Earlier this week, CBC Canada published a story about a fraudulent taxi scheme that is happening across the country. Fraudsters purchase taxi lights from a well-known online store and use them to con people out of fares. Despite being advised that this was happening, the purveyor refuses to remove the products from its website.
According to the article, the fraudsters purchase a fake sign and install it on a vehicle. When passengers get in the taxi, they are told they must pay by debit card. The card readers retain the PIN information, and the passenger receives a fake debit card. The fraudster then uses the stolen debit card to steal money. As of June 2023, the taxi scheme has reported losses of $1.7M in the Toronto area alone.
Similar schemes have been occurring in Ontario, Alberta, and Quebec, and this scheme is likely to occur in other provinces as well.
Just as with any other fraud, this is a new twist on an old fraud. Similar schemes have been run around the world for decades. I remember travelling to New York in the mid-1980s and being warned about fake taxis then.
Who are the victims of the taxi scheme?
The obvious victims are the passengers, who have no idea that the taxi is fraudulent until money disappears from their accounts or is charged fraudulently to their cards. But legitimate taxi drivers are also victims because people will be leery of taking any cabs because of this type of fraud. Legitimate taxi drivers are licensed, and those licenses are not easy to get. Taxi companies are victims as well, and for the same reason as drivers, people will turn to Uber rather than risk taking a fake cab. This causes a decline in revenue and has the potential to seriously harm the operations of small taxi companies.
Another thing to consider with this fraud is the risk of an accident. If the taxi sign is fake, the driver is unlikely to have the proper license to drive a taxi or the proper insurance. If the taxi is involved in an accident while you are a passenger, you will not have the same protections you will have with a legitimate taxi service or Uber.
How can you protect yourself from taxi fraud?
First, do not give your credit/debit card to anyone. When entering your PIN, hide the keypad.
Second, do not get into a taxi that is not identified with a known company. When you get in a cab, look for the taxi permit issued by the municipality.
Third, you may be able to tell if the cab is a fake if the sign is powered by an outlet you can see in the dashboard. Legitimate taxi signs are hardwired into vehicles, and while a fraudster may go to this length, they use an easy installation so that the fake sign can be used by several different vehicles to run the scam.
You should always watch for unauthorized charges on your account. To prevent unauthorized access to your account, it’s a good idea to set up alerts for withdrawals or charges.
Red Flags
The red flags of the taxi scheme are:
- – Payment by debit card/ credit card
- – Taxi signage not hard-wired
- – The company name on the car is not visible or altered.
- – No visible taxi license on the vehicle (often attached to the exterior of the vehicle)
As always, if you have been a victim of this fraud, report it to the police in your area or the RCMP
Kathleen O’Donoghue, CFE
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