Affinity fraud targets groups, such as social clubs and ethnic or religious communities. The scam artist plays on our instinct to trust those who are like us. In some cases, the scam artist may be an established member of the group. In other cases, they may build relationships with influential members of the group in order to gain acceptance. A common type of affinity fraud is the Ponzi or pyramid scheme.
Binary options are heavily promoted on social media as a quick and easy way to make lots of money. In most cases, these ads are for fake or fraudulent offers. These ads promote binary options trading platforms and usually promise a certain amount of money in your account as a “deal” for signing up. These trading platforms are built on the same type of software as online gambling or casino sites. Since the scammers can manipulate the results of the bet behind the scenes any way or any time they want, the house always wins.
Binary options are also commonly sold by boiler room operations. Never send money to a stranger or a strange company who contacts you over the phone or via Facebook, no matter what kind of investment they are offering.
In December 2017, FCNB joined with other participating jurisdictions of the Canadian Securities Administrators to increase investor protection and ban binary options. The ban means:
Binary options shorter than 30 days can’t be sold to individuals in Canada.
Binary options shorter than 30 days can’t be sold to companies that were set up just for the purposes of buying, selling or trading binary options.
Also, any individual or company that is offering, selling or trading binary options to New Brunswickers must be registered with FCNB. You can learn more here about binary options.
If you have received a phone call from someone you don’t know about an investment opportunity, it could be a boiler room scam. Scam artists in a boiler room operation cold call people and use high pressure sales tactics to sell shares in a company. The company may be fake or could be in a real company. Either way the scammer hypes the stock up to over inflate the price and potential earning power of the investment. The company they try to get you to invest in is usually in a sector that’s in the news. Right now, many of these scams focus on alternative medicine or the latest environmentally friendly product. By the time you realize you’ve been had, the scam artist will have closed up shop and moved on to another scam. On top of that, the scammers are usually not qualified or registered to sell securities in New Brunswick.
Newcomers are frequently targeted by a phone scam being carried out by someone claiming to be Citizenship and Immigration Canada (CIC). The scammer threatens legal action or even kidnapping if money isn’t sent. Staff at CIC never accept payments over the phone by prepaid credit cards or private money transfers.
Each yeartaxpayers are targeted by someone claiming to be from the Canada Revenue Agency (CRA). In an attempt to get money or personal information from the taxpayer, the scam artist threatens and uses aggressive and forceful language in an attempt to scare someone into paying a fake debt. The fraudster requests immediate payment and threatens the taxpayer with court charges, jail or deportation. The CRA never requests prepaid credit cards, or requests information from your passport, health card or driver’s licence.
Many complaints we receive about door-to-door sellers have to do with unclear contracts, bad quality products or services, or the customer not receiving the products or services they bought. The most common calls we answer are about heat pumps, driveway paving or sealing, roofing repairs and other home or yard maintenance services.
Direct sellers are required, with some exceptions, to be licensed and bonded under the Direct Sellers Act and to carry this licence with them, proving that he or she is associated with a licensed company. Before signing a contract, click here to learn about your rights and how to avoid getting scammed when buying from a door-to-door seller.
If you've been targeted once you are likely to be targeted again. If a scam artist receives money from you, they will often hold onto your contact information for future use or sell their list of names and contact information to other scam artists for profit. After some time has passed, you’re contacted by the first scam artist or a new one. They tell you that some or all of your original investment has been lost. The scam artist will say that they can help recover your lost money for a "fee". However, if you pay the fee, you’ll lose that money, too.
A common fraud that targets New Brunswick seniors is the Emergency or “Grandparent” scam. The scam artist calls the senior and pretends to be a family member (often a grandchild). They say they are in trouble and need money sent, but want to keep it a secret so they won’t get in trouble with their parents. Before sending any money, take steps to verify the identity and the story of the person requesting money.
Employment opportunities that promise you will get rich quick, demand payment from you for start-up costs, or asks to send and receive money through your bank account are red flags. A common employment scam is the Secret Shopper scam. The scam artist will send a cheque from a company to you in the mail and a letter asking you to spend some of the money at a certain store. The scammer asks for a certified cheque or a money transfer in return and tells you that you can keep the rest of the money as compensation. The cheque may look real, but it is actually a fake. Since it can take up to a week for the bank to determine if a cheque is counterfeit, the person is out potentially hundreds or thousands of dollars.
The scam usually starts with an unsolicited pitch to invest in a promising business that is about to go public. You may be told that the investment is only available to very wealthy people, but an exception will be made for you—all you have to do is sign some paperwork. This paperwork usually involves lying about how much money you make.
Exempt securities on their own, are not scams. They are usually sold to wealthy investors who can afford professional advice and the higher risks of these investments. Exempt securities are risky, and you could lose all of your investment. If you have to lie about how much money you have before you invest, walk away.
Click here to find out more about Exempt Securities.
Forex scams are promoted as an “exciting opportunity” to invest on the foreign exchange (forex) market. Usually these ads appear in newspapers, or on radio, TV or websites. The ads may look legitimate but what usually happens is that your money is not invested in anything. It is simply stolen by the scam artist. Some scams may hold “purchased” gold (or other valuable currencies) in a “secure vault” and promise to sell it as it increases in value. Most of the time, the gold does not exist. If your money is invested in the forex market, you may not have been told that the investment is very risky. Again, you’re likely to lose some or all of your money.
No matter what con or story they tell you, a scammer’s goal is to get your money as fast and easily as possible. A trend that we are seeing increasing is asking their victim to pay with an iTunes gift card. The scammer will usually say they work for a government department and that you owe them money. They often will threaten you with jail time or other legal action if you do not pay right away and will encourage you to pay by buying prepaid gift cards or credit cards. They will send you to multiple stores to purchase the cards (so store clerks don’t get suspicious), and have you read the code off the back of the card to them so they can drain the card of funds.
An iTunes gift card is used to purchase items online for Apple products such as music or apps for your Apple device. Unless you’re making purchases from the iTunes store, you shouldn’t be paying with an iTunes gift card. The same rule applies for other payment methods they may ask for such as PlayStation, Amazon, or Google Play gift cards.
Lying on a mortgage application is mortgage fraud. Applying for a mortgage on someone else’s behalf is called being a “straw buyer”. This is the most common type of mortgage fraud. The con artist convinces you to act as a “straw buyer”, leaving you liable for the mortgage. You could also be held criminally responsible for the misrepresentation.
This scam promises huge profits if you send your money “off shore” to another country, usually as a way to avoid or lower your taxes. Once your money is sent off shore and is in someone else’s control, it may be virtually impossible to track down your money and get it back. If the promised tax savings are fake, you could also end up owing the government money in back taxes, interest and penalties. When you move your money to another country, you are no longer protected by Canadian law. For example, if you use an offshore broker, you are not protected by the Canadian Investor Protection Fund if they go bankrupt. You will not have any recourse in Canadian court.
Scammers follow the headlines and build a pitch around what is in the news. The fluctuations in the price of oil and gas in recent years have led to many scams to get people to invest in fake oil and gas companies or fake investments tied to natural gas, wind and solar energy, and the development of new energy-efficient technologies.
Scam artists approach investors through e-mails and phone calls with false reports of an "up-and-coming" opportunity to become involved in an oil and gas limited partnership. They will tell investors that a large oil or gas company has invested in this venture to make it sound legitimate. They may have a legitimate-looking website, glossy brochures and research. Promotional material may also include falsified reports about actual drill sites and production estimates.
Be sure to fully investigate any investment and ask questions before investing any money. Be wary of terms like "expert geologist reports", and claims of "tremendous discoveries in the ground at adjacent wells/drill sites." These oil and gas company "headquarters" and "drilling sites" often do not exist. Once you hand over your money to one of these scam artists, you probably won’t get it back.
This scam promotes investment seminars offering you an opportunity to "move your money", "maximize tax flow" or "pay less tax". The seminar is likely promoting an investment with some kind of tax break or shelter. But, tax breaks that sound “too good to be true” often are. In some cases, investors are audited years later and find out that they could be assessed for additional taxes, interest, or penalties by the Canada Revenue Agency (CRA). Visit http://www.cra-arc.gc.ca/ for more information.
If you’re approached about a tax shelter, get a second opinion from an independent and qualified tax expert such as a chartered accountant or tax lawyer.
Phishing is an attempt to steal your personal information (such as personal identification information, credit card numbers, bank account details, etc.) to steal your identity or commit fraud. An example is an email claiming to be from your bank, asking you to click a link and sign in to confirm your account details or fix a problem with your account. Instead of visiting the bank’s website, the link actually takes you to a fake site that collects your personal information.
Spear-phishing is a variation of Phishing. The scammer gathers specific information about you and uses it to tailor their pitch so the fake email seems even more real.
Smishing is a phishing message sent via text message, or Short Messaging Service (SMS).
Typically, investors are recruited through ads and emails promising you can “make big money working from home” or “turn $10 into $20,000 in just six weeks.” Investors are asked to provide money up front. Early investors may receive high returns fairly quickly from “interest cheques”. They’re often so pleased that they invest more money, or recruit friends and family as new investors.
Here’s the catch: The investment doesn’t exist. The “interest cheques” are paid from investors’ own money and the contributions of new investors. The scheme eventually collapses when the number of new investors drops. Ultimately, the promoters vanish, taking your money with them.
These scams are often run out of a boiler room. You’ll receive and e-mail or phone call promoting an incredible once-in-a-lifetime deal on a stock. The scammer promoting the stock also owns a large amount of it. As they sell to more and more investors, the value skyrockets. Once the price hits a peak, the scam artist sells their shares and the value of the stock plummets. They make money and you’re left holding worthless shares.
A pyramid scheme is a type of affinity fraud that promises large gifts or payments, very high and low risk investment returns, free luxury goods or services, etc. for recruiting and enrolling others. Pyramid schemes come in many shapes and sizes and may try to downplay their pyramid nature by disguising themselves as gifting circles or charitable projects, games, chain letters, buying clubs, motivational companies, mail order operations, or investment organizations. However, the majority of participants will lose some or all of their money participating in these illegal schemes. If you have to pay to join, and making money is based mainly on how many people you can recruit, it is a pyramid scheme. Any money made is on the backs of others in the pyramid, and the income or products received could be considered proceeds of crime, making them taxable and seizable.
Scammers take advantage of people looking for romantic partners. They most commonly use email, social media sites and dating websites to set up a fake profile and pretend to be looking for a companion. They will express strong feelings for you very soon after you begin talking, so they can form a fast relationship and gain your trust. Usually the scammer will tell you they need money for some kind of personal or medical emergency, to help pay their bills, or for travel expenses to come visit you. But really there is no emergency, and they will make up an excuse why they can’t come visit you. Never send money or give credit card details, online account details, or copies of important personal documents to someone you’ve just met online.
The scam artist tells you that you can take money out of your locked-in retirement account (LIRA) early, without paying tax. The scammer advertises a special "RRSP loan." To get the loan, you have to sell the investments you now hold in your LIRA. Then you use the money in the plan to buy shares of a start-up company the scammer is selling. In return, they promise to loan you back some of the money you invested. He or she will keep the rest as a fee. You are told you will get ready cash, pay no tax on it, and still hold a valuable investment in your LIRA. But, the investment you buy may be worthless. And you may never see the loan. You could lose your retirement savings. In addition, you may also have violated federal income tax law and will now have to pay taxes to the Canada Revenue Agency (CRA) on money you never received.
But, in most cases, you have to reach age 55 or older before you take money out. And there are often limits to how much money you can take out each year. Also, you likely will have to pay tax on the money you withdraw. If someone tells you different, it may be a scam.
Spam is more than just an email chain letter. It can also include malware, spyware, phishing, and false or misleading representations carried out through any means of telecommunications, text messages (short message services – SMS), social network sites, website, apps, blogs, and more.
Dealing with Spam
Do not open spam, or emails from someone you don’t know.
Spam (and violations that go along with it such as phishing, malware, deceptive marketing, etc.) should be reported through the Spam Reporting Centre .
The Spam Reporting Centre is used by the Canadian Radio-Television and Telecommunications Commission (CRTC), the Competition Bureau and the Office of the Privacy Commissioner of Canada to investigate serious cases and take necessary action against spam.
Never click a link or download an attachment if you suspect the email is spam.
Investing in new products or inventions is best suited to venture capitalists who know how to assess the risks. Given their high risk and volatile nature, they are not suitable investments for your retirement money, even though they may promise high returns.
In a typical letter scam, you receive an e-mail, fax or letter from someone posing as a high-ranking government official from a developing country. It’s usually marked "urgent" or "in strictest confidence." The sender will tell you they have millions of dollars in a bank account that they can’t access without your help. In return, you are promised a portion of the funds, usually 20 per cent. All you have to do is deposit a sum of money as a “processing fee”, and fax your bank account information. Once they have your fee and banking information, the scam artists will drain your bank account.
Recognizing and avoiding a fraud or scam protects your own financial future, but it is critical that once you recognize a fraud or scam, you protect those more vulnerable by reporting the fraud attempt.