What is financial fraud?
Financial fraud happens when someone steals your money or harms your financial health through deception or illegal activity. This can be accomplished through a variety of methods, including identity theft or investment fraud. Tax season is an especially active time of year for financial fraud.
Here are some types of financial scams to be aware of:
Income tax season scams
During tax season, Canadians may receive fraudulent emails, text messages, or phone calls claiming to be from the provincial or federal government. These messages usually indicate that you need to send payment or click on a link to receive your tax refund.
The Canada Revenue Agency ( CRA) and Revenu Québec offer some advice on how to identify these scams:
- Scams and fraud – recognizing a scam
- How to stay secure while filing your taxes
- What to expect when the Canada Revenue Agency contacts you
- Protect yourself from tax fraud - How Canada Revenue Agency (CRA) communicates with you
- Phishing scams and identity theft: How Revenue Quebec communicates with you
- Check out the CRA's Be Scam Smart playlist on YouTube
Gift card scams
In gift card scams, a criminal may impersonate an authority figure, such as your supervisor, to pressure you into buying gift cards on their behalf. Although gift card scammers do not direct you to click on any malicious links, they use high-pressure tactics to get you to purchase and send these goods to them.
This type of scam regularly targets members of the McGill community.
If you receive an urgent request for gift cards:
- It's likely a scam. No legitimate organization will ask you to pay by gift cards.
- If the request seems unusual or unexpected, end the call or text exchange.
- If the request appears to come from someone you know, don't reply directly to it. Social media and email accounts can be compromised, and phone numbers and senders can be spoofed. Use a different method to contact the sender.
Job offer scams
Employment fraud is becoming increasingly sophisticated and quite common. Anyone can fall prey! The impact on victims can be devastating on both a personal and financial level. Learn how to spot and report these scams:
- Job and employment scams (Competition Bureau of Canada)
- Job scams (Canadian Anti-Fraud Centre)
Investment scams
According to the Canadian Anti-Fraud Centre (CAFC), investment scams were responsible for the highest losses in 2022. Investors are lured in with opportunities that claim to offer higher than normal returns, or that convince users to invest in a crypto currency company that’s not legitimate. Learn more about Investment scams: What's in a fraudster's toolbox?
Bank fraud
Bank fraud is the act of using illegal means to obtain money from an individual or financial institution. Your personal and banking information may be at risk if you do not protect your online accounts and devices.
Protect your devices and login information
- Lock your devices whenever they are unattended
- Keep your operating system and applications up to date: How updates secure your device
- Create strong, unique passwords and PINs, and do not share these with anyone. When making purchases or withdrawing money in person, cover the keypad with your hand or body.
- Do not reuse the password to your McGill account on any other account.
- When signing up for services that are not related to McGill, do not use your McGill email.
- If an institution or service that you use offers it, set up two-factor authentication (2FA) on your account.
Monitor your financial accounts
- Periodically review your bank statements and your credit reports. Check for any charges or withdrawals you do not remember making.
- Set up notifications on your credit cards and bank accounts so that you will be alerted of unusual spending activity.
RRSP Scams
A Registered Retirement Savings Plan (RRSP) is a type of account introduced by the Canadian government, that helps you save for retirement. Its main benefit is that tax on RRSP contributions is deferred until payments are made from the plan. A self-directed RRSP allows the account holders to control the assets of their RRSP and make investment decisions themselves.
The CRA warns us about self-directed RRSP tax schemes, where promoters promise RRSP owners that they can make tax-free withdrawals from their RRSPs. They typically convince victims to transfer the funds to a self-directed RRSP, then purchase shares in a private company.
Tax schemes contravene the Income Tax Act and can have serious legal and financial consequences to those who choose to participate.