Myth 1: Fraud isn't a real problem for my business
Fact: Actually, it is.
According to PwC Canada’s Global Economic Crime and Fraud Survey 2020, 47% of Canadian organizations had experienced some form of fraud in the previous 24 months. BDO Canada estimates that fraud cost Canadian businesses more than $30 million in 2017.
The impact of falling for fraud can hurt your business in terms of lost money, compromised confidential information, and wasted time. It can also impact your customers if your services are interrupted or their personal information is compromised. Fraud can ultimately hurt your reputation, your brand, and your bottom line, but there are steps you can take to protect your business.
Myth 2: Scammers are obvious
Fact: Scammers can be very convincing, and they fool a LOT of people.
In 2020, the Canadian Anti-Fraud Centre reported that Canadian consumers and businesses suffered losses of more than $104.2 million to fraud. Don’t blame yourself for not catching on if it happens to you. Fraudsters often use the following tactics against businesses because they have worked over and over:
- they pretend to be someone the business would trust
- they create a sense of urgency
- they find ways to fly under the radar, slipping through normal business processes undetected
- they use intimidation and fear
- they entice business representatives with promises of amazing deals
Learning about different types of scams and understanding the methods and behaviours that scammers use are the best ways to avoid being scammed. Arming yourself with good information will go a long way toward protecting your business.
Myth 3: Scammers aren't interested in small and medium-sized businesses
Fact: The Canadian Federation of Independent Business found that one small business out of every five had been victimized by fraud in 2019, at an average cost of $6,200 each.
Considering that up to one third of small businesses experience one or more fraud attempts each year, it is worth putting effective preventative measures in place and giving employees specific training on how to recognize, reject, and report fraud.
Myth 4: It's not worth reporting fraud
Fact: It is extremely important to report fraud of any kind, and your report remains confidential.
There are many reasons why businesses choose not to report fraud. They may fear it will jeopardize their reputation or require too many resources relative to the loss, or that it is just too minor to warrant involving the police. In fact, any fraud report to law enforcement in Canada remains confidential, and even seemingly minor efforts to scam a small business can provide authorities with important information.
Reporting fraud provides the authorities with one of their best resources for identifying current scams, seeing who is being targeted, gathering evidence to disrupt or shut down the fraudulent operation, and protecting businesses in Canada from being victimized by fraud.
Law enforcement may not be able to act immediately, but all reports can be used for investigations, to identify trends, and to warn others (through alerts and other public education). Reports can also be shared with other law enforcement partners.
Myth 5: Fraud is a one-time thing
Fact: Actually, this isn't the case.
Statistics show that once you’ve been scammed, the chance of your business being targeted again is higher. Once a business (or consumer) has fallen for a scam, you’re both likely to be placed on “sucker lists". So, while it may be tempting to write off the impact of one scam as part of the cost of business and move on, we strongly recommend that you pause and think about what measures you might take to reduce the likelihood of being scammed again. For example, training your employees to recognize fraud can provide a first line of defence against being caught either in the same scam again, or in a new and different one. Scammers don’t differentiate their targets when it comes to taking your money. There’s a scam out there for everyone.
Examples of actual scams
The following examples show the extent to which fraudsters will go to target people at their business. To protect individual privacy, the names of the individuals and companies have been changed.
Phony invoice fraud
"On March 29, I was paying bills and, along with a stack of 50 other things I had to get done that day, I paid a bill from a company called Global Business Solutions and Surprises (GBSS). The invoice looked like any other invoice in the pile, and it wasn't a large amount. I assumed someone from our company had authorized it.
A few days later, in early April, Michael from GBSS called. He said he was calling to confirm our address so he could send us the final invoice. I thought this was a little odd, so I asked how many invoices there were. He said the next invoice would be the final one. Curious, I asked what the invoice was for, and he simply said to visit his company's corporate website. When I asked him who initiated the service contract with our company he said that I did. But I did not recall initiating anything with that company. He sounded official about it, so I let it go.
In early May, I got the next invoice. It was marked "FINAL" and because of the previous conversation with Michael, I paid it.
Then, the following month, I got several more calls from Michael, confirming the previous payments and saying again that he was going to send me the final invoice. I said I already paid the final invoice, based on the conversation we had in April. He said this was impossible because there were three invoices in total, and the third had not even been sent yet! So, I said I would not send any more payments until he provided me with a contract that stated we were paying in three monthly installments, and confirmed what we were actually being billed for, since the description on the invoice was very vague. Well, this made Michael defensive and he got rude, saying I had agreed to the three installments. Then he said he had my voice recorded where I had agreed to the installment plan, and that he could play back the tape recording. I suggested that he do that, but he didn't bring it up again in the conversation.
Meanwhile, in June, I received an invoice from a company called Data Data Data Now. A fellow named Mark called about it, saying it was past due. I said we had never ordered any goods from them, to which he replied that he would be forced to send the bill to collections and our business credit rating would suffer! The invoice reminder came soon after, along with phone calls. Then Mark said he had taken over the account for Michael (of the first company!), and played a recorded conversation back to me over the phone where my voice was saying "yes" to a certain question—but the recording was such bad quality, I couldn't even tell what I was saying "yes" to. I think it was just me confirming "yes" to the address they had for us on file.
Well, the harassing threats to hurt our credit rating really became stressful, and we decided to just pay on the condition that we got a letter saying there would be no further invoices. So, they sent us a written note confirming this was the last invoice, and we paid it in full."
Directory scam
In July, I got a call from a man who asked me if I wanted to renew a subscription for a business directory. I asked for some details about the business directory, and he said it was a webbased advertising registry. I said our company wasn't interested. That's when he said the cost of the final invoice would be approximately $300, and asked me if I would be taking care of this invoice. I wasn't sure what the previous arrangements were with his firm, so I said I would take care of it. Basically, I thought that because he said it was the "final invoice" that we must have received some service from them in the past.
Then I got another call from a woman, also from the same company, confirming my agreement to pay the invoice they would be sending, so I said I would. I still thought that our company had done business with them, but wanted to check. I dropped an email to Nancy in our accounting department, asking if we'd ever done business with this company before. She confirmed that no, we hadn't. My manager, Jim, called the company. They told him they had a recording of a conversation with me that they could use to prove my agreement. He said that anyone could tamper with a recording to make it say whatever they wanted, and that our firm would not be paying that invoice.
We reported it directly to the Competition Bureau.
Web services scam
"In January, I got a call from someone named Sophia. She was calling to renew our subscription for a web service. I told her we didn't need web services, but Sophia said they had already done business with us, and that she was going to be sending an invoice for the previous year.
Then I got another call, this time from a woman who was calling to confirm our mailing address and asking how payment for the invoice would be made. I just said that we pay all invoices by company cheque, so she thanked me, and hung up.
Then I got another call from another woman, confirming the call from Sophia, and saying we'd soon be receiving our web services invoice. Again, I asked what for, because we don't have any web services. They insisted that yes, we do, and that I had ordered it over the phone. We argued back and forth, and then a few days later, I got an invoice for over $300!
The invoice had a website address on it, as well as a login ID and password on it for their website. I wanted to get a hold of them about the invoice, so I went on their website to try to contact them. There was no contact information on the site. I saw there was a client area to log in, but I didn't use it because I was afraid this might mean I was using their service. But later that day, I thought that maybe logging in to their site would be the only way to reach them, so I did so. But the login and password were not accepted.
I decided to write them a letter to the address on the invoice, explaining that we’re a non profit organization, and that we only have fixed budgets, so there is no way we would have ordered web services over the phone. But before I could send it, I got a call from someone named John asking when I would be paying the invoice. I read him the letter, and asked him about what a virtual listing was. He said it’s when you go into their website, log in, and then enter your information which creates the web page for you. I said again I did not request this service, but he insisted I did. He also said he had a taped conversation of the phone call in which I authorized the service. I agreed to hear it. It was a very fast-speaking woman speaking to me to confirm our mailing address, and I was saying “yes,” and “uh-huh” and “we pay by company cheque". It was clear that I was only confirming information, not saying I would pay the invoice.
But when the recording playback was done, John said, "There you go," in a tone of voice that implied he had proven he was right. I was shocked he took this as agreement to accept the service or pay the invoice, and I told him so. He raised his voice, and asked me what my title was, and asked to speak to my boss. I told him I was the manager and explained again that we are a notforprofit organization, and that this could not have been approved. He got angrier, interrupted me, and kept loudly saying, "When are you going to pay?" every time I tried to talk. Then he said, "You'll pay this!" and hung up.
I got another invoice marked "Final Notice," but this time it had my name personally on it, not our organization's! It requested payment in 10 days, or the account would be reallocated to the services of a collection agency.
It was at that stage I finally reported it to the Competition Bureau. The company was charged with fraudulent telemarketing and prosecuted."
Office supply scam
The two scripts below were used in a scam promoting the sale of toner products to businesses across Canada and the United States, as well as to notforprofit organizations, churches, schools, universities, and government agencies.
They were persuaded to pay exorbitant prices for toner products they did not want and did not order. Those who refused to pay were subjected to aggressive collection practices and threatened with court action or collection agencies.
In this first script, the "catalogue pitch," the caller asks for the make and model number of the company's printer, with the promise that the target will receive a new catalogue. Once the caller gets a name and the details about the company's printers and copiers, this person has everything he or she needs to make a second call using the "warehouse script."
Catalogue pitch
Hi, my name is
. I'm calling from . We are sending out a free catalogue for the new year.We would like to make sure the person responsible for ordering supplies receives the catalogue. Also, we need to know what type of printers you are using along with the model number to ensure you receive the right catalogue for your machines.
The make and model # are located on the front of your printer.
Thank you.
Warehouse script
- Good morning/afternoon. Can I speak to ? It's once again from . As you, know we're the people who handle the supplies for copier. How is the machine working these days? If you do have any problems, give your service guy a call—that's what he's there for.
- The reason I called is that we are in the midst of a major warehouse move here at the company and this move is coinciding with Christmas! What the company has decided to do is reduce the cost for toner by 40%. It just means we will have to move less of the toner at the end of the day from one warehouse to the next and do our customers a favour at the same time.
- What I've done , is to set aside boxes of the toner at the reduced price for you….Now you're still at .
- Before I leave you , it is as well coming up to Christmas and every year we celebrate with all of our long and loyal customers old and new. I am very happy and pleased to say that this year we're doing something extra special because it's our 25th anniversary!
- It comes in the form of a rare 375 mL bottle of French white wine. Actually, it comes in either the French white or the Italian red. So out of the French white or the Italian red, which would you prefer red or white??
Great! What I will do then to save a little courier cost is pop the
wine on the top of the box(es) of toner. So, make sure you get to the box before somebody else gets to it, okay?One other thing
, there is an extra 2% off if you take care of the invoice within 15 days (That's on top of the discount you're already getting). Where do I send the invoice?Thanks! We'll see you in a couple of days.
This script is a good example of an "assumed sale" tactic, where the target is asked to confirm information but is never asked directly if he or she is interested in purchasing the toner. Let's examine what was said:
- Paragraph 1: Because the fraudster asks specific questions about your copier, you may be led to believe that you have an ongoing business relationship with a legitimate company.
- Paragraph 2: You are pitched an incredible offer, a savings of 40%! Notice that you are told neither the regular price nor the actual sale price of the toner.
- Paragraph 3: You are never directly asked if you want the toner, and you are still not told the price.
- Paragraph 5: Everyone likes to get something for free, so the offer of a bottle of wine may lull you into thinking about your bonus gift rather than focusing on the details of the toner offer.
Outcome
A fine of $1.5 million was levied against two telemarketing companies. The owner of both operations pleaded guilty to 11 criminal charges under the Competition Act and related charges under the Criminal Code of Canada.
- Good morning/afternoon. Can I speak to