Scams cost billions – and Canadians all lose, experts say
Fraud costs Canadians billions of dollars each year, experts and investigators report. Although the total numbers are difficult to determine, the value of economic-related scams such as credit and debit card fraud is alone estimated at $5 billion annually by the RCMP’s Federal Serious and Organized Crime division.
With the activities of fraudsters in the Internet age ranging from identify theft to high-return email investment scams, the need for vigilance and public education has never been higher.
“Fraud threatens every Canadian,” says Commissioner of Competition John Pecman, noting that Canada’s Competition Bureau has promoted Fraud Prevention Month each March for the past 10 years, and devotes a significant part of its resources to fraud prevention.
The Financial Consumer Agency of Canada (FCAC) provides information about financial products and services to help Canadians increase their financial knowledge and confidence in managing their personal finances.
FCAC commissioner Lucie Tedesco says the top scams reported by consumers to the federal government agency in 2013 involved credit and debit card fraud, as well as identity theft.
“In many cases, the victims are too embarrassed to tell anyone that they’ve been scammed,” she says. “But recognizing the red flags, reporting them to the proper authorities and ultimately stopping fraud can save you, a family member or a friend from significant financial loss and headaches.”
Organizations like the FCAC and the Competition Bureau have extensive online resources for consumers who are worried about becoming fraud victims. They include tips for identifying and avoiding many of the most common scams.
Other consumer-focused organizations are also doing what they can to help consumers protect themselves.
Danielle Primrose, president and CEO of the Better Business Bureau of Mainland British Columbia, says that scams will continue to work as long as victims are unable to resist what appear to be great offers.
“Over the last few years, we’ve seen fraudsters becoming increasingly more professional,” she says. “For example, they are using advanced technology to create personalized and real-looking fake lottery mail, or stealing familiar brands to make spam emails look more authentic.”
Nevertheless, she adds, the average consumer seems to be more aware of scams than in the past, and many are taking the initiative to raise the alarm by contacting organizations like the Better Business Bureau.
“What we tell people is that it’s okay to say ‘no,’ and to ask for more time to think and check out the offer, says Ms. Primrose.
While scams that target individuals are often perceived as having the most serious financial impact, other types of fraud equally take money out of the pockets of Canadians. For example, while health-care fraud is often seen as “victimless,” it’s anything but, says Joel Alleyne, executive director of the Canadian Health Care Anti-fraud Association (CHCAA).
“People think health-care fraud is not their problem, but they need to think again,” he says. “Every dollar stolen from the health-care system via fraud means one less dollar for care when it’s needed.”
Founded in 2000 to combat health-care fraud, waste and abuse, as well as to protect and strengthen the integrity of the Canadian health-care system, the CHCAA works with public and private sector health-care organizations to identify and stamp out fraud by health-care providers and consumers.
While health-care fraud happens in many ways, a typical example could be a clinic billing for one service yet providing something else. This could mean billing for orthotics while providing free shoes, or charging for massage therapy while providing cosmetics, says Mr. Alleyne.
“If you are billing your insurance provider for one thing and collecting for another thing, it’s fraud,” he says. “We have seen people lose their jobs over fraudulent behaviour like this. In some cases, people have faced criminal charges.”
The implications of health-care fraud for consumers include higher rates for benefits, because additional costs are passed on to the users of the system. It also raises the price of goods and services in the system, adds Mr. Alleyne.
“The other risk is that consumers could lose their benefits altogether,” he says. “If the benefit costs skyrocket because of fraud, the benefit could be capped or removed from a plan.”
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