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Foiling financial scam artists

Foiling financial scam artists

By Carla Hindman, Director of Financial Education, Visa Canada

You can hardly watch or read the news without hearing about the latest scam to separate folks from their hard-earned money. As criminals become increasingly more sophisticated, their schemes are more difficult to spot.

At the same time, people trying desperately to overcome financial hardships or to make a quick buck sometimes overlook red flags hinting that an offer is not quite right.

Here are a few precautions to avoid becoming the next victim:

Be skeptical. If it sounds too good to be true, it probably is. Beware of:

  • Investments promising to double your money in six months or claiming to be risk-free (like so-called "pyramid schemes" where returns for ground-floor investors depend on later investors falling for the same ruse).
  • The infamous foreign banking scams, in which supposed foreign officials offer large rewards for helping them transfer money out of their country.
  • Authentic-looking cheques from contests you supposedly won. You'll be asked to deposit the cheque and send a portion to cover processing fees and taxes. You should never have to pay for any legitimate prize; furthermore, you become responsible for any lost funds if the cheque you deposit is bogus.

When in doubt, consult a financial professional.

Other things to watch out for include:

"Phishing." In this 21st century version of identity theft, culprits go fishing ("phishing") for people's personal information by sending realistic-looking but fraudulent emails that seek confirmation of personal information such as account numbers, log-in IDs and passwords – supposedly for security purposes.

Online payment companies like eBay and PayPal, as well as conventional banks and payment companies, are common targets for fraudsters developing fake emails. Be aware that legitimate businesses will never ask you to verify sensitive information via email.

Identity theft. Each year, criminals steal billions of dollars by pretending to be someone else. By intercepting mail, going through trash or even peeking over someone's shoulder at the ABM, thieves use stolen Social Insurance Numbers, credit card numbers or bank account passwords to borrow money, open new accounts or charge big-ticket items to unsuspecting victims.

At a minimum, victims spend many hours undoing the damage. At worst, identity theft can ruin your credit rating and leave you deeply in debt. Visit the Canadian Anti-Fraud centre's web site ( for detailed identity theft and security precautions you should take.

It's very important to safeguard your payment card information. Never give out your payment card numbers over the phone unless you initiated the call. And, when shopping online, only use "secure" Web sites – those whose address begins with "https://" instead of "http://" and that display a small "lock" icon in the lower right-hand corner of your browser.

There will always be scam artists looking to rip off unsuspecting victims. Your job is to not be one of them.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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