What is Fraud

The term internet or online fraud encompasses a variety of fraudulent schemes that use message boards, websites, and emails. The goal is to solicit potential victims and conduct fraudulent transactions. There are different types of fraud, including identity fraud, advance fee fraud, Nigerian fraud, and others.

An advance fee fraud is a type of scheme that asks victims to pay money in advance. Fraudsters promise items or things of value, including investment opportunities, low interest loans, and gifts. Victims get a dud product or the item they purchased is never delivered. Scammers often offer found money or lottery winnings and request upfront fees. These include handling, administrative, participation, and membership fees. Debt elimination offers are another type of fraud scheme. Con artists send emails to borrowers, regardless of whether they are in financial straits or are current on their debt payments. They request a fee for the service and promise to make the borrower debt-free. Apart from losing the fee, victims may incur even more debt, and their credit score may be affected. Debt elimination scams usually promise to eliminate the borrower’s outstanding obligations. Con artists prepare legal documents to be presented to the lender, be it a credit union, mortgage company, or bank. They refer to various court decisions, constitutional provisions, and publications by government agencies, citing paragraphs selectively. There are many online scams like this, with cons charging high commissions and upfront fees. The problem with such scams is that borrowers who stop making payments risk losing their property. Financial institutions may take legal action, and borrowers are threatened with foreclosure.

In general, cons offer special deals, feature free services and heavily discounted products, or ask for assistance in exchange for a fee.

The Nigerian fraud is another type of fraudulent scheme that combines advance fee fraud and identity theft. Fraudsters who use this scheme send unsolicited emails with confidential business proposals. Criminals often claim to be Nigerian civil servants who need help to transfer a substantial amount of money to a bank outside Nigeria. The aim is to convince the email recipient to disclose his bank account, credit card, and personal information. There are many variations of the Nigerian fraud, including extortion and threat scams and contract fraud. Some fraudsters promise to transfer money from over-invoiced contracts while others offer to disburse funds from wills. The email addresses and names of victims are usually obtained over the internet, from magazine ads, offline and online business directories, and different trade-specific journals. Criminals try to convince victims to travel to Nigeria which may result in kidnapping, intimidation, and even death. Such scams often deteriorate into kidnapping and financial loss for the victim. According to officials, hundreds of millions of dollars are lost due to Nigerian scams each year. A major problem is that the money is used for drug trafficking and other violent crimes. Victims rarely report the incident out of fear that they will be persecuted as co-conspirators. Moreover, the possession of such fraudulent letters is illegal under Nigerian law.

Identity theft or identity fraud is a scam scheme that aims to steal personal information and assume the identity of the victim. This is done to commit a criminal or fraudulent act. Con artists approach potential victims online and ask for their bank and personal details. There are other ways in which thieves gain access to financial information. These include pretexting, diverting billing statements, and skimming.

Identity fraud occurs when a fraudster uses one’s credit card number, SIN, bank account, name, or other information. Identity thieves can commit different crimes, with serious consequences for victimized persons. Their credit score may suffer, and their application for car and personal loans and mortgages may be rejected. Con artists may obtain a credit card in your name or they may rent a flat on your behalf. In some cases, the victims have been arrested for criminal acts committed by identity thieves. Identity theft can result in different types of fraud, including finance and bank fraud, credit card fraud, and utilities fraud. Thieves may use your identity to pay for expensive goods or to get access to welfare services. They may produce counterfeit documents or apply for genuine documents. Fraudsters may also use your financial information to pay for different services such as wireless internet, cable TV, and heating. Con artists can commit various types of finance and bank fraud by opening an account in your name. They may use your account to pay with counterfeit checks or they may write bad checks. Fraudsters may apply for a personal or auto loan in your name or they may gain access to your debit or credit card account and drain them.

Account takeovers and credit card fraud, in particular, are forms of internet crime. Con artists gain access to credit card and bank accounts by using fraudulent means such as malware, spyware and phishing. Bank account fraud can occur as a result of financial or personal information being stolen.

Bogus offers come in a great variety. Fraudulent insurance services and false job offerings (recruitment scams) are in the category of bogus offers. Innocent victims pay for the service but never see their money. Insurance fraud occurs when a person is denied some benefit or when a criminal lies in order to gain some advantage or benefit. There are different types of insurance schemes, including faked damages fraud, paper collision fraud, and others. Organized ring is a form of insurance fraud committed by administrators, physicians, officials, and lawyers involved in fraudulent activities. Medical provider fraud refers to illegal actions such as misrepresenting facts and inflating bills.

Other forms of fraud include business opportunity and business directory frauds, inheritance fraud, plastic card fraud, and others. In Canada, con artists are involved in a variety of fraudulent transactions, including debit and credit card fraud, identity theft, and advance fee fraud. A 2009 self-reported survey has indicated that 4 percent of Canadians have fallen victim to some form of finance or bank fraud. The highest percentage of victims is in Ontario and British Columbia. People who often use online banking for financial transactions are at a higher risk of becoming victim of bank fraud. Individuals with a higher level of education and income are more likely to be victimized. Persons without high school diploma are 5 times less likely to report fraud compared to university graduates.

Where to report fraud depends on the fraudulent act that was committed against you. If you have fallen victim to credit card fraud, you should contact your credit card issuer first. Your credit card company or bank should take the required steps to protect your money and identity. Victims may contact the Canadian Anti-Fraud Centre and the credit bureaus. Contact TransUnion and Equifax Canada so that they place a fraud alert on your credit report. If you receive an email that asks for your financial or personal details, it is important to contact the agency, institution, bank, or credit card company whose name was used. Contact the police service in your area if you are a victim of other types of fraud.

Identity Theft FAQ for Canadians

What is Fraud