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Overview of the scam

You get a call on your landline — usually early in the morning — from a person who claims to be working in the security and fraud department of your bank or credit card company. They’ve supposedly flagged your account due to unusual purchase activity overnight and are calling to find out whether your card has been compromised. They then ask if you’ve made a particular purchase. Once you reply that you haven’t, they assure you they will credit your account for the amount.

To verify the credit, the caller recites your home address (correctly) and says you can call the 1-800 number on the back of your card later if you have questions. Finally, they ask you to prove that you’re in possession of the credit card by asking you to read out the three- or four-digit CVV (Card Verification Value) security number on the back of your card. After you do this, they respond that you are correct, thank you, and hang up.

Unfortunately, the caller now has all the information required — your name, address, card number, and CVV — to commit CNP fraud.

Here are a few other versions of the scam:

  • Call-back request: The caller may ask you to call the 1-800 number on the back of your card to prove the call is legit. When you hang up, however, the call is not immediately disconnected because there is a five to 25-second disconnect delay on landline calls in Canada. To really fool you, the caller even plays a recording of a dial tone to make you think you’re placing a new call. But, make no mistake, the scammers are still on the line. When they “answer” your call, they redirect you to an imposter who may ask you to transfer funds to an external, supposedly “safer” bank account (that belongs to them) while the “investigation” is taking place.
  • Transaction-review request: Some victims are duped into providing remote access to their computers and online banking records so the “investigator” can review any suspicious transactions.
  • Investigation-assistance request: Other victims are asked to “help” catch the criminal by accepting a deposit and transferring it to another account. The deposit, however, is fake — which means victims end up transferring their own money to the scammers.

So, how did the caller get your name, address, and/or credit card number to begin with? Believe it or not, there are lead lists for sale online that contain this information for marketers. Unfortunately, criminals can purchase the lists as well. Other methods include going through your garbage or mailbox for credit card statements, hacking companies that have your card information, or through phishing scams (they try to get you to hand over your personal information).

Serious consequences

According to CAFC records, nearly 800 Canadians have lost more than $6 million to the bank investigator scam since 2016, and thousands more reported receiving these suspicious calls. The reported losses for 2021 from that scam alone surpassed $4.6 million, making the bank investigator scam the 10th worst type of reported fraud.

Top 10 scams in Canada in 2021(based on total losses reported)*

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“These scammers aren’t first-timers, they know what they’re doing,” says Jeff Thomson, senior RCMP intelligence analyst and manager of CAFC’s fraud prevention and intake unit. “Some victims have gone so far down the rabbit hole that they’ve lost hundreds of thousands of dollars.”

Indeed, in early 2019, five Vancouver-based seniors lost $3.1 million after a scammer persuaded them to transfer large amounts of money to overseas accounts using the call-back request detailed above. “The fraudster would tell the senior their credit card had been used for a large purchase or that police needed their help for an investigation,” CBC News reported. “When the senior picked up the phone again to call 911 or their bank as directed, the fraudster was still on the line. They would play a fake dial tone, and then they would pretend to be the police officer or bank representative after the senior dialled the number.”

Losses from the bank investigator scam may also come from CNP fraud. “A common CNP fraud is the purchase of airline tickets, which can then be sold to others at a discount,” says Thomson.

While victims of CNP fraud can dispute the charges with their credit card company and, in most cases, will not be out-of-pocket, that’s not a guarantee, and the process can be long and frustrating.

Furthermore, if the compromised card is one you rarely use and you don’t monitor the statements carefully, you may not even be aware that fraudulent charges were made on your account. In that case, your credit score will suffer (at least in the short term) while you have outstanding unpaid balances.

Protect yourself

There are a number of ways you can protect yourself from falling victim to the bank investigator or other credit card scams:

  • Don’t trust caller ID. Scammers often use call-spoofing technology to display fake phone numbers on your call display. So, while it appears as though it’s really your bank, credit card company, the RCMP, or some other official organization reaching out to you, it’s not.
  • Look for red flags. “Banks and other financial institutions will not call you seeking personal information — they already have that stuff,” says Thomson. Similarly, banks or law enforcement officials will never ask you to transfer funds to an external account for security reasons, ask for your help in an investigation, or need remote access to your computer. These are sure signs you are being scammed.
  • Call back from your mobile. If you’re not sure that it’s a scam and you want to be 100% certain, hang up your landline and use your cell phone to call the 1-800 number on the back of your card. That way, you will not run the risk of staying on the line with the scammers by mistake.
  • Stay calm. It’s not an accident that these calls often come in the early morning. The scammers do so to catch you off guard and create a sense of panic so you will act quickly. But there’s no need to rush into anything. “Always take five and think about it,” says Thomson.
  • Keep your credit card information safe. Only share your credit card number or other sensitive information during calls you initiate to the telephone number on the back of your credit card.
  • Shred, shred, shred. Destroy anything that has your credit card number on it to avoid theft. But before you shred your billing statement, check to ensure you don’t have any odd charges.
  • Be careful online. Don’t click on email links from anyone pretending to be your bank or credit card company, even if the email looks legitimate, as it could be a phishing scam. Also, only enter your credit card number on secure websites that you can be 100% sure are legit.

You’ve been scammed…now what?!

If you happen to succumb to the wily ways of a fraudster, revealing your credit card number or CVV when you shouldn’t have, there are several things you should do to decrease the chances of suffering losses.

  • Call your credit card company immediately. They will check to see if any charges were put on the card you aren’t aware of. If not, they will cancel your card and issue a new one. If so, they must also thoroughly investigate any disputed transactions. In most cases, if you report immediately, you will not be responsible for the charges.
  • Contact the credit bureaus. Equifax and TransUnion are Canada’s two credit reporting agencies. Get in touch with both and ask for a fraud alert to be placed on your file. Also, be sure to get and review a copy of your credit report to make sure all the information on it is correct. If not, report any errors.
  • Report the fraud. Call your local police and the Canadian Anti-Fraud Centre, which is the central Canadian agency responsible for collecting data on economic crime.

Moving forward, make a habit of checking your credit card transactions regularly (either online or on your monthly statements) and look for any charges you didn’t make.

What have we learned?

There are many types of bank fraud in Canada, but the bank investigator scam is one of the more common ones. However, with the right information, you can protect yourself from becoming a victim.

Remember that your bank or credit card company will never call you asking for personal details and the official-looking phone number that appears on your call display could be spoofed. Don’t rush into action. Hang up, wait a few minutes to be sure the call is really disconnected (or switch to your mobile phone) and call the 1-800 number on the back of your card if you are unsure. Never transfer money or provide remote access to your computer based on a request from a caller.

If you do give out any personal information, call your bank and/or credit card company immediately and explain what happened. Then report the incident to the police and the CAFC. Credit card scams have evolved and so should your methods of protecting yourself.

About the Author Editorial Team

The Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.

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