What You Need to Know About Financial Fraud

Financial fraud continues to be an easy means for criminals to make money from unsuspecting targets. As attacks continue to grow in volume, it is important that you are able to recognize the warning signs.

In this blog, we will discuss the emotional effects financial fraud can have on individuals, different types of financial fraud and how you can protect yourself.

How Fraud Affects People

Fraud can have a heavy emotional toll on the people affected by it. To start, criminals will manipulate a person’s emotions using social engineering tactics to gain their personal information. Criminals like to target emotions like fear, greed, surprise, anger and curiosity. To learn more about the emotions used in social engineering, read our past blog post. Once they have gathered enough information through social engineering, they are able to impersonate their target and commit acts of fraud.

Criminals leverage emotional responses like fear and utilize AI to socially engineer their targets. An example of a popular scam involving fraud is the grandparent scam. Those who fall for scams tend to experience extreme emotions, with feelings of guilt, lack of confidence and loss of self-worth after being tricked into sharing information.

If you or someone you know falls for one of these scams, it is important not to be too hard on yourself. Criminals often use clever cons and manipulate your emotions in an attempt to get you to act quickly without thinking through what they are asking of you. Remember to slow down and think critically of requests for your personal information.

Check & Bank Fraud

We are seeing an increase in financial fraud. A recent RBC survey found that 88% of Canadians have reported an increase in fraudulent activity, with 73% saying they were knowingly targeted in the attack. Financial institutions have large customer bases and move considerable amounts of money every day. This provides many opportunities for criminals to leverage different methods of fraud to make money. Common tactics that are used in the financial setting are check fraud, gift card fraud, wire transfer fraud and e-transfer fraud.

Checks are the easiest avenue for criminals to commit fraud. Criminals can create counterfeit checks that closely resemble legitimate ones by using stolen bank information, which is often collected through the social engineering scams described above. They can also alter legitimate checks to change details like the payee’s name or amount. If a criminal has previously gathered enough information to commit identify theft, they can easily forge checks in someone else’s name. An added step of precaution a criminal will take is to convince a “mule,” or an unsuspected individual, to deposit the fraudulent checks, building another layer between themselves and the crime.

Gift cards, wire transfers and e-transfers are additional ways criminals exploit financial institutions and their patrons. Criminals will use social engineering and phishing campaigns to trick targets into purchasing large numbers of gift cards, which cannot be returned after purchase. We often see fake Facebook Marketplace posts for furniture or concert tickets, and once someone sends a wire transfer or an e-transfer to the fraudulent seller, they are unable to get their money back. Unfortunately, wire transfers and auto-deposit e-transfers are very difficult to reverse after sending.

When it comes to purchasing furniture or tickets online, a guiding principle is that if it sounds too good to be true, it usually is. When possible, try purchasing directly from the seller and not from a reseller.

How to Recognize Signs of Fraudulent Activities

How do you recognize the signs of fraudulent activity when it comes to your bank account? We recommend you keep a close eye on your bank statements and online transactions to ensure all activity is legitimate. If you do have to use a check, double check for any signs of alterations. Receiving an unexpected checkbook or individual checks in the mail could be a sign of fraudulent activity and you should speak with your bank as soon as possible.

Additionally, if your checkbook or individual checks go missing, you should report this immediately to your bank and keep an eye on your accounts. Beware of anyone who is pressuring you to send money immediately; a false sense of urgency is a social engineering tactic that is favored by criminals.

A proactive approach is the best approach. If possible, try to avoid using checks, or sending wire transfers or e-transfers to unknown contacts; it is very difficult to reverse sending money. Criminals want to rush your decisions, so practice slowing down and taking the time to verify and validate before sharing personal information or sending money online.

Remember, your bank is there to help. If you ever have any concerns or suspicions about fraudulent activity, you should reach out. Additionally, you can report suspicious activity to your governmental anti-fraud centers.

Visit the Canadian Anti-Fraud Centre Website for instructions on how to report fraud and cybercrime online or by the phone. Or visit the Department of Justice Website to identify what type of fraud you have experienced and where you should report it.