Pause, Verify, Decide: How to Spot & Stop Financial Scams

Survey after survey shows financial scams are rapidly increasing in frequency. Investment fraud, especially, is costing Canadians hundreds of millions of dollars every year.¹ In fact, the government says reported losses since 2022 are close to $2.4 billion – but since only five to 10 per cent of incidents are reported, that number is likely far higher.²

Whether a scam is perpetrated by phone, email, text or social media, knowing what signs to look for can help you avoid falling victim to fraud.

Watch for these red flags:

• Pressure to act right now
• Calls or texts claiming to be from your bank, the Canada Revenue Agency (CRA), the police, government, or someone claiming to work for a well-known investment firm
• Requests to share your PIN, password or security codes
• Requests for payment via gift cards, cryptocurrency, e-transfers or wire transfers
• Deals or offers that sound too good to be true

Pause, verify, decide

Often, scammers try to create a sense of urgency or fear. That’s because they want you to act without thinking, says Claudiu Popa, co-founder and chairman of KnowledgeFlow Cybersafety Foundation in Toronto. Popa believes one of the best defenses against scammers is independent verification, such as hanging up a call and phoning your bank or the CRA directly.

Other ways to help stop fraud, protect yourself and confirm a request is legitimate:

• Never share security codes, PINs or passwords with anyone, even if the caller claims to be from your bank
• Set up a family code word so you can verify urgent calls
• Enable two-factor authentication on all accounts and help older relatives do the same
• Turn on transaction alerts in your mobile app so nothing slips by unnoticed
• Offer to be a trusted second set of eyes for others on anything that feels off

Remember: legitimate financial institutions will never pressure you to move money immediately.

Spread the word

Scams and fraud can happen to anyone, so it’s important to talk openly with family and friends about what you’ve seen or heard about. It makes everyone more prepared. And if you’re a victim of a scam or you’ve witnessed one, report it to the police and the Canadian Anti-Fraud Centre.

Popa says financial strain can make people more receptive to fake job offers, quick-money schemes, debt-relief pitches and investment opportunities that promise certainty in uncertain times. Artificial intelligence is also making these schemes more convincing by helping criminals create realistic voices, websites, images and messages at scale: “AI doesn’t change the goal of fraud. It just changes the quality of the disguise,” says Popa.

Here are the most frequently seen scams circulating today:

Fraud phone calls and text messages

Phone and text remain among the most common types of fraud attempts. These are part of the phishing family: voice calls are often called vishing, while text-message scams are often called smishing. In these attempts, fraudsters often impersonate banks, telecoms or government agencies and ask for money or personal information.

Fraudsters often combine a familiar or friendly tone with urgency and authority”, says Popa

Scammers read verbal cues and adapt in real time, he adds. What begins as an obvious scam call can evolve into a persuasive exchange involving multiple people who pose as supervisors or customer service reps.

So, if you suspect a scam call or text, hang up immediately and avoid clicking links.

Messaging app scams

Fraudsters increasingly approach targets through messaging apps like WhatsApp and Telegram. Again, they’re trying to steal your money or trick you into revealing personal data.

These apps can create a false sense of privacy, Popa notes. “Messaging apps make scams more intimate and more persistent – it’s very intimate to be receiving something on your phone inside a tool that you’ve been told is encrypted. It makes you feel like you’ve already got a one-to-one relationship with an individual.”

Fraudsters often start on social media or text message before pushing the conversation to a messaging app.

“The move to private messaging apps is often the moment when the scammer tries to isolate the victim,” says Popa. Once there, they may share fake documents or bogus offers to build credibility. Sometimes, criminals also use group chats with fellow fraudsters posing as satisfied investors in an attempt to lure victims into a crypto scam or pump-and-dump scheme.

Bank investigator and CRA impersonation scams

In these types of scams, people get calls, emails or texts claiming they owe money and must act immediately to avoid frozen bank or government accounts. Under pressure, many don’t stop to question whether the request makes sense. A telltale sign of this fraud? Demanding unusual payment methods like gift cards or cryptocurrency.

Scammers might impersonate bank investigators and offer to show a transfer in real time by directing victims to install screen-sharing software, which then hands over banking credentials that lets them steal money. Targets could then be told to withdraw the maximum amount and meet in a public spot.

The CRA has been warning about impersonation scams for years, but these keep working because they exploit authority and anxiety, Popa says. “Fraudsters often create time pressure by calling when people are distracted, tired or unable to easily verify the claim.”

Romance scams

In romance scams fraudsters initiate contact through dating platforms, social media or messaging apps and gain a person’s trust before cheating them out of money.

These scams often develop over weeks or months to build a strong emotional connection with a victim. Popa says they tend to follow a similar pattern of establishing contact, building rapport, creating intimacy, isolating the victim from family and friends and lastly, introducing a financial crisis. Often, the more trust they can build the more money they can get.

“Romance fraud is not a moment of weakness. It’s a long-form manipulation campaign,” says Popa. Typically, the “partner” asks for help with a medical bill, travel costs or a fake investment opportunity. “Once you manage to break people away from the pack, you can circle them, and you can have your way with their emotions,” says Popa. “It’s that isolation that is devastating.”

Romance scams can exact a huge emotional toll. In the aftermath, victims may experience an erosion of their trust and sense of safety with loved ones.

Family emergency and fake SOS scams

These scams, sometimes called grandparent scams, exploit fear that a loved one is in danger by claiming a relative has been arrested, injured or stranded. Scammers perpetrate these schemes by using personal information, such as a grandchild’s name or school.

“They don’t need somebody’s full biography. They just need one believable detail,” says Popa.

That detail can come from social media, data breaches, obituaries or public records. Popa says timing matters too, as scammers often strike when people are tired, distracted or emotionally vulnerable, typically in the evenings.