Bank fraud cases skyrocket in Canada: National Banking Ombudsman

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Consumer complaints about banking and investment services spiked in Canada last year, with concerns about fraud driving a 63 per cent one-year increase in case volume at the national banking ombudsman’s office.

The Banking and Investment Ombudsman (OBSI), an independent dispute resolution service for consumers and businesses, reported more than 17,000 consumer complaints in 2023, up from 10,640 the previous year.

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“Complaints about credit cards and electronic transfers reached historic levels” said the Ombudsman’s Office when reporting its annual statistics.

“Fraud reports continued to rise to new record levels and remained a top concern for banking consumers and a growing concern for investors.”

Complaints about credit cards increased more than 240 percent and complaints about wire transfers, driven primarily by fraud cases, increased nearly 540 percent. Complaints related to checking and savings accounts tripled and complaints about wire transfers doubled.

Fraud was the top issue among banking customers with 951 fraud-related complaints, an increase of nearly 350 percent from 2022.

“We saw a very dramatic increase in the volume of cases,” public advocate Sarah Bradley said in an interview. “There are huge amounts of fraud going on and it’s affecting more and more people all the time.”

Bradley said OBSI had seen an increasing number of fraud cases targeting wire transfers and other types of electronic banking.

“What we’re seeing are situations where criminals gain access, in one way or another, to the victim’s online banking platform and make some quick transactions,” he said.

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Although scammers are gaining access to other people’s online banking platforms in different ways, there are two main methods, Bradley said. One involves the use of malware (often inadvertently downloaded) that gives scammers the ability to view a victim’s computer or cell phone in real time and steal online banking information.

They can then break into the accounts and change security settings to thwart detection while absconding with money through wire transfers and wire transfers.

The other method involves direct contact with a victim and tricking a person into sharing their account information or one-time passwords.

“They do this by posing as a bank employee or someone in a position of authority, such as police or Canada Revenue Agency employees,” Bradley explained, adding:

“Sometimes when you hear stories of fraud, it’s easy to think, ‘Oh, how could someone have fallen for that?’ It’s very obvious.’ But at the moment it’s not really obvious, and some of these scams are actually very clever in terms of how they fool people.”

This newspaper recently published articles about two clients of an Ottawa bank currently involved in fraud disputes with the Bank of Montreal. In both cases, the scammers illegally accessed their accounts and sent money abroad using global money transfers (GMT).

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Bradley said GMTs were attractive to foreign scammers because they allowed them to get money out of Canada.

So how should consumers protect themselves against these online bandits? Bradley outlined some basics:

• Be careful when clicking on any unknown links in a text message, email, or website.

• Never share one-time passwords or access codes.

• Make sure passwords are complex and changed frequently.

• Always log out of electronic devices.

• Enable two-factor identification and automatic alerts that notify customers of account activity.

• Ensure that wire transfers can be deposited automatically to prevent fraudsters from intercepting them.

• Question suspicious callers; Hang up and call back to a verified phone number.

“It’s very difficult to recover from fraud once it has occurred, so it’s really important to be proactive, be aware of fraud and understand how well these frauds are executed,” Bradley said. “We need to raise the profile of this.”

Cherolle Prince, director of fraud and identity management at Equifax, said the consumer credit reporting agency’s analysis showed that identity theft was driving an increase in fraud cases. Prince recommended that consumers closely monitor their credit files (to ensure that no one else tries to obtain loans in their name) and safeguard their personal information.

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“People need to be careful about how they handle bank statements, invoices and any type of sensitive information. Those documents should be destroyed,” she stated.

Bradley said the increased volume of complaints had posed a challenge in his office. The organization has doubled its staff from pre-pandemic levels and continues to grow.

Bradley said the volume of complaints had also increased due to the new consumer protection provisions of federal banking law, which came into effect in June 2022. Among other things, the new rules changed the way banks handle customer complaints and require them to be resolved within 56 days. This has led to more cases being brought before the OBSI, he said, which can consider appeals from dissatisfied bank customers.

He Financial Consumer Agency of Canada It supervises the country’s banks and is tasked with protecting the interests of banking customers. An agency spokesman said banks were expected to have procedures in place to identify and flag unusual customer transactions.

“Based on best practices, banks should proactively inform consumers about unusual transactions,” said Léonie Laflamme-Savoie. “Banks should also inform consumers about what types of communications they can expect from them as their bank (for example, a bank will never request personal or financial information via email) and how to report unauthorized transactions.”

Andrew Duffy is a National Newspaper Award-winning reporter and long-form writer living in Ottawa. To support his work, including exclusive subscriber-only content, sign up here: ottawacitizen.com/subscribe

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