sun-life-three-financial-scams

When clients are in their fifties, many of your discussions will revolve around retirement. But there’s another topic that warrants their attention: financial scams and how to avoid them.

According to the 2013 annual statistical report from the Canadian Anti-Fraud Centre (CAFC), Canadians between the ages of 50–59 are the most targeted with regard to mass marketing fraud. They also reported the highest dollar loss. Mass marketing fraud refers to scams committed via mass communication media using the telephone, mail and internet.1 They range from fake lotteries and contests to money transfer requests to solicitation from phony charities, with new schemes surfacing all the time.

Of the ploys affecting older Canadians, a financial crime trend bulletin issued by the CAFC earlier this year highlighted these three types of scams:

  • emergency or grandparent,
  • prize, and
  • bank inspector.

Emergency/grandparent scam

“Hi grandpa? It’s me. I’m in trouble.”

In this scenario, the victim (often a grandparent) gets a phone call from someone claiming to be a family member (often a grandchild) or friend. They say they’ve been in an accident, are having difficulty returning from a foreign country or need to be bailed out of jail. They ask grandpa or grandma to wire some money and not to tell anyone because they’re embarrassed or afraid of a parent’s reaction. In some cases, someone posing as a police officer, lawyer or medical professional also calls to “authenticate” the story. These callers are convincing, know how to ask leading questions and play on people’s compassion, all of which add up to big losses:

  • Since 2009, the CAFC has received 17,132 emergency scam complaints (from Canadians, the U.S. and other countries), accounting for more than $24 million in reported losses. Of these complaints, 11,889 were reported by Canadians.2
  • The average loss per victim was $3,743.07.2

Anyone can be a victim. According to the Canadian Marketing Association, anyone—regardless of age, income and ethnicity—can be targeted for fraud. Victims are often educated, informed, relatively affluent and involved in their communities.

Prize scam

“Congratulations! You’re a winner!”

This ploy includes fake lotteries, sweepstakes and contests. Victims are contacted by phone or email about a “big win” or the chance to win something. To receive their prize, they must first make a payment (to a bogus organization) to cover taxes, transportation, insurance or legal fees; to be entered in a draw, they may have to “buy” something. The victims send the money but there are no rewards or opportunities, just wrongdoing. In 2013:

  • The CAFC received 2,371 lottery/prize complaints targeting Canadian seniors.2
  • 397 were classified as victims with total reported losses exceeding $3.4 million.2
  • The average loss per victim was estimated at $8,610.2

The prize scam can also lead to identity theft. Fraudsters may ask victims to confirm their full name, address, birthdate, social insurance number or mother’s maiden name as a “security” measure before awarding any prizes or entering them into a draw, only to use this information to defraud the victim.

Did you know?

  • Police, judges and lawyers never request that money be sent through money service businesses such as Western Union.
  • Financial institutions don’t solicit the public’s help for internal investigations.
  • Known lottery and sweepstakes companies don’t request an upfront fee to receive a prize.
  • Any unsolicited phone call advising that you’ve won a lottery is fake. The only way to participate in any foreign lottery is to go to the country of origin and purchase a ticket in person. A ticket can’t be purchased on your behalf.
  • Fraudsters often lure their victims through professional-looking marketing materials, well-researched telephone scripts and their ability to impersonate legitimate organizations.

Bank inspector scam

“We think an employee is stealing; we need your help to prove it.”

When asked for help, many people are happy to oblige – which is what offenders count on in this costly crime.

It starts with a phone call from a “bank inspector” or “police investigator” about a bank employee suspected of stealing money. The victim is asked to help with the investigation by withdrawing cash from their bank account – often in the $5,000 range as $100 bills2—and to not discuss the withdrawal with anyone, including all bank staff in case more than one person is involved. The victim gives the cash to the scammer for “inspection,” believing it will be returned to them or re-deposited to their account soon afterwards. But it isn’t—and they’re out a substantial sum of money:

  • Since 2010, the CAFC has received 66 complaints related to the bank investigator scam targeting senior citizens.2
  • Of these complaints, 36 were victims with a total loss of $241,200.2

43,006 complaints…11,740 victims…$52,789,894.96 lost

These figures are from the CAFC 2013 annual statistical report, representing mass marketing fraud reported by Canadians in 2013.

Aware and informed

Awareness is essential to avoiding what could cost your clients thousands of dollars, not to mention peace of mind. Organizations including the CAFC, Financial Consumer Agency of Canada, Competition Bureau and CARP offer consumer-friendly insight into financial fraud—how to recognize it, how to protect yourself, types of scams and more. So does Brighter Life:

Encourage your clients to explore these resources and protect themselves from financial fraud.

Originally published on Advisor.ca