Beware of these common financial scams

Toronto, ON – Financial scams cost the country millions of dollars each year. Credit card scams alone cost Canada $199-million in 2011. With so much rampant fraud, the Competition Bureau has designated March to be National Fraud Prevention Month here in Canada.

“When it comes to scamming consumers, fraudsters are becoming increasingly savvy in how they convince you to give them information,” says Jeffrey Schwartz, executive director, Consolidated Credit Counseling Services of Canada, Inc.

Consolidated Credit wants consumers to be aware of the most common financial scams:

  • Cheque cashing and money transfer scams: A company contacts you with an offer to become a “secret shopper” for cheque cashing stores. They send you a cheque to cash, and you send a portion of the cheque amount back to them via a money transfer service. When the cheque turns out to be fraudulent you are held accountable for the entire amount. While “secret shopper” businesses do exist, the Competition Bureau confirms no such services are used in cheque cashing or money transfer companies.
  • Lottery scams: These scams involve someone contacting you to congratulate you on winning a lottery you never entered. They request a fee or taxes in order for you to claim your prize, even though traditional lotteries NEVER require upfront fees. You send the money in and never receive anything back.
  • Work-at-home investment scams: These involve a company claiming you can achieve your financial dream working just a few hours a week from home; all you need to do is provide some initial investment capital and you’ll be set to become a millionaire. Unfortunately, they take your money and never give you any work because “no jobs are currently available,” or they just disappear entirely.
  • Warranty and insurance scams: These types of scams usually involve a third party calling you over the phone to offer extended warranty protection or additional insurance on products or services you already own. You pay for additional protection on something important like your car, thinking you’re being a responsible consumer, only to realize you have no additional coverage when it comes time to use it.
  • Advanced fee personal loans: Ever wonder how a loan company can offer you a loan when you have bad credit or no credit at all? It may be a scam. The loan company offers you money you desperately need, but they require an up-front fee – usually anywhere from a few hundred to a few thousand dollars. You send the money, but you never get approved for your loan and you can’t get your money back. A good rule of thumb is if you can’t get a loan through your bank, you probably can’t qualify for a loan.
  • Fake charities: This scam is pretty straightforward. You want to help those who are in need, so you give the charity representative your account information over the phone or send a cheque in the mail. Unfortunately, you’re helping a scammer instead of someone who’s fallen on hard times.
  • Fake inheritance claims: This involves getting a letter about the death of a long-lost friend or relative you never knew existed. There’s tons of money available; all you have to do to get a nice chunk for yourself is assist with the banking by providing your bank account information. You may also be asked to pay an up-front fee to collect your portion of the wealth.

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