Be Aware of these Top Five E-transfer Scams

We’ve all heard stories of Canadians who have fallen victim to financial fraud, whether it is a senior who lost thousands in a fake CRA scheme, a new Canadian robbed by an immigration e-transfer scam, or families bilked out of thousands by a rental fraud scam. It’s easy for more savvy consumers to shrug these instances off as vulnerable people being taken advantage of, but the financial fraud landscape is evolving, becoming increasingly sophisticated.

With the pandemic pushing us to engage in more online financial transactions the odds of being victimized by an e-transfer scam have increased exponentially.

According to the Canadian Anti-Fraud Association in 2021 alone, financial fraud (including e-transfer scams) cost Canadians $380M. Since the beginning of January 2022, $34M has been lost to fraud. 

So, what are the most common e-transfer scams and how can you protect yourself?

Here are the five biggest financial scams of 2021 based on dollars lost.

1. The Investment Scam ­– $163.9 Million lost in 2021

An investment scam centres around a fake investment opportunity, typically earmarked by higher-than-normal returns on investment. This scam exists in several forms, the most famous of which is the Ponzi scheme.

Fake investment opportunities are the most common form of e-transfer scam. Scammers engage their target through a variety of platforms (including in person) usually promising a ground floor buy-in, with high rate of return. In some instances, victims will receive their return on investment, but this is used as a lure to get them to “invest” more funds and attract more investors/victims to the scheme.  

How can you spot an investment scam? The hallmarks often include:

• Unsolicited financial advice
• Higher-than-normal returns (if it sounds too good to be true, it probably is)
• High pressure tactics
• Requests for alternate forms of payment like cryptocurrency

2. The Romance Scam – $64.6 Million lost in 2021

Despite shows and documentaries like Love Fraud, The Tinder Swindler, and countless episodes of Dr. Phil focusing on romance scams, they are still the second most common e-transfer scam in Canada.

Romance scams involve relationships typically started, or maintained exclusively, online and can occur over the course of years. The perpetrator will go to great lengths to create an appealing social profile and sense of success, often stealing their image from other people. They are over the top with romantic gestures and sentiment, working hard to endear themselves to their victim. They may even send gifts and cash to their victim to establish a sense of “back and forth”. Once they have gained a person’s trust and sympathy, they start to ask for money and the e-transfer scam begins. The amount increases while the circumstances of the perpetrator become more desperate (trapped in a foreign country, assets frozen, wrongly imprisoned, etc.).

How to spot a romance scam:  

• Their profile shows they live in a different country from where they are seeking romance  
• They refuse to meet in person (or something comes up to prevent it) or engage in video chats
• They try to lure you off the website you met on to another platform
• They profess their love early on
• They ask for money or assistance with a financial transaction

3. Spear Phishing – $54 Million lost in 2021

Spear Phishing e-transfer scams typically occur via email with the scammers trying to get businesses/individuals to send them money by pretending to be someone they know. The scammer engages the e-transfer scam by spoofing a legitimate email address from an existing person, for example an employer/employee, or supplier. They will then use the existing relationship between the sender and recipient to get money.

How to spot a Spear Phishing e-transfer scam:  

• There is an inconsistency in the email address/signature of the sender
• The sender is making an unusual request ex. assistance purchasing gift cards, emergency funds
• The sender is alerting you to an immediate change in their banking information
• The sender is asking the recipient to make a financial transaction they wouldn’t normally to “test” a service

4. Extortion – $18 Million lost in 2021

Easily the most frightening form of e-transfer scam for its victims, extortion scams use threats of violence, reputational ruin, loss of freedom and financial destitution to extort a ransom. Victims are contacted with a threat and required to pay the perpetrator money in a set time before it is carried out. These e-transfer scams are obvious to spot, but should you find yourself a target remember.

• Report any threats of violence to the police
• Do not send any money
• Block the caller/sender if possible and report the scam to your cellphone provider

5. Merchandising Scams – $12.3 Million lost in 2021

A merchandising e-transfer scams involves selling fraudulent items such as event tickets, pets, vehicles, rental properties, etc. Scammers will post an online/classified listing and when they are contacted by a potential “buyer” they will have them send a deposit, or payment in full. The product doesn’t exist, and the money is lost.

How to avoid a merchandising scam:

• Do your research, check ratings and reviews from other buyers
• Compare prices if it’s too good to be true it’s probably a scam
• Arrange for payment upon pick up, don’t hand over any money until you have the merchandise

E-transfer scam are getting more difficult to identify, and since the shift to remote working and online payments sparked by the pandemic, they are getting more sophisticated. It is more important than ever to protect your personal data and financial information. To learn more about protecting yourself, or to report an e-transfer scam, visit the Canadian Anti-Fraud Centre.