Online scams are cheating a growing number of consumers out of their savings

October 22, 2019

Romance and employment scams are the most common online scams we see at OBSI. According to the Canadian Anti-Fraud Centre, Canadians lost more than $22.5 million to romance scams and more than $5 million to employment scams in 2018. These types of scams often involve an element of overpayment fraud in which consumers receive a payment for more than they expect and are then asked to return the excess funds. The funds that the victim has received turn out to be fake, while the money they have sent to the fraudsters is real and often can’t be recovered.

Romance scams
Romance scams often take place through online dating sites or other social media. The scammer will create an online profile using a fake or stolen identity and will pretend to be some type of professional, military personnel or an entrepreneur. This allows them to claim they are travelling or working abroad when asked to meet in real life.

Acting as an engaging romantic partner, the scammer will quickly express their affection. They will go to great lengths to gain the victim’s trust. The scammer will be attentive and share personal information to build an intimate bond with the victim. Their intent is to make the victim feel they are part of a romantic relationship.

Once the scammer gains the trust of their victim, an urgent situation of some sort will occur, such as:

An emergency medical crisis that leads them to ask the victim for money to pay for an expensive procedure for themselves or a close relative.
A great business opportunity that requires an immediate cash infusion, but they don’t have cash on hand. They will ask the victim to give them a short-term cash advance so that they can take advantage of the business opportunity.
An urgent desire to meet in person, but first they will need financial help to be able to afford the travel expenses.

As well as stealing from the victim in this way, the now-trusted scammer may also send the victim items of value, such as electronics or cash, or they may ask the victim to purchase expensive goods for them. The victim will be asked to forward the items of value somewhere else. For example, the scammer may wire or email money to the victim’s bank account and ask them to send it to another account. If they agree, romance scam victims may unwittingly take part in a form of money laundering or may find out too late that the original wire transfer they received was fake.

Employment scams
Employment scams often appear on job boards, social networking sites like Facebook and Twitter, or the targets of such scams may receive unsolicited emails from supposed employers. The scammer often assumes the identity of a legitimate company, recruiter or hiring agency and will quickly offer the victim a job that pays well but requires little or no effort. The jobs offered are typically 'work from home' or ‘mystery shopper’ jobs. The victim will often get the job without needing to send in an application, have an interview or even discuss the role at all with their supposed employer.

Scammers will take advantage of job seekers by collecting confidential information that they will use for identity theft, or they will have the victim cash fraudulent checks, wire money, or transfer funds for services or supplies. There are several ways an employment scammer may take a victim’s money. For example, the scammer may ask the victim to:

Submit personal information, like a social security number or driver's license number, that is needed to complete their application.
Provide bank account information to process their pay.
Send their credit card information to pay for training or training materials that are needed as part of the job.
Cash a cheque to complete the application process or as payment for their new job. The victim will be asked to send the money to a third-party or wire any excess funds back to the employer. The victim will soon find out they are involved in an overpayment scam.

Overpayment scams
Overpayment scams can occur as part of another scam or by themselves. A typical example involves a victim who is selling an item online. The scammer agrees to buy the item and then proceeds to send the victim a payment for more than the sale price of the item.

The victim will then be told that this was some kind of mistake and is asked to wire the excess funds back to the sender or forward the funds to a third party. There are also variations on this scam that involve the victim being asked to purchase gift cards with the excess money and then provide the scammer with the gift card information and PIN number.

Eventually, the scammer’s payment is found to be counterfeit, but the victim has already sent money or gift cards to the scammer which they can’t get back.

Our experience
When we hear from consumers who believe they have fallen prey to an online scam, we often hear that they were somehow tricked into willingly sending money to the scammer. Sometimes they do so even after they should have been reasonably suspicious of the scammer’s stories or actions.

Bank staff are trained to look for red flags and advise consumers if they see suspicious activity, and consumers who send money through their bank are often asked questions by bank staff who find their transactions unusual. Unfortunately, the victims often follow the scammer’s instructions to intentionally misinform or otherwise hide their reasons for withdrawing or transferring funds. Typically, scammers will coach their victims to claim the money is being withdrawn for a seemingly legitimate reason.

Once the scam is uncovered, victims sometimes complain that their bank should have provided protection for them that would have helped prevent their losses to the fraud scheme. In cases OBSI has investigated, we considered whether a bank’s branch staff followed established procedures or if “red flags” were ignored. However, in many situations a scam will not be apparent because the bank can only see part of the transaction. Sending funds to a family member or fiancé may not raise any flags. However, sending funds for unusual reasons or to a location known for fraud, should raise additional questions. In these cases, bank staff can and should warn clients who may be potential victims of fraud.

Avoiding scams
The following tips can help you to avoid scams:

Protect your personal information and do not share it.
When you meet someone online, do your research. Often an online search can verify the identity of the person or company you are dealing with.
Never send money from a bank unless you are 100% sure who you are sending it to.
If you are ever asked to refund money to someone, be extremely vigilant. It is likely a scam. Never agree to deposit a check and wire transfer money back anyone or forward funds to a third-party.
Be cautious when dealing with people you have only met online. If you decide to send them money use secure, traceable transactions. Do not send wire transfers, prepaid debit cards or gift cards.
Be cautious about opening attachments in any format, even via social media or text message. You may be unwittingly allowing a virus to infect your computer or device.

What to do if you have been scammed
We are concerned that Canadians continue to fall victim to online scams. Once a fraud has taken place, there is often very little that can be done to assist the victim or get their money back. The client account agreements that consumers have with their banks usually say that the client is responsible for all transaction and losses originating from their own actions.

If you believe you may have been taken advantage of by sending money or sharing financial information, you should immediately:

Take action. Scamming is a crime. If you feel you may be a victim of a scam don’t feel embarrassed. If you aren’t sure about a situation you are in, talk to someone you trust and stop sending money immediately.
Consider contacting a credit agency to establish a credit monitoring service so that they can alert you if someone opens an account in your name or registers a change of address. You can also set up a credit freeze so no one can open an account or take out any loans in your name.
Report the details to all your financial institutions including credit card companies.
You can also try to call back any funds that have been sent which may include reaching out to the institution where you sent the money.
Gather all information about the fraud. This includes documents, receipts, copies of emails and/or texts. Report these to the police.
Notify the marketplace or social media site where you met the scammer.

Reporting romance, employment and overpayment scams helps authorities find those responsible and warn other potential victims about these scams.

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