BBB logo

Financial literacy and stability can reduce your risk of falling for scams

November is Financial Literacy Month in Canada and the Better Business Bureau serving Mainland BC (BBB) is encouraging Canadians to invest in their financial well being to help reduce their risk of susceptibility to scams and fraud.

Data collected from BBB Scam Tracker reveals that a growing number of victims who reported losing money to a scam. The study showed that individuals who are under financial strain might be more susceptible to scams, especially if the invitation promised financial rewards or an opportunity to get out of debt.

Low household income ($50,000 and below) was significantly associated with engaging and losing money in a scam, and those who lost money were significantly more likely than non-victims to show signs of financial insecurity. Victims of these scams also shared similar traits like spending more than their monthly income, no emergency savings and significant amounts of debt. They were also more likely to be the ones reporting advance fee loan, investment, and sweepstakes/lottery/prize scams.

Individuals struggling financially because of the COVID-19 pandemic are at a greater risk of falling victim to scams. BBB has seen growing scam report numbers for investment, employment, cryptocurrency, advance fee loan, pyramid schemes and credit repair /debt relief scams.

During conversations with some of the victims, they shared that they “probably could not” or “certainly could not” come up with $2,000 if an unexpected need or emergency arose within the next month.

“Taking steps to improve your financial well being can help to reduce your risk of encountering, interacting with or worse, losing money to scams,” explained Karla Laird, Manager for Community & Public Relations at BBB. “Actively practicing to stick to your budget, lower your debt and save as much as possible can ultimately reduce your need to jump at risky or unknown opportunities out of desperation. Furthermore, financial education is beneficial in detecting and avoiding scams. This knowledge is extremely important when one in five Canadians say they have been a victim of some kind of financial scam or fraud.”

Here are some important tips to help reduce your risk of losing money to scammers:

Keep track of your money. Making a budget will help you to stay on top of your finances and properly manage your debt. Do not borrow more than you can afford. Frequently review your bank statements and monitor your credit report. If you are a victim of identity theft, shared any financial and/or personally identifiable information on an unsecured website or with a stranger, or unwittingly purchased from a fraudulent online retailer, place a “fraud alert” or “freeze” on your credit file.

Only borrow from trustworthy, recognized institutions. Anyone dealing with your money should have proper identification and licensing. Research the business on to see what other people have experienced. If you are being asked to pay in advance for things like debt relief, credit and loan offers, or mortgage assistance, walk away. In the case of payday loans, local payday lenders and payday loan brokers must have a valid payday lender license issued by Consumer Protection BC.

Stay informed about financial scams and frauds. Knowing about specific types of scams and understanding the general tactics that scammers use can help you avoid becoming a victim. Last year, 30% of persons who reported a scam to BBB said they were able to avoid engaging with the scammers and did not lose money because they knew about the scam before they were targeted.

Guard your personal information. Never reveal sensitive financial information to a person or business you don’t know, regardless of how they contact you. Remember that scammers will sometimes impersonate a retailer, financial institution or government agency to trick you into sharing this information. If you receive a suspicious call or email and are concerned about your account, contact your financial institution directly to check on your account status. Other steps to avoid financial fraud include creating strong passwords for online accounts, avoiding public WiFi when banking online, and shredding documents with sensitive information.

– Source: BBB