Fraudsters are out to fleece victims of the pandemic
By Erika Morris
As more and more people are strapped for cash as a result of the coronavirus crisis, scammers are bringing old schemes back with new faces.
Many Canadians have been receiving messages via Facebook or other social media—some from strangers but some apparently from friends or family—promising them money if they join a “Blessing Loom” or “Money Board.” The message claims it’s a great way to make quick money with little effort.
You simply send $100 through a payment service such as Paypal or Venmo and watch your investment earn a major return as more members join and spread the wealth—all you have to do is get your friends to invest, and as the circle widens, everyone makes more cash. Except that once people stop coming in, so does the cash, and you lose your investment. These scams, called pyramid schemes, are illegal in Canada and the United States.
The Better Business Bureau (BBB) is also warning against “advance-fee loan,” “administration fee,” or “credit protection” offers. To get one of these loans, you have to send money upfront before you receive any funds. You’re told that you’ll get the advance fee back once you prove you can make your payments; in reality, of course, you just lose thousands of dollars becasue the lender vanishes.
These types of loans, which are illegal in North America, can be tempting because they offer rates that, while higher than those offered by the banks, are much lower than short-term payday loans, making the investment worthwhile if you save more money in interest in the long-run.
To recognize schemes, watch out for any offer that asks for upfront fees, promises money for recruitment, or simply seems designed for those wanting to get rich quick. A request for payment via an e-transfers is a red flag.
Never accept friend requests from strangers, and even if the message comes from a friend, it doesn’t mean there is no risk. Be careful when opening suspicious e-mails containing unknown links.
Before responding to any offers, do research on the company. Some scams do seem like legitimate businesses, so it’s important to be diligent. Pay attention to the phone numbers, office locations, and registration dates of the companies. You can check BBB’s Scam Tracker or report a scam on BBB’s website, bbb.org.