There is an ever-growing issue that affects many Canadians, young and old alike: financial fraud. The financial fraud that has become prevalent in the past 12 years is not solely Ponzi schemes like Madoff or FTX—although those still do exist. What has become rampant is online fraud and scams. These fraudulent schemes take various forms: bank “investigations” into gift card fraud; pet sales schemes; “charitable” donations on behalf of legitimate charities; and bogus used item sales on online platforms. There are many bad actors out there, all looking to make a quick buck and leave you holding an empty bag.
Most who are victimized by a scheme or con feel too ashamed to come forward to the police or ask for help from family and friends. This is exactly what con artists and fraudsters hope will happen, so that they do not have to face the consequences of their actions. Many victims lose hundreds, if not thousands, of dollars. The schemes can look legitimate, thanks to technology. Anyone with 10 minutes can create a social media account and an email address, post an item for sale, and start defrauding people. But it’s worse than that. Fake online dating profiles, email scams, fake websites, phone call scams—all add up. Now, with data breaches at legitimate businesses, technology makes it easy for potential scammers to monitor or hack business emails and compromise or steal legitimate payments. Education about what fraud is clearly isn’t enough to prevent it from happening.
Police, especially the OPP, lack the significant technological resources needed to investigate online fraud. The know-how is there, but just as criminal elements have scaled up their operations, police need to respond in kind. There is, at least in some rural areas, also a lack of empathy from police when victims do come forward. The typical response, besides a police report, is being told to contact their bank.
The Canadian banking industry has played a large role in the proliferation of online fraud. In the past two decades, banks have been quick to roll out new online products and services, making it easier for you to access your money. However, banks have systematically failed to put in place adequate safeguards to protect consumers. The largest failure is that of its Interac Email Transfer program. Once money is transferred between buyer and seller, there is no protection for the buyer if they are scammed. Rarely, as a “courtesy,” a bank will refund a victim the money lost. Often, though, banks will hide behind user agreements and fine print, telling customers to treat an Interac transfer like cash. Banks could investigate fraudulent transactions, but they refuse to do so.
In order to help stem the tide of online victimization, there must be action on multiple fronts. More funding for both the police to investigate crimes and the courts to prosecute the accused is a good start. Increased public awareness is also important so that people know how best to protect themselves. But the biggest changes needed come from the banks. Canadians pay among the highest bank fees in the world for personal banking and receive fewer in-person services than ever before. The technology is already in place for banks to protect their customers if they wanted to do so. The Federal Bank Act should be amended to mandate that banks provide additional protections against online fraud. Forced action is better than inaction and complacency.