A review of the warning signs of fraud

Mar 12th, 2015 | By | Category: ABCs of Fraud, Finance

By Bud McGinnis

Many of us made resolutions as we entered the New Year but by now some, perhaps most, will have been broken.  One resolution we in the ABCs of Fraud program hope you made and are keeping is this: I will remember that fraudsters and scam artists are in our midst at all times, with plans to rob us whenever the opportunity arises!” 

These criminals are both heartless and smart.  They care not whether you are rich or poor, sick or healthy, young or old, they want your money and they’re out to get as much of it as they can.  Toward that objective they employ old schemes while continuing to develop new ones.  These con artists are full-time professional crooks.  In contrast, we law-abiding citizens are only part-time amateurs as we strive to protect ourselves against them. It’s important, therefore, to arm ourselves as best we can in this battle of mismatched combatants.

Accordingly, let’s consider some of the warning signs (Red Flags) that suggest a problem is developing.

Red Flag No. 1: Any proposal that sounds “Too good to be true!”  First, you have to wonder why a stranger selected you for this special deal?  Whether it’s a vacation package, an investment opportunity, a sweepstakes prize, a snow removal contract, or a home renovation proposal, just remember that no stranger will give you something for nothing.  It’s clearly in the interest of the stranger to have you agree to this “Too good to be true” offer.

Red Flag No. 2: When you answer the phone you’re informed that you are the winner of a large prize, perhaps $50,000 in a lottery.  To receive the prize, however, certain administrative costs have to be covered up front. Legal fees, accountant’s fees and perhaps insurance all must be paid before the prize can be released to you. The caller is asking for $500 (one percent) to cover these expenses.  Think about this phone call.  Do you know the caller?  Did you even enter such a lottery?  The answer is likely “No” to both questions and the offer is another “Too good to be true!” proposal.

Red flag No. 3:  Should you hesitate and suggest you’d like to go back through your records, the caller is likely to respond with a time limit.  “We need your answer now otherwise we’ll draw another ticket and you’ll have forfeited the prize and you don’t want that to happen do you?”  Application of pressure is a common technique and is a Red Flag that shouldn’t be missed.

Red Flag No. 4: “We’ll send a courier around to pick up the payment.” The caller is so concerned for your welfare that he’ll send a courier over to pick up the payment so you don’t miss the deadline.  Ask yourself who will benefit from this rapid pick up of your cash.

Red Flag No. 5:  “We’ll double your money in six months!” or, alternatively, “It’s a low risk off-shore investment and we guarantee an annual 15% return on your money.”  Under present circumstances in Canada it’s clear that the proposed returns are just “Too good to be true!”

Red Flag No. 6:  “Because we’re working in your area we can give you a special deal.”  The man at the door has identified a serious problem with your roof but can repair it for a fraction of the regular price. If you suggest you wish to discuss the problem with a family member it’s likely that pressure will be applied.  “You must make your decision now because we’re leaving the area and won’t be here to honour the special price if you delay.”  As noted earlier the pressure tactic is a significant Red flag.

Red Flag No. 7:  “Let’s keep this a secret!”  The implication here is that the offer is so good that if others heard of it they would want to be included and the benefits would shrink accordingly.  In actual fact, by remaining silent, the victim allows the con artist to victimize others without any fear of being exposed.

Red Flag No. 8:  Offers that suggest the equivalent of full-time salaries for just working part-time at home.  Again this is one of those “Too good to be true!” arrangements and brings with it nothing but expense and trouble.

Red Flag No. 9:  Beware of the stranger who enters your life and immediately tries to secure your trust and make himself or herself indispensible.  It’s been shown many times that the individual is just trying to gain your trust, and with that, access to your bank account.   Sadly, this is another of those “Too good to be true!” events, when this new found benefactor proves to be a crook.

With what has gone before we’re not suggesting that no one can be trusted.  Rather, we are pointing out that not everyone is trustworthy.  It’s up to us to determine the difference and protect ourselves from the criminals.

To arrange a free presentation for your group, call 613-564-5555 and leave a message.

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