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Reports of CRA extortion scam on the rise

Last Updated Aug 29, 2018 at 2:12 pm EDT

A sign on a gift card display warns customers about a scam involving the Canada Revenue Agency, in a Rexall store in Toronto on Aug. 28, 2018. CITYNEWS

“These scammers are very threatening. They’re very direct. They entice that fear.”

Stores including pharmacy chain Rexall have started posting warnings about scams involving gift cards as reports about the fraud continue to mount.

Fraudsters pretending to be the Canada Revenue Agency (CRA) have been calling unwitting consumers and telling them they owe money from a past tax return. The consumers are told they will incur additional fees, face jail time or be deported if they fail to pay the sum — by wire transfer, pre-paid credit cards, gift cards or bitcoin.

“It’s one of the biggest scams out there right now,” said Jessica Gunson of the Canadian Anti-Fraud Centre (CAFC), a federal agency jointly managed by the RCMP, the Competition Bureau, and the OPP.

“These scammers are very threatening. They’re very direct. They entice that fear. They just want that person to have that knee-jerk reaction. They don’t want to give them time to think about it. They don’t want them to talk to anyone else.”

When scammers receive gift cards, they generally resell them for cheaper, Gunson said. They may sell a $100 iTunes gift card for $80, for example.

In October 2016, investigators traced the fraudsters to call centres in India, arresting dozens.

Almost immediately, the CAFC noticed a “huge decrease” in calls about the CRA extortion scam. Since that time, however, the reports have steadily increased.

Last year, the agency received more than 10,000 complaints about that particular fraud, and 688 people reported being swindled out of $2.7 million. But already in the first six months of this year, the number of reported victims has surpassed the 2017 total. The CAFC said 764 victims of the extortion scam handed over $3.6 million to fraudsters from January to June.

The real number is likely much higher as it’s estimated less than five per cent of fraud is reported to the CAFC.

Gunson said she has seen convenience stores and pharmacies in Ontario taking preventive measures.

“Retailers have become very good and very vigilant in alerting customers that may be buying or asking for a stack of cards,” she said.

In April 2016, the manager of a Metro grocery store in Brampton intervened when a man tried to buy 42 iTunes gift cards at once. The manager called police who, after assessing the situation, told the man he was being scammed.

And several Rexall stores in downtown Toronto have posted signs on their gift card display warning customers who are being pressured to buy gift cards.

The notices mention the CRA will never use aggressive language or tone, ask for prepaid credit or gift cars or threaten arrest. They include a link to the CRA’s fraud prevention website.

Here are some more tips from the CAFC about how to avoid scams by phone and email.

How to protect yourself from scammers

  • The CRA will use registered mail to contact consumers.
  • Contact the CRA to confirm you owe back taxes or are entitled to a refund.
  • Never provide personal information on inbound phone calls. Ask who is calling, document information and do your homework.
  • The CRA would never request payment by money service business, iTunes gift cards or bitcoin.
  • For more information about fraud scams involving the CRA, visit the agency’s fraud prevention website.
  • If you’ve shared personal information, contact Equifax and Trans Union to place fraud alerts on your account.
  • If you’ve shared banking information with the scammers, contact your financial institution to place alerts on your account.
  • If you think you or someone you know has been a victim of fraud, contact the Canadian Anti‐Fraud Centre at 1‐888‐495‐8501 or report it online at antifraudcentre.ca.