How to Avoid… Banking Scams

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Canadian Twenty Dollars Bill

Who doesn’t have a bank account these days? A checking account and a credit card are often essential to everyday life but unfortunately, banking comes with a number of scams.

I strongly encourage newcomers to Canada to get familiar with the local banking system, including debit cards, saving accounts, credit cards and credit reports. For more information, read How to Bank in Canada, a comprehensive overview of the banking system here. Knowledge is power and it will really help you avoid the most obvious traps.

Phishing

The neologism “phishing” alludes to baits used to “catch” financial information and passwords. For instance, you receive an email from a respected financial institution, such as the TD Bank, the Bank of Montreal or Scotiabank. This official-looking email informs you that your account will be suspended unless you click on the link provided in the body of the email and re-enter your online banking username, password and account information.

If course, your bank never issued such email and you will be redirected to an authentic-looking but fraudulent website which will capture your personal information as you enter them.

All the main financial institutions issue regular warning about phishing and ask customers to report it. You can see an example of a phishing email here, here and here.

Scammers sometimes use “vishing” (“voice” plus “phishing”) to reinforce the scam, calling “customers” and asking them to update, verify, activate or re-activate their account over the phone.

Remember that legitimate financial institutions will never request personal information by unsolicited emails or telephone calls, so keep an eye open for this widespread scam.

Credit report scam

It is very important to know your credit history and subsequent credit score, especially when applying for a loan. It is also recommended to check your credit history once in a while to spot potential identity theft.

By law, you can obtain a copy of your credit report for free. Simply contact a legitimate credit bureau such as Equifax Canada (see at the bottom of the page) or TransUnion Canada. You just have to fill up a form and mail it along with a copy of your ID. I regularly request reports from TransUnion and I usually receive it for free within two weeks.

Please, don’t get scammed and don’t pay to see what the law requires these companies to disclose! Even these legitimate credit bureaus try to trick you into signing up for “credit monitoring”.

Finally, don’t even bother googling “free credit report check”—half of the websites showing up in the search results don’t look legit. Remember my article on identity theft? A lot of credit report websites are deliberately misleading, with names such as “free credit report” or “free credit score” but they are not official nor free.

To learn more about credit checks, you can read this article which explains what a credit score is and why it is important.

Credit card fraud

In 2007, there were approximately 64.1 million credit cards in circulation in Canada. No wonder scammers love to target credit card holders!

The most common type of fraud is fraudulent charges. The good news is customers aren’t usually on the hook when their credit cards are used without their permission—credit card companies take the liability. Yet it’s a hassle to prove you didn’t commit the fraud (in other words, that you are not responsible for the charge(s) on your credit card) and to dispute the fraudulent charge.

Make sure you check your monthly statement and flag any suspicious activity. Credit card companies are pretty paranoid about fraud and can occasionally block your credit card if the notice what they consider “unusual activity” (such as a large purchase) or if you card is used abroad. I usually give Visa a call when I know I’ll be abroad to avoid such inconvenience. Don’t forget to keep your credit card and any personal information safe, and if you suspect foul play, contact your credit card company immediately.

Have you ever experienced one of these frauds? How did you deal with it?

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About Author

French woman in English Canada. World citizen, new mom, traveler, translator, writer and photographer. Looking for comrades to start a new revolution.

8 Comments

  1. Good tips! I do all my banking with the same bank, that eliminates a lot of fishing because if I get mail from a place I don’t have an account then obviously its not real. I ring the bank if anything fishy comes in, and keep my security high my McFee Total Protection to avoid programs which can steal my credit card numbers and such.

    • I keep on getting phishing emails from a bank I don’t use. Obviously, I know it’s a scam! But a lot of people can fall for it, some of these emails are really good fake.

  2. I’ve been lucky so far. A good idea is to voluntarily cut your credit card’s credit limit to something that is more reasonable. Most people don’t need to have a $10-15K limit… it’s risky if card is lost or stolen.

    Thanks for the tip on obtaining a free credit report – I didn’t know that!

    • I did just that when my bank kept on increasing my limit. The person I called was pretty confused, he said people rarely called to lower their credit limit 😆

  3. I received a strange email from my bank yesterday. I was immediately suspicious and didn’t click on the link. Rang the bank and it was indeed a scam…
    They could at least make sure they don’t make grammar and spelling mistakes in their emails!!!

    • Oh I know, some emails are very badly written… but you can’t help having a doubt sometimes. I would have rang my bank first too, this series made me suspicious!

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