MARCH 2005 SCAMS 2nd edition TO AVOID

What is this booklet about? This booklet describes some of the most common current consumer (or scams). It shows you how to identify the scams and how to avoid them. You can use this booklet to help yourself and others become informed and alert consumers. Knowing about consumer scams: • helps prevent crime and consumer • reduces the possibility that you or others will become victims of a scam You should not rely on this booklet for legal advice. It Contents: provides general informa- tion only. Introduction 1 Charity Appeal Scams 2 Foreign Lottery Scams 3 5 Scams 9 Loan and Credit Scams 14 Prize and Contest Scams 16 Pyramid Schemes 18 Travel Scams 19 Work Scams 21 Sources of Help 25 FREE • Never give out your chequing account Charity Appeal Scams number or credit card number to anyone you don’t know. Ask for an address and offer to send a cheque. In Canada we have a long and honourable tradition of voluntary giving to those in • Do not give money or credit card infor- need, often through charity organizations. mation at the door. You may wish to But if an unfamiliar charity organiza- make out a cheque payable to the char- tion contacts you – by mail, phone, or ity. You can mail the cheque later. Internet – be careful. • Call the charity. Find out if they know Bogus charities often use names that are about the appeal and have authorized it. very close to the names of legitimate and • Call the Better Business Bureau to find respected charities. You can check out the list out what they know of the charity. See of legitimate registered charities by going page 25 for contact details. to the Canada Revenue Agency’s website at: www.cra-arc.gc.ca/charities • Make sure you request an official dona- tion reciept for the eligible amount of your gift. Only registered charities are Warning signs entitled to issue official donation recipts. You can use the official donor receipt to • High pressure or threatening claim a tax credit when you claim your telemarketers who want you to contrib- income tax for that year. ute immediately. • Someone calls and thanks you for a pledge you don’t remember making.

What you can do

• If you receive a telephone call, ask for the information to be sent to you in writing. Ask how much of your gift will be used directly for the charity. Ask how much will go toward administrative costs. Legitimate charities have no problem giving you this information.

2 letter says they have been hired by a for- Foreign Lottery Scams eign lottery to distribute unclaimed prizes. To claim the prize you have to pay an “administration fee,” or “taxes,” sometimes Canadians have lost millions of dollars in thousands of dollars. illegal lottery ticket scams. The only people “hitting the jackpot” are the people run- Facts ning the scams. Here are some major foreign lottery • You do not receive any prize. scams: • If you do send the money you may be put on a mailing list for another scam. Scam 1: You have already won! Scam 3: Phony lawyers calling You receive a letter saying you have won millions of dollars in a foreign lottery. You get a call from a telemarketer who On closer reading you find out that all you claims to represent a law firm. have won is the opportunity to buy lottery The telemarketer says you have won a tickets. Usually the scam wants you to pay valuable prize, but you need to pay taxes a fee in order to play, often $30 or more. and a legal fee before you receive the prize money. Facts • When you send money to private lottery Fact companies you usually do not get any • You do not receive any money. proof that your money is actually used to buy lottery tickets. • Many of these scams demand more and Scam 4: Canada Customs calling more money in order for you to remain eligible for future winnings. Someone claiming to be a Canadian Customs officer calls to say they are hold- • Most of these scams fail to pay winnings. ing a cheque for you worth tens of thou- They want you to reinvest your winnings sands of dollars of winnings in a foreign with additional cash for the chance to lottery, often from the United States or win “greater prizes.” Australia. They say you have to pay an “insurance fee” to get the money. Scam 2: You have an unclaimed prize! Fact You receive a letter telling you that you • Canada Customs officers never call to have won a prize in a foreign lottery. The ask you for money.

3 Scam 5: Like to recover money you have Fact already lost in a foreign lottery? • The scam will often use your bank account number to withdraw unauthor- Already lost money in a foreign lottery? ized sums of money from your account. The scam may contact you again. They claim to be able to recover your lost funds for a fee. The tactic is called a Scam 8: You have won if certain “recovery room” scheme. numbers appear on your credit card

Fact Under this scam you are told you have won • You do not receive any money. a prize if certain numbers appear on your credit card.

Scam 6: Phony collection agency Fact demand letter When they have the credit card number, they charge unauthorized sums against the You may receive a demand letter from a account. phony collection agency, demanding pay- ment for lottery ticket purchases. These letters threaten immediate legal Scam 9: Subscribe to our “winning action if you don’t make the payment. numbers services” The elderly are a particular target of this scam. This scam asks lottery players to subscribe to a service that has an “impressive record Fact of picking winning numbers.” • In most cases, the victims of this scam They claim they have a computer with have never had any lottery debts. artificial intelligence or a fabulous mathema- tician on staff. They typically want you to pay a fee of $10 to $20 to play the lottery. Scam 7: Give us your bank account number so we can deposit winnings Facts • In most cases, the numbers sent to The caller may ask for your bank account customers are selected at random number or for a void cheque, so that they can “deposit winnings” into your bank • Your name and address may go on account. mailing lists for other scams. • Do not expect to get your money back.

4 What the law says Identity Theft • Under the Criminal Code of Canada it is illegal, in most circumstances, for indi- Identity theft happens when someone viduals or firms to sell lottery tickets takes the personal information of another without proper authorization. In addi- person and uses it without their knowl- tion, many of these firms engage in edge or consent. misleading advertising, which is illegal. Identity theft is the fastest growing • It is against the law in BC to resell BC fraud in North America. This is a result of lottery tickets out-of-province. the growth of technology. The RCMP re- ceives up to 100 calls a day from Canadian • Most foreign lottery offers do not come victims of identity theft. from foreign government agencies or lic- Identity theft can happen to anyone. By ensees. The activities of these companies being aware of the issue and by managing are not controlled by the government of your personal information wisely, you can the country in which they are located. help guard against identity theft.

What you can do What does identity theft mean?

1. Don’t send the money and don’t reveal Identity thieves steal your name and other personal financial or bank account pieces of personal information such as numbers. address, date of birth, Social Insurance 2. Ask who to make a cheque out to and Number (SIN), credit card numbers, bank get their address. Then make a report cards, PIN numbers, driver’s licence to (a) Project PhoneBusters, and numbers, calling cards, birth certificates, (b) the Competition Bureau. See page passports, and mother’s maiden name. 25 for contact details. Once they steal the information, iden- tity thieves invade your personal and financial life. Using this information, they may: • Drain your bank accounts, transfer bank balances or open new accounts. • Run up credit card debts or apply for new credit cards. • Apply for loans and other services or benefits.

5 • Go on spending sprees involving the • Search sources such as obituaries in purchase of vehicles, apartments, luxury newspapers, phone books, and public items and vacations. records to obtain your information. • Commit more crimes and, if arrested, • Place bogus advertisements for employ- use your identity. ment in order to obtain your informa- tion. How do they get the information? • Pretend they need your personal details so you can “claim” a prize or lottery winnings. Identity thieves can obtain your personal and financial information in a range of ways. For example, they may: Warning signs • Steal the information from your wallet or purse, home, vehicle, or computer. 1. You find withdrawals or transfers you • Pose as a credible person (e.g., govern- didn’t make on your bank statements. ment official, bank employee, landlord, 2. Your credit card statements show items employer, creditor, service provider) to you didn’t purchase. obtain your personal or financial infor- 3. You notice that not all of your mail is mation from you or from confidential being delivered, or that your bills are sources. not arriving on time. • Remove mail from your mailbox or 4. You get credit card statements for redirect your mail. accounts you don’t have. • Tamper with automated teller machines 5. You start getting bills from companies (ATMs) and point-of-sale debit machines you know nothing about. so they can read your debit or credit card number and personal identification 6. A creditor calls to say you’ve been number (PIN). approved or denied credit that you haven’t applied for. • Retrieve personal information from gar- bage or recycling. This information may 7. You apply for credit and are turned include transaction records, copies of down for no apparent reason. credit applications, insurance forms, 8. A collection agency tries to collect on a cheques, financial statements and old debt that isn’t yours. income tax returns. • Buy the information from someone who works where personal and/or financial information is stored.

6 What you can do to minimize the risk 8. Sign your credit and debit cards as soon as you get them. Cut up expired You can minimize the risk of someone and unused cards. A card may have ex- stealing your identity. Here are some strat- pired but the number may still be valid. egies you can use: 9. Keep key documents such as your birth 1. Immediately notify the issuer if any of certificate, passport and social insurance your identity documents are lost or card in a safe place when you’re not stolen. using them. Also keep other important 2. Give your SIN only when absolutely documents such as tax returns, your necessary, and do not carry your SIN will, marriage certificate, diplomas and with you. degrees in a safe place. 3. Never give personal or financial infor- 10. Make a list of the names, account num- mation to anyone who phones or bers and the expiration dates of your you unless you know who they cards in a secure place. (Do not carry are or can confirm they are legitimate. this list in your wallet.) This will help if Be aware that police and financial insti- you need to alert your credit grantors tutions never call or to ask for about a lost or stolen card. your bank or credit card details or PIN. 11. Know when your credit card and finan- 4. Tear or shred receipts and copies of pa- cial statements and utility bills are due. pers you no longer need, such as old Pay attention to credit card expiry tax returns, credit applications, insur- dates. Keep credit card, debit card and ance forms, physician statements and ATM transaction records so you can credit offers you get in the mail. match them to your statements. 5. Don’t leave personal information lying 12. Do not put more than your name and around at home, in your vehicle, at the address on your personal cheques. office or on your computer. Don’t leave 13. Lock your household mailbox if pos- receipts at an ATM, a gas station, or sible. Pick up your mail promptly. anywhere else where you are purchas- When you are away, have a trusted ing goods or services. person pick up your mail. 6. Carry only the documents and cards 14. Use passwords (for your credit card, you will need during your day. bank account, etc.) that do not contain 7. When you receive a renewal or replace- easily available information like your ment for a document that contains birth date, phone number or SIN. identity information (e.g., your driver’s 15. On your computer, make use of licence), return or destroy the old one. filters, email filters and firewall programs.

7 16. If you use secure sites for financial The Identity Theft Statement explains transactions, make sure you under- that identify theft has occurred, and stand and follow all of the instructions that you did not run up the debts or for security when you enter and exit charges. It includes a space where you the site. can provide the details that companies 17. Do not send personal and financial may need to begin an investigation. information by email. It may not be 2. Contact your financial institutions, secure. credit issuers, and other companies. 18. Make sure personal information is Tell them what has happened and ask them to investigate. Cancel any cards really deleted before you sell, recycle or discard your computer. You may have that were affected, and close any deleted files from folders but the infor- affected accounts. mation may still be on the computer’s – Find out if the company requires hard drive. written documentation to begin inves- tigating your claim of identity theft. – Do they accept the Identity Theft What you can do if your identity is Statement? stolen – Do they require any additional infor- Dealing with identity theft is time- mation? consuming. You need support and infor- Send the company the documentation mation. This section suggests actions you they require as soon as possible. can take to stop the thief and regain con- 3. Contact Canada’s major credit report- trol of your identity documents. ing agencies: Trans Union Canada, If you suspect you have become a vic- Equifax Canada, and Northern Credit tim, you need to contact financial institu- Bureaus Inc. tions, credit issuers, other companies and credit reporting agencies. Keep a log of Equifax: dates, person(s) that you speak with or Telephone: 1-800-465-7166 (toll free) write to, what they say, and how to contact Website: www.equifax.com them again if you have more questions. Trans Union Canada 1. Report the incident to PhoneBusters. Telephone: 1-866-525-0262 (toll free) See page 25 for contact details. Website: www.tuc.ca PhoneBusters has an Identity Theft Northern Credit Bureaus Inc. Statement you can use to send to finan- Telephone: 1-800-532-8784 cial institutions, credit issuers, other Website: www.creditbureau.ca companies and credit reporting agencies. Ask each agency to send you a copy of You can download it from the website your credit report. The credit report and make copies. 8 may show if there are other companies where the identity thief has opened ac- Internet Scams counts or incurred debt in your name. Discuss with the credit reporting As a global method of communication, the agency whether to have a “fraud alert” Internet provides many new opportunities placed on your file. A “fraud alert” for legitimate sellers. It also provides a new means that creditors call you before tool for consumer fraud. Old scams have opening any new accounts or changing gone online and new scams specific to the your existing accounts. Internet have emerged. 4. If your government-issued documents Whether they’re misrepresenting goods were lost or stolen, contact the depart- and services, making exaggerated claims ment or ministry, explain what hap- about earnings potential, seeking advance pened, and request new documents. payment for bogus deals, or secretly hi- 5. If you think your mail is being stolen jacking your modem, scammers are just a or re-directed, contact Canada Post. mouse-click away. Here are some common Internet scams: 6. Report the incident to your local police department. Ask the police to take a report, if possible. If a police report is Scam 1: Web auction scams available, include it in all your corre- spondence about the identity theft with Buying at online auction sites is fast financial institutions, credit issuers, becoming one of the most common ways other companies and credit reporting to purchase consumer goods. While there agencies. are many reputable dealers, there are also scammers. Scammers offer attractive deals to lure bidders. You may win the bid, send the money, and receive nothing. Or the item may be of much lower quality than advertised. In addition, there may be groups suspected of driving up bids, or the price may be hiked after the highest bid has been accepted. Remember: scammers open and close their business quickly, so sellers with no complaints registered on an auction site are not necessarily legitimate.

9 Scam 2: Nigerian scam Scam 4: “” or brand spoofing

This scam, which has been around for long This scam is a form of identity theft. time, now uses email addresses. It is some- Scammers create email messages and web times called the 4-1-9 scam, after the pages that mimic those of a bank, credit section of the Nigerian criminal code that card company, auction site or escrow ser- addresses fraud schemes. vice such as Paypal. The scammers send The email may come from anywhere emails randomly to “fish” for passwords overseas, usually somewhere in Africa. and financial data, hence the term, The email claims that an important “phishing” (pronounced “fishing”). event (e.g., a change of government) has These emails often ask you to “re-register” resulted in a person having a large sum of or “reactivate” an account. They provide a money which needs to be transferred over- link to a website that appears to be the seas. The sender claims that if you help legitimate site of the company or financial with the transfer, you can keep a portion institution. The goal is to trick you into of the money. If you reply to the email, you providing personal, financial, or password receive official-looking correspondence data. Once the scammers have your infor- and are requested to provide your financial mation such as credit card numbers, bank details, such as bank account information. account information, social insurance Then something “goes wrong” and you are numbers, and passwords, they use it to pressured to save the deal. The scammer commit more fraud. demands advance fees for various taxes, legal fees, transaction fees or bribes. There are many variations of the scam, but all Scam 5: Bogus Internet services and aim to steal your money. access scams

There are numerous scams that take your Scam 3: Computer equipment/software money for Internet services that you did scams not order, or that you were told were free. In one scam, you get a call from a These scams include sales of computer company offering you a free website for a products that are never delivered or are certain period of time. The caller says you not as advertised. Many offers for free or can continue the service for a small low-cost computers are scams. “Free” may monthly fee and cancel at any time. The apply only to the hard drive, and the real caller obtains your contact information cost may be hidden in a disclosure in fine and a description of your business. Then print. You may need to pay for all of the you receive a bill, whether or not you other components. Or you may need to ordered the service. sign a contract with a particular Internet service provider for years of service. 10 In another version of this scam, you Scam 7: Online sales scams receive credit card or telephone charges for services that are misrepresented as free. The Internet provides endless opportuni- These often include charges for accessing ties for selling products, with sales of “adult” materials. For example, you are everything from T-shirts to toys, calendars promised free access to the site if you give to collectibles. If a scam is involved, the your credit card number to prove you are item you purchase online may never be over 18. The scammer then runs up delivered or may not be as advertised. Or charges on your card. you may be asked to pay an advance fee and receive nothing. Sales scams most often arrive on your Scam 6: Modem hijacking computer as unsolicited bulk email (“spam”) or as “pop ups” online. Many are versions Modem hijacking is also known as “Internet of the same old scams. dumping.” It only affects computer users Here are eight common online sales with dial-up connections. It happens when scams: pop-up windows or websites secretly upload a program to a person’s computer and in- 1. Pyramid schemes structs the modem to dial a number to which You are told you can make money through expensive charges apply. You receive a phone the products and services you sell, as well as bill that has very high long-distance rate those sold by other people you recruit to sell. charges to remote places. Telephone companies have responded to 2. Work-at-home scams this version of the scam by automatically You are given extravagant promises of high blocking long-distance calls to suspect earnings. You can “use your home PC to locations make money fast in your spare time.” All The scam has also been used to target you have to do is pay money for informa- users of sites where people prefer not to tion, kits or materials. give personal data. Instead of being asked to give a credit card number, you are in- 3. Phony prize promotions vited to use a discreet billing method such You receive an electronic certificate con- as having the cost added to the phone bill. gratulating you on “winning” a fabulous All you have to do is download the prize, such as a vacation or money. Some “viewer” software. Or you may be invited say you have been “specially selected” for to view for free if you install the “viewer.” this opportunity. When you click to agree to the offer, a file downloads to the modem, which trans- 4. Health care products and services scams fers you to an expensive long-distance You are invited to buy pills to let you lose number. The charges show up on the your weight without dieting or exercise, and are telephone bill. 11 offered cures for everything for hair loss to What you can do impotence to cancer. 1. If you are buying something at a repu- 5. Chain letters table online auction site, always check You’re asked to send a small amount of out the references for the seller and money to each of four or five names on a only buy from sellers who have good list, replace one of the names on the list with references. Major online auction sites your own, and forward the revised message. often allow you to send payment to a The letter may claim that the scheme has reputable third party (an “escrow” ser- been approved by the government. vice such as PayPal), not directly to the seller. Be sure to check out the escrow 6. Investment scheme scams service as well as the seller, since there Investment schemes promise very high are scam escrow services online, too. rates of return with no risk. The scammers tell you they have vital inside information 2. Always use your credit card for online for this unique opportunity. They promise services, since this provides a paper to guarantee the investment or buy it back trail to track down a bad transaction. after a certain period of time. One version Be sure your initial purchases involve of this scam claims to be looking for in- only small amounts of money and that vestors to start an offshore bank. Another you shop at reputable sites. version invites you to make an initial in- 3. Never give your personal information vestment in a day-trading system to realize to a company that already has it, huge profits immediately. especially if the request for that infor- mation comes by email. Contact the 7. Cheap rate credit card deals, guaranteed company independently. Use the credit company’s contact information on You are offered cheap-rate credit card deals their official website or on a bill. on payment of upfront fees. Another version 4. Read your credit card statements and of the scam offers guaranteed credit cards phone bills carefully. Question unau- or home loans regardless of your credit his- thorized charges on your credit card tory. Often the scammer claims that “off bill by calling the bank that issued the shore banks” are involved. Sometimes these card. Question unexpected charges on offers are combined with pyramid schemes. your telephone bill by calling the phone company. 8. Credit repair: wipe your credit record clean 5. Check out online businesses just as Credit repair scams make a phony offer to carefully as you would any other busi- wipe negative information from your ness. Demand clear conditions of sale, credit file so you can qualify for a loan, a cost of shipping and handling charges. mortgage, and credit. When buying goods or services off the 12 Internet, write down the merchant’s 11. Make sure you read and understand a phone number and address so you can website’s privacy notice before you give call if something is wrong. Don’t con- out your email address. duct business with an anonymous user. 12. Be cautious if the seller uses a free Don’t send your payment to a post email service, such as Hotmail, Yahoo, office box. Be skeptical of a company etc. Of course, most people who use that does not clearly state its name, these services are honest. However, it is street address and telephone number. very easy for the seller to keep his or Check it out with the local Better her real identity and information Business Bureau. See page 25 for con- hidden. tact details. 13. Save copies of all of the emails and 6. Be wary of a request for advance pay- other documents involved in the trans- ment by cash or certified cheque or action. Then, if you discover you have money order. Never send an advance been scammed, you have documenta- payment to collect a prize. tion to help you deal with the problem. 7. Read the . Don’t download 14. Be wary of offers that make extrava- any program to access a so-called “free” gant claims about performance or service without reading all the disclo- earnings potential. Avoid plans that sures carefully. Scammers sometimes require you to recruit distributors or bury disclosures about cost in fine buy inventory. print in the hope you won’t see them. 15. Use the blocking tools that are offered 8. Make sure the website is secure if you by your operating system, your Inter- are buying online and you need to pro- net Service Provider (ISP) and your vide your credit card number. Look for email service. the letter “s” (“secure”) following http in the website address and an unbroken 16. Use discretion when making public key or padlock symbol to ensure it is posts on the Internet that include your secure. email address. 9. Do not open spam (unsolicited email). 17. Use common sense and trust your While some spam messages are legiti- intuition. If you have a funny feeling mate sales offers, others are the same about an item, don’t buy it. old scams. 18. Report Internet scams to the Better 10. Avoid buying items offered in bulk Business Bureau. See page 25 for email (“spam”). contact details.

13 financial institution will give you a Loan and Credit Scams loan. Your credit history is one of the main criteria they use to determine Bogus loan or credit offers are often whether you will be able to repay a loan. pitched to people who need extra money. 3. If you can’t get a loan yourself, a friend, You may see the ads in the classified sec- relative or employer may be willing to tion of the newspaper, or on bulletin apply with you for a loan. Warning: if boards, or on the Internet. Or you may you co-sign for someone else’s loan, receive a phone call from a telemarketer. you are equally responsible for the debt. If the other person can’t make payments on time, you can be held Scam 1: Advance fee loan scams liable for the loan, and your credit record will be affected. You are told you are “guaranteed” or highly likely to get a loan. All you need to do is 4. Get free or low-cost help with credit pay an upfront fee to process the loan. problems. If you’ve got bad credit or no credit, get advice on how to build a Facts good credit record. See page 25 for places that can help. • Bogus fee loan companies don’t send the promised loan. Your fee is not refunded. You get a letter saying that your loan Scam 2: Bogus credit cards application has been denied. • Legitimate lenders never “guarantee” This scam claims “guaranteed approval” that consumers will qualify before a for a credit card, regardless of your credit credit check is done. rating. They want you to pay an upfront “processing fee” to get the credit card. What the law says The pitch might be something like this: $5,000 unsecured credit card, 6.95% rate, In BC it is against the law for a company to guaranteed approval regardless of your charge an advance fee to obtain a loan, credit history (bankruptcies and foreclosures even if that fee is described as the first or okay)! last month’s payment.

What you can do Facts • Few victims of these scams ever receive 1. Apply for loans through local banks credit cards. and credit unions. Know who you’re dealing with. • Those who do get a card find that there are additional processing and annual fees 2. If you have poor credit, it is unlikely they were not told about. that any legitimate bank or other 14 • In some cases, all you get is a list of banks Scam 3: Wipe your credit report clean you can then send an application to. • In other cases, consumers who gave out The pitch goes something like this: their chequing account numbers found Credit problems? You can now wipe your money had been debited from their credit report clean of bankruptcies, judgments, account without their permission. foreclosures, liens, and late payments! AND IT’S 100% LEGAL! • In offers that claimed that the card Usually the scam advises you to dispute would be issued by an “offshore” bank, the accurate negative information on your the credit card never showed up and the credit report or to set up a new credit bank did not exist. identity for yourself.

What the law says Facts It is illegal to make false or misleading • There’s no legal way to erase accurate statements about providing credit cards. negative information from your credit Any company that promises approval and record. charges a fee is breaking the law. • Legitimate financial institutions don’t What you can do issue credit cards without first checking your credit. Ignore these offers. 1. If someone offers you a credit card regardless of your credit history, be What you can do wary. It’s probably a scam. Report suspected frauds to the Better Busi- 2. Don’t give out your bank account num- ness Bureau and to Project PhoneBusters. ber to anyone unless you intend to have See page 25 for contact details. money withdrawn from your account. 3. Ask for written information about a credit card or any other offer to be Scam 4: Abandoned property mailed to you. Under this scam, a company contacts you 4. If the seller insists that you have to and offers information on how to collect apply immediately, do not apply. A thousands of dollars in unclaimed prop- legitimate financial institution will be erty. They say that all you have to do is just as happy to consider your applica- send them a fee. tion tomorrow. Fact • You send off the fee and receive nothing.

15 What you can do Prize and Contest Scams If you wish to seek unclaimed property — dormant accounts in financial institutions, insurance and utility companies, safe de- You may find out by mail or over the phone posit boxes and trust holdings — contact or by email that you “have won first prize” the local Better Business Bureau for infor- or that you “have won first place in a con- mation. test” for a valuable item such as: • a deluxe vacation for two What the law says about dormant accounts • a car The federal Bank Act requires that all char- • a diamond tered banks begin trying to contact owners • a TV-VCR of accounts after they are inactive for two years. If there is no response, the bank Or they may not even tell you what the sends a second letter after five years. prize is. After nine years, the details are published Some scams use envelopes announcing in the Canada Gazette before the bank that You Have Won and It’s Your Lucky Day. transfers the funds to the Bank of Canada. Some use names that resemble official or- Amounts of over $500 are retained indefi- ganizations, such as the lottery or a parcel nitely and can be claimed at any time. delivery service. Others use an envelope To search the database visit Bank of that looks like it contains a telegram or Canada’s website: http://ucbswww.bank- government cheque. banque-canada.ca; or contact the Dormant Very often you will find that the prize: Account Section at: • is worthless, or Unclaimed Balances Services, • costs less than you have to spend to get Bank of Canada, it, or 234 Wellington, Ottawa, ON, K1A 0G9. • does not exist at all. Telephone: 888-891-6398 / Fax: 613-782-7802. The Better Business Bureau points out Ways these scams try to get your money that some companies charge up to 40% of your bank balance to make this search. 1. You have to provide your credit card This is not illegal, but you can easily do the number to cover the shipping and han- search yourself for free. dling fee, lawyer fees etc. or “taxes” to process your winnings. This may be for just a small amount – about $3 or $4. They want you to think, “It isn’t much money, so why not risk it?”

16 If you receive a call telling you that you • What the scam may be after is your have won a prize but you have to pay a name to add to “sucker lists” that it sells fee, this is a scam. The caller may describe to others. the fee as a “filing fee” or a “processing • If someone else - your son or daughter, fee” or an “administrative fee.” for example - makes a call to a “900” 2. You have to call a “900” phone number number on your telephone, you are to find out what you have “won.” If you responsible for the costs. call a “900” number you are paying for • If you give out your chequing account the call. number or send a certified cheque, 3. You have to call a toll-free number (for you’re probably out of luck. example, an “800” or “888” number) that directs you to a pay-per-call “900” number. What you can do 4. You have to make “a small purchase” 1. Don’t pay to win or enter. Buying (typically a few hundred dollars’ worth goods or services won’t increase your of small items such as pens, key chains, chances of winning. Prizes are sup- or light bulbs) to get the prize. posed to be free. 5. You have to provide your credit card 2. Don’t call a 900 number. Calling a 900 number or chequing account number number is not a free call. If you are for “verification” purposes. As soon as required to call a 900 number, you are someone has your credit card number being forced to pay to win. they can use it; they do not need to have your signature. 3. Never give your credit card number, bank information, or social security 6. You have to send a certified cheque. number to someone who claims they 7. You are pressured to buy “on the spot” need it to “verify your eligibility” or to because the prize is available for a “deposit winnings” in your account. “limited time only.” 4. Don’t send a company money for taxes. Facts Only the government collects taxes on prize winnings. • If you have to pay to receive your “prize,” you haven’t won anything. • If you have to purchase products, provide a credit card or other account numbers, or send a fee in order to receive your prize, it is not a prize.

17 Pyramid schemes are confusing. They Pyramid Schemes look a lot like “multilevel marketing,” which is legal in Canada. Under “multilevel marketing” people “Pyramid” schemes aim for quick profits sell consumer products, usually in custom- by selling the right to recruit other people ers’ homes. The products are supplied by a to the scheme. multilevel marketing company. In a , you are asked to You can obtain information about multi- pay money to become a “distributor” of a level marketing from Industry Canada: product or service. 1-800-348-5358. Usually you are recruited through a While multilevel marketing focuses on meeting, where you are pressured to pay selling products or services, the pyramid (“invest”) a large amount to become a scheme focuses on recruiting more and “distributor.” more people. You then recruit a number of other distributors. Each of those distributors is supposed to recruit the same number of What the law says: distributors, and so on. Pyramid schemes are illegal in Canada. How to spot a pyramid scheme Facts: The focus is on profits you can make by • Only the people at the top of pyramid sales to new recruits who buy the products make any money. in order to participate in the scheme. • Most of the people who invest money in There is more emphasis on recruiting pyramid schemes lose all of it. than on selling the products or service. • Do not expect to get your money back.

Multilevel Marketing: Pyramid: Lily has become a distributor for Lipstick You can make huge profits from a miracle Lady. Lipstick Lady is a brand of cosmet- new laundry product, Blue Bomber! ics that is sold door-to-door. Lily keeps a When you become a distributor, you sign percentage of each sale she makes of Lip- up other sales people and are guaranteed stick Lady products. to make at least $5000 a month!

18 Why pyramid schemes collapse Travel Scams Suppose one person recruited six distribu- tors, each of whom, in turn, recruited six Need a holiday? others. Follow this through six steps. Tempted by those glossy brochures? Here’s how many people would have to There are bargains out there, but you need be recruited: to be a careful consumer. Here are some of the major travel scams to watch out for: Number of People at Each Level of Pyramid Scheme Scam 1: You have won a “free holiday” Level Number of people You get a letter in the mail or a phone call first 6 or an email. It goes something like this: second 36 Congratulations! You have just won a free third 216 holiday in an exotic tourist destination. fourth 1,296 fifth 7,776 sixth 46,656 Scam 2: “Bargain” holiday certificates or packages For the pyramid scheme to work there would have to be an endless supply of For example: Holiday cruise for four for recruits. As soon as the supply runs out, only $500! the pyramid collapses. To get the bargain, the scam says you have to: • let the travel agent book the flight from What you can do your home to the port of departure for the cruise; or You can report a suspected pyramid scheme • join a travel club; or or get help deciding if it’s a pyramid or legitimate multilevel marketing by phoning • attend a time-share presentation. the Better Business Bureau or the BC Busi- ness Practices and Consumer Protection Facts Authority. See page 25 for contact details. • Most people who join a bogus travel club or purchase a bogus holiday certificate never receive anything. • Typically, the scam will use delays so your offer expires before you can take a trip. Or the travel dates you prefer will be unavailable. 19 • There will be hidden costs for transporta- • Travel agents in BC must have a licence tion and accommodations. Many offers to operate. include only hotel costs. • Licensed travel agencies contribute to Examples: the BC Travel Assurance Fund. • The cruise may be discounted, but the • This fund is used to compensate travel- flight to where the cruise leaves from ers if the travel services they have paid may be vastly overpriced. for become unavailable. • A holiday certificate may be for two • This fund is available only if you have adults but only one adult’s airfare is paid. purchased your travel arrangement You have to buy the other airfare at the through a licensed BC travel agent. Note highest rate. that this applies to holiday travel, not business travel. • There may be fees, such as port fees for cruises, which have not been mentioned. • For more information about travel A deposit is usually required which is services and the Travel Assurance Fund only refundable upon completion of contact the Business Practices and travel. Consumer Protection Authority: Phone: 604-320-1667 • The time-share presentation may just be Toll Free: 1-888 564-9963 a high pressure sales pitch urging you to buy now! • The trip is often not what you expected. What you can do People who have booked luxury cruises have been given a day on a barge! Your 1. Book through a BC registered travel five-star accommodations turn out to be agent so you are protected by the Travel a dump. Assurance Fund. 2. Do not give out your credit card num- ber, or chequing account number, or What the law says send money until you get the full offer in writing with all costs and conditions. • If you have signed up for a travel club or holiday certificate in BC, you have seven Find out if the prices are quoted in days to cancel. This is a “cooling-off” Canadian or US dollars. period required by law. Travel clubs in Find out exactly what the holiday pack- BC are limited to 2-year memberships. age contains in terms of transportation They are not “lifetime.” and accommodations and for how • If you cancel within seven days, the com- many people. pany is required to return your refund. 3. Do not be pressured by any company to make an immediate decision. 20 4. Get the names of specific hotels, air- ports, airlines and restaurants that are a Work Scams part of the package. Contact them to double-check the arrangements (Find Looking for work? the phone numbers yourself. Do not Need more money? use a number provided by the company). If they’ve never heard of the firm offer- If you see a job offer or business oppor- ing you the trip, don’t sign up. tunity that looks too good to be true, it probably is. 5. Ask if the deposit is refundable, and Here are some work scams to watch out how much is required later. for. 6. Be skeptical if you’re told that you have 18 months or more to take the trip. By the time you try to make reservations, Scam 1: Work at home, make huge the company could be out of business. profits 7. Discuss with a local travel agent what a similar holiday would cost before you The offer may be to do such things as: pay a deposit or make a purchase. • stuff envelopes, 8. Call your local Better Business Bureau • clip coupons, to check on the travel agent’s record. • assemble crafts, or See page 25 for contact details. • enter data on a computer. The ad may be on television or in the newspaper. Or you may get a phone call or a letter, or see a notice at the local commu- nity centre or even on a telephone pole. Example: Make $50,000 in less than 90 days from home!

Warning signs This scam often: • Demands you buy something in order to start the program. • Promises you guaranteed markets, huge demand, big profits, and big earnings for part-time work.

21 Fact • Wants money to include you in their The Better Business Bureau has not promotional agency book. received any reports that work-at-home schemes produce income. What the law says Modelling agencies that offer courses must What the law says be registered with the BC Career Training It is illegal for an employer to require a Institutions Agency. prospective employee in BC to pay a fee in order to obtain a job. What you can do Legitimate companies usually do not place Check with the Better Business Bureau to open ads for work-at-home programs and see what they know about the agency. do not require any type of payment in Phone the BC Career Training Institu- advance. tions Agency to see if the agency is regis- tered with them. Phone 604-660-4400. What you can do 1. Learn as much about the company, Scam 3: Work overseas schemes product and market potential as pos- sible. Get everything in writing. Check You may see an advertisement for overseas with the Better Business Bureau to see employment. what they know about the company. The offer may be for a job: 2. Get a complete description of the work • on a cruise ship, or involved before you send any money. • with an airline. You should never have to pay for a job description or for needed materials. Warning signs This scam often Scam 2: Bogus modeling and talent • Claims to guarantee employment. agencies • Claims to have access to confidential Watch out for bogus modelling or talent information about work available. agencies that “guarantee” huge or instant • Wants you to send payment in advance success. to receive the information.

Warning signs Facts This scam often: • No employment service can guarantee a • Asks you to pay for acting classes, work- job. shops, or photographs.

22 • The access to “confidential employment Warning signs of a franchise scam opportunities” may be no more than a • High pressure sales tactics. If you are list from free sources such as govern- pressured to sign immediately “because ment lists or other newspaper ads. prices will go up tomorrow,” or “another buyer wants this deal,” do not sign. What you can do • Be wary if the salesperson makes the job If you want to work in any country over- sound too easy. seas, contact the embassy of that country. They will tell what you need to know • Promises of extraordinary profits with about permits etc. very little risk are usually too good to be true. Example: No experience required. No Scam 4: Bogus franchises selling. Earn $5,000+ per month. • Excessively high start-up fees. Some franchises are legitimate business • Evasive answers to your questions. If a opportunities. Others are scams. seller won’t agree to put verbal promises What is a franchise? in writing, avoid this seller and look for a legitimate company. A franchise is where you buy the right to • With franchise scams you will find that sell a company’s goods and services. promoters: Examples: – Do not deliver the equipment they •“chains” such as many fast food outlets promised. • vending machines – Do not provide the support services • magazine racks they promised in the sales pitch, such as • video game machines. repairing or replacing damaged items. A business opportunity is considered a “franchise” if: Tips for People Interested in Buying a Franchise 1. You will sell or distribute goods or services that are supplied by either the • Shop around. Compare franchises with company or a designated supplier. other business opportunities. 2. The company will help you by securing • Talk to people who have franchises. Find locations or sites for the vending out how many sales people are in the machines or display racks. area and whether you will have an exclu- sive territory. 3. You are required to pay the company a sum of money when you sign the con- • Ask the seller for a list of the names and tract or within a set period of time addresses of current owners and opera- after you begin operations. tors. The company’s list of selected 23 references is not a substitute for a list of • Sales claims about successful areas of franchise owners. Be very wary if the business — “Be a part of our five billion seller provides recommendations from dollar industry,” for example — may people but never gives you a way to con- have no bearing on your likelihood of tact those people yourself. success. Once you buy the business, you • Ask to see a Uniform Franchise Offering may be competing with franchise owners Circular (UFOC) and review it carefully. or independent business people with This document lists current franchisees, more experience. those who have left or quit, and gives • Before you sign any contract, take it to a financial statements of the business. It lawyer who is familiar with franchise should give you the true picture of the operations. Be sure you understand who franchise operations beyond the glossy owns what. sales brochures. • Report any problems to the Better Busi- UFOCs are not legally required in BC, ness Bureau. See page 25 for contact but demand one anyway. UFOCs are details. required by law in most parts of the U.S. • For more information, contact Dial-A- Alberta has also introduced a version. Law, a service that provides legal • Get professional advice from a lawyer information on tapes. Select the tape, and/or accountant or business advisor. Business Opportunity Schemes, Go over all the details of the franchise Franchises, Pyramids and Chain Letters system. Always question where the fran- (Tape 259). See page 25 for contact chise company makes its money. details. • Get the seller’s promises in writing. If the salesperson says one thing but the writ- ten contract says nothing about it or says something different, the written contract is what counts.

24 Sources of Help 2. in writing, on the Dial-A-Law website Telephone 604-687-4680 in the lower mainland or 1-800-565-5297 elsewhere in It’s not always easy to spot scams and new BC. Or go to www.bccba.org and click on ones are invented every day. If you suspect Visitors and then Dial-A-Law. Look for the that you may be a target of a scam, remem- “Consumer” menu. ber that you are not alone. PhoneBusters Here are places that can help if you want to report a scam or if you need more infor- PhoneBusters is a national anti-fraud call mation. centre jointly operated by the Ontario Provincial Police and the Royal Canadian Better Business Bureau of Mainland British Mounted Police. PhoneBusters plays a key Columbia role in educating the public about specific Consumer line: 604-682-2711 fraudulent pitches. Website: www.bbbvan.org Telephone: 1-888-495-8501 Fax: 1-888-654-9426 Better Business Bureau of Victoria Website: www.phonebusters.com Consumer line: 250-386-6348 Email: [email protected] Website: www.bbbvanisland.org Competition Bureau BC Business Practices and Consumer The Competition Bureau of Industry Protection Authority Canada deals with complaints about scams Information about how to prevent con- and also provides information. sumer problems and what to do if you Telephone: 1-800-348-5358 have a problem. Website: www.cb-bc.gc.ca Telephone: 604-320-1667; Email: [email protected] 1-888-564-9963 (toll free) Address: 50 Victoria Street, Website: www.bpcpa.ca Gatineau, Quebec K1A 0C9 Credit Counselling Society of BC Canadian Consumer Information Gateway The Credit Counselling Society of BC This federal government website includes provides assistance with debt problems. valuable tips on how to protect yourself in Telephone: 1-888-527-8999 various consumer situations, such as shop- Website: www.ccsbc.org/help.shtml ping on-line, investing, dealing with tele- Dial-A-Law marketers, door-to-door salespeople, or Dial-A-Law is a library of practical legal renovation contractors, having your car information. It is operated by the BC repaired, and much more. Branch of the Canadian Bar Association. Website: You can access Dial-A-Law in two ways: www.ic.gc.ca/cmb/welcomeic.nsf/ICPages/ 1. by phone, as recorded scripts SubjectConsumers#consumergateway 25 Please tell us what you think…

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