Canada's Condominium Magazine

It’s Fraud Prevention Month: you can’t be too careful!

You have to hand it to the fraudsters: they can be very creative. Oh, we’ve all chuckled over those badly written, obviously phony emails from the infamous Nigerian scammers, the ones that ask you to send money to help them release large sums from a bank in some war-torn country, on the promise that you will receive a generous cut. Compared to those crude efforts, the real pros are masters of sophistication.

A woman in Ottawa was recently horrified to learn that her condo, which she had listed for sale on Kijiji, was listed on another real estate site for less than half the price she was asking. The fake listing even included the real photos of the condo from the legitimate listing. As police investigated, they discovered that the fake seller had even set up a phony law firm website, through which potential buyers were instructed to send a $12,000 deposit. If the seller hadn’t noticed the scam, chances are very good that some innocent buyer, tempted by the ridiculously low price being asked for the nice condo by the scammers, would have lost a lot of money.

Another common scam targets renters. Much like the half-price Ottawa home scenario, this one involves hijacking legitimate for-rent listings from sites like Craig’s List and posing as the owner or owner’s agent. The simplest way it plays out is for the scammer to ask for a deposit, which the would-be renter is usually more than prepared to give. A common variation of this is for fraudsters to rent out a beautiful vacation home they don’t actually own. How many times have we heard of vacationers showing up at a home they have “rented” for a few weeks in Florida, much to the surprise of the owners, who know nothing about the arrangement?

Even more daring and sophisticated is the so-called Title Fraud, whereby the fraudster steals the identity of a home owner and either sells the property out from under the real owner, or places a mortgage on the property and absconds with the money, leaving the unfortunate owner to deal with the bank and the police. Like the Toronto woman who was told by her bank that she no longer owned the home she lived in. A fraudster had stolen her identity and taken out a $300,000 mortgage on the home. She was told she would have to pay it back, even though the bank knew it was all a fraud. She took the bank to court. Only after a lengthy legal process did she win her case. Now, all home buyers are strongly advised to take out title insurance when they buy a home, to protect themselves against this type of fraud.

 Fraud Prevention Month: don’t let down your guard

March is Fraud Prevention Month in Canada and the Chartered Professional Accountants of Canada (CPA) just released a survey that shows some of the ways Canadians try to protect themselves against fraud. Many (72 per cent) said that they shred their banking and credit card statements. Almost as many (68 per cent) said that they were “very uncomfortable” giving out personal or financial information on the phone. More than half (60 per cent) said that they always make sure online shopping sites are encrypted.

As the CPA statement says, it’s “ heartening” that so many are aware of the possibility of fraud, but it warns that we should not let our guard down. “Fraud prevention requires continued diligence.”

The real estate market, where large sums of money regularly change hands between buyers, sellers, lawyers, realtors, and banks, provides fertile ground for fraud. Besides title fraud there are home equity scams, appraisal fraud, illegal property flipping, and a whole range of other criminal activities that target home owners and buyers as well as banks and insurance companies. A good rundown of some of the common forms of real estate fraud can be found here.

According to the CPA survey, almost one-third of Canadians (29 per cent) admit to having been victims of some form of fraud. Even more said they knew someone who had been a victim. The most common types of fraud reported were credit and debit card fraud.

The CPA survey doesn’t touch on real estate fraud directly, though credit and debit card fraud are often part of the bigger identity theft crime that can lead to mortgage fraud.

Below is the advice on how to protect yourself against mortgage fraud, posted by the Canadian Bankers Association.

[colorbox title=”How to protect yourself against mortgage fraud” color=”#333333″]

Protect your personal information from identity thieves:

  • Do not give out personal information on the phone, through mail or over the Internet unless you have initiated the contact or know with whom you’re dealing.
  • If it sounds too good to be true, it probably is — before you reveal any personal information, find out how it will be used and if it will be shared.
  • Pay attention to your billing cycles. Follow up with creditors if your bills don’t arrive on time.
  • Guard your mail. Deposit outgoing mail in post office collection boxes or at your local post office. Promptly remove mail from your mailbox after delivery. Ensure mail is forwarded or re-routed if you move or change your mailing address.
  • Minimize the identification information and number of cards you carry.
  • Keep items with personal information in a safe place. An identity thief will pick through your garbage or recycling bins. Be sure to tear or shred receipts, copies of credit applications, insurance forms, physician statements and credit offers you get in the mail.
  • Give your Social Insurance Number (SIN) only when absolutely necessary. Ask to use other types of identification when possible.
  • Don’t carry your SIN card; leave it in a secure place.
  • Check your credit report regularly to ensure there are no discrepancies
  • Reviewing your credit report can help you find out if someone has opened unauthorized financial accounts in your name. There are two credit reporting agencies in Canada: Equifax Canada and TransUnion Canada. You can request free copies of your credit report from credit reporting agencies by mail. Online versions of reports are also available for a small fee.
  • You can also conduct a property search at your province land registry office to ensure that the title to your home is in your name. [/colorbox]
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