remember that legitimate banks or credit unions will not ask their customers for confidential information through email, text or voicemail
  • never reply to an email that requests your confidential information
  • contact your financial institution immediately
  • report suspicious activity to the appropriate parties

12. Who is typically targeted?

Who is typically vulnerable to becoming a targeted victim of fraud?

1. Seniors
2. Newcomers to Canada
3. Women over the age of 50
4. Everyone

• The answer

  The correct answer is D (everyone).

  Every demographic is at risk of becoming a victim of fraud. Scammers are adaptable and clever. Don't be a victim. Stay informed!