COVID-19 Fraud: Consumers in the Crosshairs
While COVID-19 fraud has broadly impacted governments and businesses, it is also impacting consumers. For instance, Canadians reported 29,590 instances of pandemic-related fraud between 6 March 2020 and 30 November 2021 to the Canadian Anti-Fraud Centre (CAFC).
The Anti-Fraud Centre is Canada’s national repository for information on fraud, reporting fraud, and providing resources to identify it. It also provides information on fraud to law enforcement, including the Royal Canadian Mounted Police.
To find out how the COVID-19 pandemic has impacted the CAFC and the types of fraud reports the centre is receiving, Security Management spoke with Sue Labine, call centre operations supervisor in charge of the Fraud Intervention Intake Unit.
Labine’s unit typically acts as the first point of contact for individuals who want to report an incident of fraud—either by phone or through an online reporting tool. The CAFC then validates those reports and provides support to victims.
Due to the increasing prevalence of fraud targeting older adults, the centre also has a Senior Support Unit that specializes in working with seniors—
including connecting them with another individual who has been a victim of the same scam, Labine says.
Before the COVID-19 pandemic, the types of fraud in 2018 with the highest dollar losses reported to the CAFC were romance scams (CAD $22.5 million) and wire fraud (CAD $12.5 million). Loan (CAD $11.9 million), extortion (CAD $10.2 million), and investment (CAD $8.7 million) scams were also linked to high dollar losses in 2018.
The scammer “becomes very convincing and fun to communicate with, and sometimes can be quite quick to profess their love for the victim and ask for money.
“Victims are being told that they could invest into a fake company, but they think they’re investing with a legitimate platform,” Labine explains. “Returns are always extremely high and at the end when it comes to reclaiming their funds, there are barriers to getting their money back. They lose the majority of their investment.”
Since the pandemic began, the CAFC has seen an uptick in investment scams. Between January 2021 and September 2021, 1,557 instances were reported for a total of CAD $70.2 million in losses.
The centre has also seen an increase of reports of phishing attempts and social engineering tactics leveraging COVID-19 related content. For instance, fraudsters sent emails about where to claim relief funds with a link ultimately used to steal someone’s personal information to commit identity fraud, or they offered to sell lists of COVID-19 infected people in a specific neighborhood to steal financial data.
The CAFC has also received reports of fraudsters calling victims and posing as loan financial officers or representatives of local utilities who threaten to discontinue service if the victims do not pay immediately.
And while they were a problem before the COVID-19 pandemic, romance scams continue to evolve. Between January and September 2021, the centre received 1,291 reports of romance scams targeting 919 victims for CAD $42.2 million. These scams have become especially popular during the pandemic as more individuals moved to social media and online dating services to meet people, Labine says. Scammers typically mirror their target’s interests in their online profile, such as expressing a love for skiing on their Facebook page if the intended victim is fond the sport.
The scammer “becomes very convincing and fun to communicate with, and sometimes can be quite quick to profess their love for the victim and ask for money,” Labine says. “Other times, they establish a long-term relationship and then start asking for money. They give different reasons why they need money—there’s a family emergency, they can’t access their accounts and will pay the victims back, or they’re in the military, or there’s an inheritance and they need help to pay lawyers.”
Once fraud is reported to the CAFC, the centre can advise victims on next steps to take to protect their identities and ensure that their remaining assets are safe. The centre can also take steps on its own to disrupt fraudsters, including using its Operational Support Unit to facilitate the shutdown of a fraudulent website, disconnect numbers being used by scammers, and alert financial institutions of suspicious activity.
One major problem remains, though, for the centre to act. Less than 5 percent of victims report fraud, Labine says.
“The reason people aren’t reporting it, quite often, is because they’re embarrassed they’ve fallen victim for a scam,” Labine says. “And for seniors, they may be afraid their family will take over their account—especially if they lost a large sum of money. They don’t want the family to find out.”