Fraudsters are getting better at what they do, and it's costing Canadians billions

How to protect yourself from financial fraud Financial expert Barry Choi has tips on protecting your pin, creating a family safe word and identifying a phishing scam.

In the past decade, incidents of fraud have risen sharply across Canada, but in that same time, the proportion of cases solved by law enforcement has reached a 20-year low, leaving tens of thousands of victims and millions of dollars in losses unresolved.

Statistics Canada data show that 150,000 cases of fraud were reported to police in 2022, the highest-ever in the available data and nearly double the 79,000 cases reported in 2012.

But in that same time, the fraud clearance rate, or the proportion of cases solved by law enforcement, has fallen by nearly two-thirds to just 12 per cent last year, with more than 100,000 incidents left unresolved.

National law enforcement point to the ever-growing role of technology in daily life as a catalyst to the problem.

“Fraudsters are increasingly using society’s digital reliance to target potential victims,” reads the latest report from the Canadian Anti-Fraud Centre (CAFC), a joint operation by federal and provincial police services. “Increased access to Canadians at a low cost is enabling fraudsters to diversify and expand fraud operations.”

To Mark Lokanan, a financial criminology expert and associate professor at Royal Roads University in Victoria, the trend flows from a basic problem: when it comes to financial crime, Canada’s system is a lenient one, and the fraudsters know it.

“It’s a recognizable concept across various countries that we are very lax both in the litigation and the prosecution of these crimes,” he said in an interview with CTVNews.ca. “We simply don’t have the infrastructure in place.”

In Lokanan’s view, the criminal justice system is disproportionately focused on street-level offences, with many cases of fraud delegated to tribunals and other regulatory organizations, dampening deterrents.

The result is a dual feeling of opportunism and fearlessness among prospective white-collar criminals.

“They’re prosecuted as civil cases, which is basically a slap on the wrist,” Lokanan said. “People understand that: ‘Hey, if I defraud somebody of $100,000, nothing is going to happen to me.’”

Billions per year lost to fraudsters, mostly unreported

Law enforcement agencies report that financial losses to fraud are reaching never-before-seen heights.

According to CAFC data, reported losses to fraud and cybercrime totalled $530 million in 2022 alone, close to 40 per cent more than the $380 million in 2021, which itself was an unprecedented high.

"As we see the amount of money lost to fraud continue to increase, our duty to protect each other grows more and more important,” said CAFC Director General Chris Lynam in a statement earlier this year. “It could take just one conversation with a loved one to prevent them from falling victim to fraud.”

Meanwhile, StatCan research suggests that the those losses could represent just the tip of the iceberg, with estimates of losses including those unreported to police stretching into the billions of dollars per year.

The most recent national survey data shows that 17 per cent of Canadians aged 15 and older fell victim to a fraud between 2014 and 2019. Among those examined by the StatCan survey, fraud has become the category of crime most commonly victimizing Canadians, exceeding property and violent crime and impacting roughly 2.5 million people in the 12 months preceding the survey.

All told, fraud victims reported a total of nearly $16.3 billion lost in the five years preceding the survey when extrapolated to the total population, but StatCan notes that that sum is based only on the largest single loss per respondent, meaning the true grand total is likely even higher.

At the same time, fraud remains among the crimes least-often reported to police, with roughly one in 10 victims contacting police about the worst fraud they experienced in past five years, according to the StatCan survey. A majority of victims, meanwhile, reported the incident to their bank or credit card company, though one in four said they didn’t report it at all.

To Lokanan, those reporting rates signal withering confidence that law enforcement can help.

“I’ve spoken to a lot of victims in this area, and I can tell you this much … these guys don’t think the system in place will do anything about it,” he said. “So why would you report it?”

Cryptocurrency, housing scams among the most damaging

According to the most recent research by the Better Business Bureau (BBB), the riskiest types of fraud hitting Canadians last year included cryptocurrency investment scams (with a median loss of $2,000 per victim) and scams involving housing ($1,900 for home-improvement scams, $1,600 for rental fraud) and employment ($3,000).

It’s a trend echoed in the CAFC data. In 2021, losses linked to investment fraud grew by nearly 500 per cent from the year prior, to $114 million from $19 million, with an average per-victim loss of $56,000.

The emergence of new instruments in digital finance, the CAFC notes, is a major factor.

“Despite its extreme unpredictability, cryptocurrency is quickly becoming a popular investment avenue for Canadians,” its most recent annual report reads.

“The rapid growth in cryptocurrency value and narratives of high investor returns is alluring, even when potential investors may not have a strong understanding of cryptocurrency as an investment. [Fraudsters are] preying on this lack of understanding.”

The report highlights an increased focus on cryptocurrency, a new reporting system in partnership with the RCMP’s cybercrime unit and continued community outreach as key next steps for the interagency organization.

“The evolving threat environment and exponential growth of fraud require the CAFC [to] continually adapt to be effective,” it reads.

To Lokanan, in the absence of major reforms to the justice system, from harsher penalties and bail requirements for fraudsters to a new branch of government specialized to tackle financial crime, public awareness is key.

“The more education we have, the more awareness we have, the more support we have towards the vulnerable population, you will see that rate decreasing significantly,” he said.

“You can’t just depend on the criminal justice system to save you, here. You must educate yourself.”

Edited by CTVNews.ca Special Projects Producer Phil Hahn