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How to avoid scams and identity theft

Rounding it up

  • Fraud comes in many forms, but scams and identity theft in particular have been on the rise.

  • Most scams come via telephone, email, online, or text message. If they use aggressive tactics to make you immediately transfer money, they’re likely fraudsters.

  • You can proactively avoid scams by using strong passwords, being cautious on social media, and avoiding public WiFi.

  • If you’ve fallen for a scam, stay calm, collect relevant documents, contact your financial institution, and file a report with the police.

11 min read

Barry Choi
#security#data#privacy#scams

Fraud comes in many forms, but scams and identity theft in particular have affected thousands of Canadians in recent years. Major retailers, financial institutions, and even social media platforms have experienced data breaches, making it more imperative than ever to keep your personal information safe.

Safeguarding your data begins with knowing what scams are out there. Thieves are consistently coming up with creative ways to get you to part with your money, and such awareness can protect you.

What is identity theft?

Identity theft is when an imposter gets access to your private information and then uses it for financial gain. On the most basic level, someone might have stolen your credit card information and racked up the charges. However, if they have access to more of your information such as your Social Insurance Number and home address, they could apply for new credit cards and loans under your name.

Some people assume identity theft isn’t a significant problem, but it happens a lot. Thieves see it as an easy win, and the tactics they’ll use are becoming more advanced. They may prevent your credit card from being delivered to your home address or even take it right out of your mailbox. Unfortunately, it’s also possible that the thieves work for an organization that has your personal details, so stealing your identity could be easy.

How do I know if I’m a victim of identity theft?

Cybersecurity is constantly improving, but it’s still possible to be a victim of identity theft without you even knowing it. Keep a close eye on the following signs of identity theft as you might be able to put a stop to things before it gets out of hand.

  • There are charges that you don’t recognize on your credit card bill

  • Unexplained drops to your credit score

  • You received an email about a new credit card or loan application

  • You’ve been notified about an address change for one of your accounts

  • Your bills are no longer arriving when they’re supposed to

  • Your loan application has been denied

  • A collection agency has contacted you about a defaulted account you never opened

How do I recognize a scam?

When thieves don’t have your personal information, they’ll try to pull a scam on you to get you to give up your details. Fraudsters often pose as someone else, such as the Canada Revenue Agency (CRA), and use aggressive tactics to try and convince you they’re real.

Most scams come via telephone, email, online, or text message. In some cases, fraud involves threatening arrest or deportation if you don’t pay them immediately. In other situations, they may simply be trying to get you to click a link where you’ll unknowingly yet willingly give up your account info.

Admittedly, it can be hard at times to tell the difference between potential fraud and legitimate communication from a service provider. Still, there are a few general guidelines that you should follow to recognize a scam.

By phone

  • Financial institutions, government agencies, and service providers will not call you unless you’ve contacted them first

  • Anyone requesting information such as your date of birth, address, or SIN is likely not who they claim to be

  • If someone is demanding immediate payment, especially if they claim to be the CRA, it’s likely fraud

  • If the caller is threatening arrest or deportation, it’s for sure not real

  • Service providers and financial institutions will not send you a text message to confirm your login details

By email/online

  • A link in the email looks suspicious

  • The email is asking you to respond with personal information

  • If an offer looks too good to be true, it probably is

  • The domain name looks off. E.g. instead of Amazon.ca, it’s showing Amaz0n.ca

  • The website URL is not secure. Look for the S in https:// as that will confirm the website is secure

"When thieves don’t have your personal information, they’ll try to pull a scam on you to get you to give up your details."

What can I do to protect myself from scams and identity theft?

Even if you make protecting your personal information a priority, it’s impossible to guard yourself completely from scams. That said, you can take some proactive steps to lower the odds of you becoming a victim of identity theft.

1. Use strong passwords and PINs

This should be obvious, but you want to ensure that all your passwords are strong. Use upper and lower case characters, symbols, and numbers when allowed. You’ll also want to make sure that none of your passwords are the same. There are multiple password management apps such as LastPass that can help you keep track of everything. As for your credit card and debit card PINs, they should all be different, and you should change them at least once a year. If two-factor authentication is an option, set it up since it’ll give you an extra layer of security.

2. Check your credit report

With so many recent data breaches, you may want to consider monitoring your credit report through both credit bureaus: Equifax and TransUnion. You can order a free credit report through both agencies once a year. What you’re looking for are open accounts that you don’t recognize. It might even be a good idea to pay for credit monitoring, so you’ll be alerted anytime there’s a credit report. By going this route, you can take immediate action if there’s any suspicious activity.

3. Beware of social media

Social media is a part of many people’s daily lives, but some individuals may overshare. Perhaps you’ve posted a picture of yourself on vacation, or you’ve sent out a tweet with your first pet’s name. Maybe you’ve decided to tag all your friends from an old junior school photo. You’ve basically provided thieves with enough information to target you. They know you’re not home, and you’ve given up the answers to many common security questions.

4. Be careful when out in public

Whenever you’re out and about, you still need to be mindful of your surroundings. Avoiding public WiFi is advised as the networks could be vulnerable. The last thing you want is spyware to be automatically downloaded to your device. When using an ATM at home or abroad, check to see if the machine has been tampered with before inserting your card. When prepaying at a gas station, cover your PIN when entering it.

5. Review all your transactions

Whenever your credit card bills arrive, you’ll want to go over every single line. Make sure that every transaction made lines up with what you spent. Sometimes thieves will make small charges in hopes that you won’t notice. Later they may try something more significant. As soon as you’ve confirmed there’s a transaction that wasn’t made by you, contact your financial institution to initiate a fraud claim.

6. Do your own due diligence

There’s practically a new scam every day, so you need to constantly do research. Any organization that claims they can quickly fix a problem for a fee should be questioned. For example, there are many ads out there that claim they can clear your debt and increase your credit score instantly — that’s just not possible. Be extra cautious these days, as thieves can also prey on people who are worried about current events like COVID-19.

7. Don’t fall for phishing scams

Phishing is when fraudsters try to get your information by posing as an organization you may be familiar with. As a general rule, you should never click random links or give up your personal information unless you’ve reached out to the company first. Some of these phishing scams can be quite elaborate and may sound convincing. If you’re not sure if it’s real or not, hang up and contact the company directly. Call the customer service number that’s listed on their official website (not one that was provided in the call, email, or text message) and ask the rep if they’ve tried to contact you. They’ll be able to tell you if anything is going on with your account.

What should I do if I’m a victim of fraud?

Despite your best efforts, you unfortunately may still become a victim of fraud. Here’s what to do if your identity has been compromised or you’ve fallen for a scam.

1. Collect your thoughts

It’s scary when you’re a victim of fraud. You may be going through an emotional rollercoaster, with no idea how a thief got your information. Instead of making any quick decisions, take the time to collect your thoughts. First, you’ll want to confirm that you are indeed a victim of fraud. If you’re sure, you’ll need to gather any documents related to your situation, be it receipts, emails, or text messages. Having all of this information ready will help speed up the fraud investigation.

2. Contact your financial institutions

You’ll want to immediately contact your financial institution where the fraud occurred. That could be where you do your regular day-to-day banking or another bank where a fraudster has attempted to open up an account. Once you’re in touch with the fraud department, they’ll be able to lock your accounts and cancel any new applications. They’ll also get you to change all your passwords and send you new credit and/or debit cards.

3. Get a police report

In some situations, you’ll want to file a formal police report. Generally speaking, any time you fall for a scam, you’ll need a police report. That could include falling for a CRA scam or inadvertently buying a fake item online. Admittedly, a police report may not do anything, but it might be required as part of the fraud investigation. Basically, you want to do everything you can to build your case in your favour.

4. Set up fraud alerts

Contacting your financial institution and the police will help you short-term, but you may be dealing with fraud for several years to come. You’ll want to order your credit report right away to see if the thieves try to open up any accounts under your name. At the same time, it’ll be worth your while to pay for fraud alerts with both TransUnion and Equifax. Since thieves already have your information, they may try to use it again later. The fraud alerts will tip you off right away so you can take corrective action.

What are some common scams?

There are hundreds of scams out there, but some are more common than others. They all use the same tactics, so once you know how they work, you can clearly point them out. These are the common scams to look out for.

Canada Revenue Agency (CRA) scam

The CRA scam has evolved over the years, but it’s pretty similar in each form. Someone claiming to be from the CRA will say that you owe money. If you don’t pay it back immediately, you’ll be arrested or deported. The clear giveaway that this is a scam is when they tell you that your only solution is to pay immediately with bitcoin or gift cards. They’ll also tell you to stay on the phone and act normal when you make the payments.

The CRA will never contact you by phone unless you initially requested them to. Most of their communications are done via direct message, which is only available when you log in to your CRA account.

Government of Canada scam

Like the CRA scam, a fraudster will pose as a government official and target newcomers to Canada. They’ll say you owe money and you need to pay right away, or you’ll instantly be deported.

Immigration, Refugees and Citizenship Canada (IRCC) employees will never call you to collect any fees, nor will they use threatening language. They also won’t inquire about your personal or financial information.

COVID-19 fraud

There have been multiple COVID-19 scams going around, including:

  • Vaccines for sale

  • CERB and CESB payment scams

  • CERB and CESB repayment scams

COVID-19 vaccines and financial assistance are administered directly by the government. Anyone who’s offering you a vaccine for a fee or claims they can get you additional Canada Emergency Response Benefit (CERB) or Canada Emergency Student Benefit (CESB) payments is definitely trying to scam you.

Fake emails

The Nigerian prince scam where they need you to broker a multi-million dollar deal has been around for decades, but people still fall victim to it. Catfishing is a similar scam, where a fraudster will prey on a lonely soul looking for love, then convince them to give them money.

No one will ever reach out to random strangers to complete a major financial transaction while offering a fat commission. Catfishing can be a bit tricker, but in most cases, you should never give money to someone you’ve never met in real life, no matter what your feelings are towards them.

Fake prizes

If you’ve ever received a call or email about a prize you’ve won, be suspicious. Ask yourself if you entered a contest recently and what the prizes were. If you haven’t entered anything recently, it’s probably a scam. If the email or caller asks for personal information or a fee to verify your prize, then there’s no doubt it’s a scam.

Always keep your guard up

You have to give fraudsters credit — they’re constantly changing their tactics to get you to part with your hard earned money. They also use technology to make it easier to trick people. Keeping up to date about common scams and protecting your personal information safe is the best way to prevent yourself from becoming a victim of identity fraud.

As weird as it sounds, you may also want to keep your information hidden from anyone that’s not your spouse. Parents, brothers, sisters, aunts, uncles, and anyone you know can open up accounts under your name if they have the correct information. That’s not to say you shouldn’t trust your family and friends, but keeping your personal information safe is paramount in modern times.

Barry Choi

Barry Choi is a personal finance expert based in Toronto who makes frequent media appearances. His website Money We Have is one of Canada's most trusted sources for all things related to money and travel.

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