Cyber fraud is a hot topic in Canada. As fraudsters use deep fakes, emails, fake websites and the deep web to find and extort their victims, companies focus resources on creating firewalls and malware remedies. The fact that major companies, including Google and Ticketmaster, have been hacked and had sensitive personal information stolen and sold is an indicator of why companies are increasing resources to battle cyber fraud. Given all the attention that cyber fraud receives, it is easy to forget that there are many other schemes that fraudsters use.
Maintaining a cautious mindset is important, as schemes can occur in seemingly familiar situations without the internet. For instance, a landscaper is working on your street, and a stranger approaches your door, offering to do landscaping. After a brief discussion, you agree to a price, and the contractor requests 50% of the cost upfront for expenses. You pay, assuming everything is legitimate due to the visible work in your neighbourhood. Later, you discover the person was not connected with the landscaper. You’ve fallen victim to fraud.
Advance fee fraud, as illustrated, is more common than one might think. Paying a deposit for a product is a standard practice. Farmers may pay a deposit on grain and homeowners on renovations. This practice protects freelancers’ and small businesses’ interests when they have to outlay costs in advance of delivery. This familiarity with deposits is why many individuals don’t think twice about it, and also why fraudsters can run advance fee schemes.
When providing deposits to any vendor, it’s crucial to have the agreement’s details in writing. This simple step can empower you and protect you from potential scams. Always confirm the employment of anyone who comes to your door trying to sell you something and check references. Many governments have sites, like the Alberta Consumer Investigation Unit, where you can see if a business is licensed and if any complaints have been filed against it.
Another type of fraud is medical fraud; even here in Canada, where we have universal healthcare, we have medical fraud. Some medical frauds include doctors billing for hours and services. Patients may claim benefits they are not entitled to (benefit fraud) or illegally acquire prescription drugs (prescription fraud). Medical fraud can happen in the form of kickbacks, for example, when a medical practitioner prescribes a specific brand of medication because of incentives provided by the manufacturers.
Corruption is a pervasive type of fraud that is often overlooked by society. We may say that someone is corrupt in conversations with friends and disregard the action in public. Corruption includes abuse of power (the misuse of a position of power to take advantage of another), conflict of interest (choosing personal gain at the expense of the company or organization), nepotism (using power to benefit family), cronyism (using power to benefit friends), and bribery (giving something of value to influence or express gratitude for a decision). Although we may think Canada is corrupt, we were ranked 12th on the Corruption Perception Index, a rating system of least corrupt countries, in 2023, an improvement of three points from 2022.
The list continues with payroll fraud, vendor fraud, expense fraud, bait-and-switch, mortgage fraud, counterfeit bills and cashier cheques, and even art fraud and wine fraud. Just as we safeguard against cyber fraud, it is important to remain aware of the other forms of fraud that can occur.
Kathleen O’Donoghue, CFE
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