When your teacher says, “Class dismissed,” you may be tempted to pull out your cell phone to shop for the latest clothes drop online or scroll social media.
While this may be a seemingly harmless activity, it’s also important you’re aware of the latest scams in Canada—especially financial scams. In this article, we’ll explain what a financial scam is, the five common types of scams, and how to protect yourself from losing money to these sophisticated scams.
What is a financial scam?
A financial scam is when someone takes your money or assets by deceiving or misleading you. That’s why your parents have probably said to you, “Don’t talk to strangers.” That advice rings true, especially when you’re online.
Maybe you’re thinking, “I wouldn’t fall for a scam!”?” However, Gen Z are more likely to fall for an online scam compared to their Boomer grandparents. When we look at fraud in Canada, the Canadian Anti-Fraud Centre (CAFC) received 1,730 reports of victimization from individuals aged 19 and under in 2022.
In fact, financial scams have been around for a long time. If you jumped into a time machine back to 300 B.C., a Greek merchant who sold corn, attempted to sink his boat and put a claim on his insurance policy (known as bottomry) but ended up drowning while trying to escape.
Fast forward, technology has transformed money scams quite drastically. Since many young people are online but may not have a strong understanding of financial scams, they could be primary targets.
5 financial scams you should know about
Learning how to identify a scammer can be challenging, especially when scam artists use elaborate schemes to trick people out of their money. Here’s five common financial scams teens should be aware of.
1. Social media scams
You’ve probably used different social media platforms to watch your favourite celebrities, influencers or stay connected with friends. But it’s also where identity theft and catfishing can occur.
Catfishing is when a person uses images and information to create fake profiles. They’ll try to befriend you with the intent of taking your money. Identity theft is when a scammer takes your personal information and opens a credit card or loan to rack up debt under your name.
Moussa Noun, Director with the Global Cyber Security team at RBC says that teens can protect themselves by asking critical questions like:
- “Who benefits from this?”
- “Is it consistent with what you expect this person to do?”
- “What do they want?”
Now, more than ever, it’s important for teens to be cautious about what they see and hear on social media.
2. Marketplace scams
Whether you’re a Swiftie trying to get concert tickets or snag the latest phone, online marketplaces can be a trove of treasures. While you may be able to snag a good deal from time to time, you also have to be aware of phony websites. If you aren’t careful enough, you may end up buying fake concert tickets or knock-off items.
Even worse, you could land on a website that offers amazing deals on designer clothes. You input your payment information, but no packages arrive at your door. What’s probably happening is that scammers set up these fake websites to obtain your personal data to use for identity theft or they trick you into clicking on a link that contains malware.
So, the next time you’re shopping online for concert tickets, be sure that you’re buying from a verified seller. Also, when it comes to buying a luxury product, Noun says, “YouTube often has excellent videos to show you what the real versus fake product looks like. For electronics, you can find high-res pictures of them on sites like iFixit.com to compare the product and make sure it looks authentic.”
3. Phishing emails or texts
Scammers will send phishing messages to users with the goal of having them click on a malicious link or share their financial information.
For instance, a scammer will send you an email or text pretending to be your bank. They’ll ask you to click on a link to sign in. If you’ve unknowingly entered your login credentials, the scammer will have it.
Noun shares, “Cyber criminals now use tools like ChatGPT to generate very convincing emails that are personalized. They can even create graphics to make it look like a real business. Don’t click on the links. Go directly to the website by searching the site.”
E-transfer scams are another popular tactic where the fraudster sends you a text message. It could take the form of a family emergency, winning a contest or prize, advertising a fake job or telling you that your package cannot be delivered.
This type of scam can happen very quickly, especially if you feel like you’re being rushed to take action. If you receive a phishing email or text message that looks like this, it’s best to check for spelling errors and avoid clicking on links.
4. CRA scams
If you’ve started filing tax returns, you should be aware of Canada Revenue Agency (CRA) scams. Basically, the scammer is trying to get you to share your financial information or transfer money to them. They may even try to intimidate you or threaten to call the police.
A common example is the CRA text scam, where a scammer sends a text message (or by email) that includes fake links to claim government benefits or tax refunds. However, Noun explains that the CRA will never send you a link or details in an email. They will only send a notice by email that asks you to go to their website and log in to your personal account.
Another situation is when you receive a phone call from someone who claims to be a CRA employee. They’ll say you’re under investigation for tax fraud or tax evasion and you owe money to the government. Next, they’ll ask for personal information, like your social insurance number (SIN), demand your banking information or immediate payment. If this happens, ask for their name, office location and a number you can call them back on. That way, you can verify their identity by calling the CRA directly before making any moves or giving away any personal information to a potential scammer.
5. Cryptocurrency scams
Some of you may be old enough to invest in crypto and own a crypto wallet. In the digital world, this means that scammers are enticed to steal your crypto assets—or take your money.
For example, “pump and dump” crypto schemes hype up a certain type of cryptocurrency to lure unsuspecting investors into buying an asset by making false claims about its value.
Another tactic you’ll see is from social media ads offering cheap bitcoin when you buy through a particular site. These illegal platforms are set up to sell you fake crypto products and guarantee you big investment returns. When you decide to withdraw your money, you’ll find it’s disappeared. That’s because scammers use malware to infect your device, steal your private key or password and get access to your account.
Knowing this, here are the signs you should look out for to spot a crypto scam:
- You should be wary when someone asks for payments in cryptocurrency.
- Scammers will typically promise you big profits.
- If someone from an online dating site or app tries to get you involved with crypto, you should be cautious.
Ultimately, before you decide to buy crypto, be sure to search online for the company, person, and cryptocurrency name and add the words “scam,” “complaint,” or “review” to find out what other people are saying before you buy.
Noun wisely says, “Don’t invest anything you’re not willing to lose entirely. Crypto is an unstable currency system that has some benefits, and it’s an intriguing technology, but it does not have any protections for consumers.”
How to protect yourself from scams
Maybe you’re starting to trust your gut instincts. This will come in handy when you’re trying to spot a financial scam. Keep in mind if something seems off, then it’s best to take a step back. Research to see if this “opportunity” or “deal” is legit.
Luckily, there are ways to protect yourself so that your information is secure and your online privacy is protected. Here are some tips to safeguard your data:
- Create unique passwords and enable multi-factor authentication for all of your accounts. “A password manager can help with this, and many phones and computers will come with one built in,” says Noun.
- Check external online reviews of a product or service before making a purchase.
- Don’t click on suspicious links, especially if you don’t know or trust that person.
- Don’t give out your banking information unless you’re certain that you can trust that individual.
- If you receive unsolicited messages or offers, you should treat them with a ton of caution.
Taking precautions to prevent being scammed
The next time you’re on a smartphone browsing online and come across a tempting deal, make sure you do your research and see if there are any red flags. Also, be vigilant and cautious since there are so many scams in Canada.
Also, if someone is making you feel like there’s a sense of urgency to buy an item now, then an internal alarm bell should go off. You shouldn’t feel the pressure to act swiftly and provide any type of payment, especially if it’s to a stranger.
If something looks suspicious, you may want to run it by your parents to double-check if it’s real before you make any moves. Lastly, Noun says, “It’s the same advice for everything. If it feels too good to be true, it most likely is.”
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This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.
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