Blurb: Our increasingly complex society has broadened the risks that you may one day be targeted by fraudsters. But there are steps you can take to protect yourself.


Protecting yourself against financial fraud


By Peter Diekmeyer •


There’s an old saying in the news business: “If it bleeds, it leads,” that says a lot about why people are so worried about crime. Crime and fear sell newspapers and attract TV viewers. However the irony is that the number of highly publicized crimes such as murders, armed robberies, rapes and kidnappings being committed in North America, has been on a long-term secular downtrend for years.


But there is one sphere of criminal activity that Canadians should pay attention to that they almost never hear about:  fraud, more particularly investment, consumer and credit card fraud. Fraud does not photograph well and cannot be sensationalized quite as easily. But it’s there. And with the advent of the Internet, the opportunities for criminals are increasing exponentially. The good news is that by taking a few simple steps, Canadians can go a long way towards protecting themselves from this menace.


Investment fraud

For criminals, fraud is big business. One recent study claims that more than one million Canadians have at one time or another been a victim of investment fraud. Not surprisingly more than 90% of Canadians believe that investment fraud should be treated just as seriously as violent crimes. Yet most people believe that this is not happening.


Investment fraud is a big challenge for the Canadian Securities Administrators (CSA), the group that sponsored the study. As Jean St-Gelais its chairman, stated: “The first casualty of fraud is the victim’s trust in other people, investments and the financial markets. As regulators we are concerned when investors lack the trust to invest again. We must continue to educate people on how to recognize avoid and report investment fraud.”


Ironically, despite the losses that they suffer, few fraud victims actually report the crime. Only 17 percent of those targeted report their experiences with attempted fraud to the police, consumer advocacy groups or the appropriate regulatory authorities.


Experts say that there are several steps that people, particularly vulnerable seniors, can take to minimize their chances of being targeted. These include informing themselves of the early warnings of potential fraudulent activity and not letting their emotions guide their investment decisions, as well as being extra careful when selecting an investment advisor and always double checking any documentation that you sign.


Credit card and Internet fraud

Another increasingly lucrative field for criminals has been credit card fraud. The use of consumer credit in Canada has been growing exponentially in recent decades. According to the Canadian Bankers Association there were about 56.4 million credit cards in circulation at the end of fiscal 2005 with Mastercard and Visa alone accounting for approximately $190.6 billion in purchases during that year.


With that kind of volume you would expect the odd mishap. In fact during that year there were 342,640 recorded instances of payment card losses recorded totaling $280 million. Although the amount represents just a tiny portion of the amounts charged up on credit cards, if you are the one that is on the hook for it, to you, those losses are huge (even though credit card losses are often eventually picked up by the card issuers).


Credit card companies give several tips to users that want to avoid being taken for a ride:


·      Keep your card in a safe place and never lend it to anyone.

·      Do not write down your personal identification number (PIN). Memorize it and don’t tell anyone what it is.

·      Only conduct your ATM transactions at location in which you are comfortable.

·      Use your hand or body as a shield to hide your ATM number while you are punching it in.

·      If your card is lost or stolen report it immediately. (Most institutions offer 1-800 numbers and 24-hour/day services to take those calls.


One of the most lucrative areas that criminals have been moving into has been online transaction fraud. Although there are no hard and fast rules, experts say that following a new basic steps can vastly reduce your chances of being targeted.


·      Use you own computer when accessing your online accounts. If you use a public terminal you could accidentally leave temporary Internet files on that computer, which an unethical future user could take advantage of.


·      Install a firewall. These are software programs that you can load onto your computer that filter information coming in over the Internet.


·      Simply do not respond to Spam E-mail offers, no matter how attractive they are. Many such offers are done using fake letterheads and logos from reputable banks or financial institutions. Yet you’ll only find out that you been tricked when it’s much too late.


·      Monitor your own credit record regularly to make sure that there have been no suspicious transactions done by others using your identity.


·      Watch those cookies! Cookies are small program files that companies dump on you computer in order to monitor your activity. Learn how to block cookies from companies that you don’t know or trust.



For more information on protecting yourself against various types of consumer fraud, you can check out the following publications:


The Canadian Securities Administrators

Fraud resources:


How to avoid investment frauds and scams:


The Canadian Bankers Association

Safeguarding your money


Visa Canada

Credit card fraud: A guide to help businesses. Recognize it. Report it. Stop it.


Royal Canadian Mounted Police

Tips to prevent counterfeiting and credit card fraud


Peter Diekmeyer ( is a freelance business and economics writer.




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