March is National Fraud Prevention Month

Markus Muhs - Mar 06, 2020
March is National Fraud Prevention Month and I thought I'd take the opportunity to update a blog post from a few years ago. One thing that hasn't changed over the past 5 years is that people still keep getting defrauded...

I first want to recommend checking out the Government of Canada's website for National Fraud Prevention Month and then there will be a few more resources at the end of this post.


Protect Yourself from Identity Theft


Identity theft is a serious problem in North America. As can be seen here, stats seem to be trending in just one direction, up over 40% since I first wrote this post 5 years ago... 

Identity theft goes beyond stealing a credit card or account number and racking up short-term debts, as serious as such fraud may be. Identity thieves can establish an interlocking set of financial accounts, from bank accounts, utility services, job registrations, driver’s licenses and just about anything else imaginable to assume an alternate identity for the purpose of extracting money. Some victims may go for years without being aware that their good name is being abused by a thief, and it can be very difficult to clear their record after the fact.

Prevention — Some Common-Sense Antidotes

With our interactive society, it is not an easy task to keep our confidential information completely private. But we can certainly employ some common sense in our day-to-day behavior to make theft more difficult. Here are some tips that we can all use:

  • Buy a Shredder — Never throw papers with identifying information into the trash. Sorting through the garbage is one of the most popular ways that crooks gain sensitive information. Credit card slips with matching signatures, investment notices (e.g. the recent mailings of annual reports from your investments) — shred them in a cross-cut shredder. Consider shredding junk mail as well. That latest unsolicited credit card offer could be easily abused by the dishonest.
  • Lock Your Mailbox — Keep incoming mail secure from those tempted to pilfer. Don’t leave outgoing mail where it may be stolen. This is one way that thieves can gain access to your information, and often without you knowing as often times only select pieces of mail will be stolen.
  • Review Your Credit Card Statements — While the liability for fraudulent use of a credit card is generally now limited, it still pays to be careful. Always reconcile monthly statements with your transactions. Question any discrepancies immediately. Cancel any cards you no longer use through the issuer, and destroy your copies. Of course, take action immediately where you lose an active card.
  • Keep Your Social Insurance Number (SIN) Confidential — This number may only be requested by tax authorities and financial institutions. While some merchants or card issuers may try to demand it, you may always decline. Keep your SIN confidential.
  • Review Your Credit Rating — You are entitled to check the record that credit rating agencies are keeping on you. A regular review may spot problems before they turn into catastrophes. Canada's two major credit bureaus are Equifax and Transunion.
  • Use the Internet Carefully — If paying for something on the internet, ensure that the site name where card information is entered is secure. If making a purchase from a vendor for the first time, do a check and see if there are reviews on the vendor that might indicate problems with the vendor. As well, be aware of information that may be solicited over the internet. These days, it is very common to be subject to “phishing” — the use of phony emails to extract sensitive information from recipients. Phishing activities have become more sophisticated as users become more aware. And it’s not just a problem with the internet and home computer use. Experts say much of such theft occurs in the workplace as well. Be aware this goes on and act accordingly. Never click a link in an e-mail that purportedly links to a log in page (if an e-mail directs you to log in to your account, go to the website and log in the way you normally do). Know what Malware is and how to avoid it.
  • Google Everything and Everyone — Whether it's an internet service, a professional service, or a brick and mortar store. Google can immediately bring up reviews good and bad, as well as links to what others have to say or possibly fraud reports. 




Too often people get taken when it comes to investing in something. This can range from simply being sold a fully legitimate investment and not understanding all the risks involved, then unexpectedly losing money, all the way to Bernie Madoff type "ponzi schemes" or just outright theft of your investment money by a rogue investment dealer.

There will always be more scams and schemes in the future causing investors to lose their hard earned money, and I can't guarantee that you'll always be able to avoid them, but try to avoid being a statistic or a news headline. A lot of fairly sophisticated investors, even financial institutions, entrusted Madoff with their money. Year after year I read stories of local investors losing everything due to some kind of investment promising outsized returns, probably sold without full disclosure of the risks, like this one from a few years back. Then there's the oft-repeated story of financial advisors outright stealing their clients' money.

To help protect yourself from either taking unexpected losses or being taken for a fool entirely, some pointers:

  • Understand what the risk free rate is (around 1% as I write this, essentially the return you can get on short-term GICs or a savings account) and that EVERYTHING offering a higher rate of return comes with correlative higher risk. There is absolutely no exception to this rule, ever. If one GIC pays a slightly higher rate than another, it is likely from an issuer with a slightly lower credit rating (ie: a small trust company versus a major bank). Stocks potentially offer a higher rate of return with a degree of risk we're all familiar with. If an investment is promising a "guaranteed 10%" when the risk free rate is 2% then it is a much riskier investment wth a realistic chance of total loss. Or it's an outright ponzi scheme where the issuer of the investment can only pay out that return by collecting more money from newer investors. Just don't fall for it. I repeat again, there is no exception to the rule; we operate in an efficient market, so if some business venture is offering an outsized "safe" return, then the banks or some other investor with a lot more money than you would be all over it already.
  • Again, just as above: Google is your friend. Google search any new investment advisor or firm. Google search for more info on that investment type. You'll find lot's of info that will help you make your decision. If a particular investment company already has a bunch of investor complaints against them, there's no reason they should be gaining new clients.
  • Every properly licensed investment professional can be found listed on the Canadian Securities Administrator's Are They Registered site. If they're not listed on there then they shouldn't be selling investments.
  • Invest only in liquid, marketable securities. Sometimes certain private investments might be offered to you and I'm not saying to avoid them entirely, but know the additional risks. If you invest in listed common shares, exchange traded funds (ETFs) and mutual funds, you know what you have and you know that you can sell them any time the markets are open. They might have prices that fluctuate dramatically day to day, but on that point they actually have prices and are liquid every day. Your investment statements should also be coming from the firm your advisor works for and not be fabricated by the advisor.


Further Reading:

The OSC's Get Smarter About Money includes information on avoiding fraud/scams and is just a generally good resource to educate yourself better on everything personal finance related.

The Canadian Marketing Association's Fraud Prevention Forum has a lot of good info.

What to do if you're a victim of scams or fraud, on the RCMP website.