Common Scams to Watch For
Scams are nothing new. It seems like every other week there is a new warning issued about fraudulent calls or emails from banks, government departments, and fake businesses. Unfortunately, they are something we have become quite used to dealing with. According to the Canadian Anti-Fraud Centre, scams and frauds have resulted in more $100 million in 2019 alone.
Fraud can come in many forms. Some of the most common scams include:
- Malware and phishing: When you click on a fraudulent link or attachment sent to you via email or text, malware is downloaded onto your device that can then access your personal information.
- E-Transfer frauds: When a third party intercepts money transfers and is able to successfully access the payment
- Compromised emails: Fake emails about changes made to your accounts, required payments, requests for password updates, etc.
- Credit Card Fraud: Someone gets a hold of your credit card information and uses it to make purchases. Luckily, there are ways to protect yourself from credit card fraud.
Some scams are obvious, some aren’t. But be on alert: if you get a suspicious phone call, text, or email, don’t give out any info or click on any links. Instead, call your bank, credit card provider, or lender directly (based on the phone number listed on the official website) to verify.
It’s also a good idea to use your credit cards for payments. Credit card issuers, like Visa, MasterCard, and American Express, have zero-liability policies to cover unauthorized transactions. Obviously, you still need to be cautious about where and how you use your card. That zero liability policy is a safety net that offers a lot of protection since you are not liable for unauthorized usage.
Beware of COVID-19 Specific Scams
On top of the usual scams, there are some COVID-19 specific scams going around. Many of these are smaller scale and pretty obvious. Some people have been selling what they claim is hand sanitizer. Others are hawking fake COVID-19 tests and “miracle medicine” they claim will prevent you from getting the virus. There’s even an air duct scam where companies claim their cleaning services can stop you from becoming infected (um…no.)
These are all terrible scams, and likely, most people will recognize them as fraudulent. However, there are a few more serious, believable COVID-19 related scams to watch for, as they are potentially more financially dangerous.
Investments are a hot topic right now. With the stock market crashes, investors have seen their portfolios plummet, which causes panic-selling. On the other hand, other individuals are seeing the low market as the perfect opportunity to start investing. Some investors are even considering borrowing money to invest while the market is down!
Unfortunately, scammers are taking advantage of these scenarios and preying upon anxious or uninformed investors to make a quick buck. Watch out for the following:
- Fake investment “warnings”: There have been reports about Canadians getting emails and texts warning them regarding their investments. Given the fact so many people are stressed about their investment losses, this is a potentially effective tactic that could work on anyone. Of course, the message is phony and the link will download malware onto your mobile devices or computer that can access your personal and financial information.
- Faux investments in COVID cures: Another investment scam is fraudsters using mainly social media to promote investment opportunities around COVID-19 treatment and vaccines. The promise is zero to low risk and high returns. Obviously, the opposite is true and scammers will take your money and run.
While it’s generally a good idea to invest when the market is down, only use trusted, legitimate institutions to get information and to buy stocks. Get-rich-quick schemes usually fail, and some (like pyramid schemes) could even land you in hot water with the police. Instead, look at the best investments in Canada and consider building a balanced, diversified investment portfolio of low-cost ETFs and index funds.
Thanks to technology, there are plenty of reliable investing options available and it’s easy to learn how to invest online. If you are a pro, you can easily do this yourself through a discount brokerage, such as Questrade or Wealthsimple Trade. As an added bonus, Young and Thrifty readers who open a Questrade account get $50 in free trades. Alternatively, you might want to try Wealthsimple Trade — Canada’s first and only zero-commission trading platform. Investors who are comfortable with a mobile-only platform can open an account there and trade stocks and ETFs for free. Here’s an excellent reason to sign-up: those who open a Wealthsimple Trade account will get a $10 cash bonus + $0 commission trades. All you have to do is deposit $100 and buy $100 worth of stock within the first 45 days.
However, if you aren’t keen on managing your own portfolio, using a robo advisor, such as Wealthsimple is always a good option. It will do the work of building a risk-appropriate, balanced portfolio that matches your financial goals, as well as rebalancing it when necessary. Plus, you can take advantage of our exclusive promo offer: open and fund a new Wealthsimple Invest account with $1000 within 45 days, and get a $75 cash bonus deposited into your account.
Relief Fund Scam
Some Canadians have reported receiving a text message that they’re getting a deposit of $1,375.50 from the government’s COVID-19 emergency benefits program. The text message includes a link, where you are asked to input your personal banking information in order to deposit the funds. Don’t fall for it!
The Canadian Emergency Response Benefit (CERB) requires you to apply for it. It won’t just magically appear in your bank account without any effort on your end. You will also be able to set up a direct deposit, so there is no need to enter your personal information to claim. To learn more about the Canada Emergency Response benefit, visit its official website here.
Additionally, fraudsters are posing as employers for financial institutions. They are posting fake ads on job sites, knowing that many people are currently unemployed and looking for work. The targets are then asked to fill our personal information and banking forms as part of an “onboarding” process. Again, don’t fall for it: a legit employer won’t ask for this info until you’ve accepted a job offer and signed a contract. If it feels sketchy, it probably is! Lastly, if you’re applying for jobs, stick to real deal job boards and apply to any prospective company via their official website.
What If I Need COVID-19 Financial Assistance?
Right now, a lot of Canadians are finding themselves financially stressed, which makes them vulnerable to scammers. If you are financially struggling right now, please note that there are safe and trusted options out there for you.
Government Financial Aid
The Canadian government recognizes that many Canadians have lost jobs and income due to the COVID-19 crisis and there are plans of action in place to address a shortfall in funds. Right now, EI and the CERB are the two main options. Learn more about this option in Young & Thrifty’s guide to COVID-19 emergency benefits.
Get a Balance Transfer Credit Card
If you are struggling with credit card debt, a balance transfer credit card could be a great option to help you manage your financial situation. Moving your debt from a high-interest credit card to a low-interest credit card (especially one that has a 0% promotional interest rate for a few months) can end up saving you hundreds of dollars in interest charges. Read about How to Use a Balance Transfer Card Wisely.
Ask For a Lower Interest Rate
If you’re carrying a balance, contact your credit card provider and ask for a lower interest rate. If your credit card provider won’t do this, consider applying for one of the best low-interest credit cards. For instance, TD Emerald Flex Rate Visa* Card offers a variable interest rate of TD Prime + 4.50% to 12.75% on purchases and cash advances.* Given that TD’s Prime Rate is currently 2.450% (as of March 27, 2020), that means you could qualify for an interest rate as low as 6.95% (TD Prime + 4.50%), depending on your credit score. That way, if you must carry a balance, you’re paying a lot less in interest charges. Read more smart strategies on how to get out of credit card debt.
*This offer is not available for residents of Quebec. For Quebec residents, please click here.
Apply for a Personal Loan
If you’ve got a lot of high-interest debt, then consider consolidating your debt with a personal loan. You can easily apply online for a loan, and interest rates tend to be lower than credit cards. many lenders, including Loans Canada and LoanConnect, can get money to you on the same day as you apply. Interest rates on the loan depend on several factors including your financial history as well as the current prime rate, but it can certainly be a lot lower than a credit card. For instance, LoanConnect offers interest rates between 4.6% - 46.96% and if approved, the money can be in your account within 24 hours. For a detailed comparison, read more about The Best Personal Loans in Canada.
Obviously, getting approved for a loan will be easier with a good credit score, but not everyone has a solid credit rating. Don’t worry! Even with bad credit, there are still options available to you. Read more about The Best Bad Credit Personal Loans in Canada.
The Last Word
The COVID-19 crisis has created a lot of stress and confusion, but there is no need to panic. While scams continue to pop up our best bet is to always be vigilant. Protect your personal information and be smart about financial decisions. Trust government websites and established businesses and experts – not strangers or sudden opportunities that just seem to pop up. During the COVID crisis, follow expert financial advice and stick to trustworthy financial institutions when it comes to major money decisions like investing.