Top six frauds and scams

The Ombudsman for Banking Services and Investments (OBSI) has issued a list of the frauds and scams that top its Most Frequent Complaints list. Here’s a list you can share with clients—and guard against yourself.

1) Debit and credit card fraud: Keep your cards in a safe place, use different PINs for each card, don’t share your card and PIN with anyone else, cover the PIN-pad with your hand to prevent others from seeing you enter your PIN, and don’t ever write your PIN on the card or leave your written PIN in your wallet or purse.

2) Overpayment scams: You advertise something for sale, and find a buyer. Success! But the buyer has written you a cheque for too much money. He asks you to return the overpayment by sending a wire. By the time the original cheque is discovered to be counterfeit, the “buyer” and your money have disappeared. Criminals also target landlords with this scam. Know that once funds are sent by wire to a fraudster, the money is usually not recoverable.

3) Debt consolidation scams: This scam becomes more common during times of economic recession and personal financial trouble. Someone whose credit limit is stretched to the max and has multiple debts will pay a company a fee for debt consolidation at a lower rate. In return, this person receives a cheque to clear the original debts. The cheque is deposited to a bank account and existing debts are paid off from the proceeds. It is not until the consolidation cheque later turns out to be counterfeit that the scam is discovered. The unfortunate victim now has an even-bigger debt problem.

4) Identity theft: Your personal and financial information is valuable, and criminals love to get their hands on it. When they do, they may be able to open bank accounts, get credit cards and borrow money – all in your name. Protect your personal information, safely store important financial documents, and shred those financial documents and statements you no longer need.

5) Sales scams: This one can affect both buyers and sellers. Online transactions involve a degree of trust, and the bad guys can take advantage of this. Sometimes you sell something over the internet and don’t receive payment, other times you pay for something you don’t receive. Understand how online selling works before you try it and take steps to minimize your risks, whether you are a buyer or a seller.

6) Fraudulent investments: If you’re offered a special deal on an investment “for you only”, or guaranteed high returns, watch out! As the saying goes, if it sounds too good to be true, it probably is. Buy your investments from licensed investment advisors working with regulated firms. Then if something goes wrong, there may be somewhere to turn to (like the regulators or OBSI) for help.

Have you steered your clients clear of a fraudulent investment? Tell us about it in the comments section below.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.