You should not rely on thisbooklet for legal advice. Itprovides general informa-tion only.

SCAMSTO AVOID

MARCH 2005

F R E E

What is this booklet about?

This booklet describes some of themost common current consumerfrauds (or scams). It shows youhow to identify the scams and

how to avoid them.You can use this booklet to

help yourself and others becomeinformed and alert consumers.

Knowing about consumer scams:• helps prevent crime and consumer fraud

• reduces the possibility that you or otherswill become victims of a scam

Contents:

Introduction 1Charity Appeal Scams 2Foreign Lottery Scams 3Identity Theft 5Internet Scams 9Loan and Credit Scams 14Prize and Contest Scams 16Pyramid Schemes 18Travel Scams 19Work Scams 21Sources of Help 25

2nd edition

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• Never give out your chequing accountnumber or credit card number to anyoneyou don’t know. Ask for an address andoffer to send a cheque.

• Do not give money or credit card infor-mation at the door. You may wish tomake out a cheque payable to the char-ity. You can mail the cheque later.

• Call the charity. Find out if they knowabout the appeal and have authorized it.

• Call the Better Business Bureau to findout what they know of the charity. Seepage 25 for contact details.

• Make sure you request an official dona-tion reciept for the eligible amount ofyour gift. Only registered charities areentitled to issue official donation recipts.You can use the official donor receipt toclaim a tax credit when you claim yourincome tax for that year.

Charity Appeal Scams

In Canada we have a long and honourabletradition of voluntary giving to those inneed, often through charity organizations.

But if an unfamiliar charity organiza-tion contacts you – by mail, phone, orInternet – be careful.

Bogus charities often use names that arevery close to the names of legitimate andrespected charities. You can check out the listof legitimate registered charities by goingto the Canada Revenue Agency’s website at:www.cra-arc.gc.ca/charities

Warning signs

• High pressure or threateningtelemarketers who want you to contrib-ute immediately.

• Someone calls and thanks you for apledge you don’t remember making.

What you can do

• If you receive a telephone call, ask for theinformation to be sent to you in writing.Ask how much of your gift will be useddirectly for the charity. Ask how muchwill go toward administrative costs.Legitimate charities have no problemgiving you this information.

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Foreign Lottery Scams

Canadians have lost millions of dollars inillegal lottery ticket scams. The only people“hitting the jackpot” are the people run-ning the scams.

Here are some major foreign lotteryscams:

Scam 1: You have already won!

You receive a letter saying you have wonmillions of dollars in a foreign lottery.On closer reading you find out that all youhave won is the opportunity to buy lotterytickets. Usually the scam wants you to paya fee in order to play, often $30 or more.

Facts

• When you send money to private lotterycompanies you usually do not get anyproof that your money is actually usedto buy lottery tickets.

• Many of these scams demand more andmore money in order for you to remaineligible for future winnings.

• Most of these scams fail to pay winnings.They want you to reinvest your winningswith additional cash for the chance towin “greater prizes.”

Scam 2: You have an unclaimed prize!

You receive a letter telling you that youhave won a prize in a foreign lottery. The

letter says they have been hired by a for-eign lottery to distribute unclaimed prizes.

To claim the prize you have to pay an“administration fee,” or “taxes,” sometimesthousands of dollars.

Facts

• You do not receive any prize.

• If you do send the money you may beput on a mailing list for another scam.

Scam 3: Phony lawyers calling

You get a call from a telemarketer whoclaims to represent a law firm.

The telemarketer says you have won avaluable prize, but you need to pay taxesand a legal fee before you receive the prizemoney.

Fact

• You do not receive any money.

Scam 4: Canada Customs calling

Someone claiming to be a CanadianCustoms officer calls to say they are hold-ing a cheque for you worth tens of thou-sands of dollars of winnings in a foreignlottery, often from the United States orAustralia. They say you have to pay an“insurance fee” to get the money.

Fact

• Canada Customs officers never call toask you for money.

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Scam 5: Like to recover money you havealready lost in a foreign lottery?

Already lost money in a foreign lottery?The scam may contact you again.

They claim to be able to recover yourlost funds for a fee. The tactic is called a“recovery room” scheme.

Fact

• You do not receive any money.

Scam 6: Phony collection agencydemand letter

You may receive a demand letter from aphony collection agency, demanding pay-ment for lottery ticket purchases.

These letters threaten immediate legalaction if you don’t make the payment.

The elderly are a particular target of thisscam.

Fact

• In most cases, the victims of this scamhave never had any lottery debts.

Scam 7: Give us your bank accountnumber so we can deposit winnings

The caller may ask for your bank accountnumber or for a void cheque, so that theycan “deposit winnings” into your bankaccount.

Fact

• The scam will often use your bankaccount number to withdraw unauthor-ized sums of money from your account.

Scam 8: You have won if certainnumbers appear on your credit card

Under this scam you are told you have wona prize if certain numbers appear on yourcredit card.

Fact

When they have the credit card number,they charge unauthorized sums against theaccount.

Scam 9: Subscribe to our “winningnumbers services”

This scam asks lottery players to subscribeto a service that has an “impressive recordof picking winning numbers.”

They claim they have a computer withartificial intelligence or a fabulous mathema-tician on staff. They typically want you topay a fee of $10 to $20 to play the lottery.

Facts

• In most cases, the numbers sent tocustomers are selected at random

• Your name and address may go onmailing lists for other scams.

• Do not expect to get your money back.

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What the law says

• Under the Criminal Code of Canada it isillegal, in most circumstances, for indi-viduals or firms to sell lottery ticketswithout proper authorization. In addi-tion, many of these firms engage inmisleading advertising, which is illegal.

• It is against the law in BC to resell BClottery tickets out-of-province.

• Most foreign lottery offers do not comefrom foreign government agencies or lic-ensees. The activities of these companiesare not controlled by the government ofthe country in which they are located.

What you can do

1. Don’t send the money and don’t revealpersonal financial or bank accountnumbers.

2. Ask who to make a cheque out to andget their address. Then make a reportto (a) Project PhoneBusters, and(b) the Competition Bureau. See page25 for contact details.

Identity Theft

Identity theft happens when someonetakes the personal information of anotherperson and uses it without their knowl-edge or consent.

Identity theft is the fastest growingfraud in North America. This is a result ofthe growth of technology. The RCMP re-ceives up to 100 calls a day from Canadianvictims of identity theft.

Identity theft can happen to anyone. Bybeing aware of the issue and by managingyour personal information wisely, you canhelp guard against identity theft.

What does identity theft mean?

Identity thieves steal your name and otherpieces of personal information such asaddress, date of birth, Social InsuranceNumber (SIN), credit card numbers, bankcards, PIN numbers, driver’s licencenumbers, calling cards, birth certificates,passports, and mother’s maiden name.

Once they steal the information, iden-tity thieves invade your personal andfinancial life. Using this information, theymay:

• Drain your bank accounts, transfer bankbalances or open new accounts.

• Run up credit card debts or apply fornew credit cards.

• Apply for loans and other services orbenefits.

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• Search sources such as obituaries innewspapers, phone books, and publicrecords to obtain your information.

• Place bogus advertisements for employ-ment in order to obtain your informa-tion.

• Pretend they need your personal detailsso you can “claim” a prize or lotterywinnings.

Warning signs

1. You find withdrawals or transfers youdidn’t make on your bank statements.

2. Your credit card statements show itemsyou didn’t purchase.

3. You notice that not all of your mail isbeing delivered, or that your bills arenot arriving on time.

4. You get credit card statements foraccounts you don’t have.

5. You start getting bills from companiesyou know nothing about.

6. A creditor calls to say you’ve beenapproved or denied credit that youhaven’t applied for.

7. You apply for credit and are turneddown for no apparent reason.

8. A collection agency tries to collect on adebt that isn’t yours.

• Go on spending sprees involving thepurchase of vehicles, apartments, luxuryitems and vacations.

• Commit more crimes and, if arrested,use your identity.

How do they get the information?

Identity thieves can obtain your personaland financial information in a range ofways. For example, they may:

• Steal the information from your walletor purse, home, vehicle, or computer.

• Pose as a credible person (e.g., govern-ment official, bank employee, landlord,employer, creditor, service provider) toobtain your personal or financial infor-mation from you or from confidentialsources.

• Remove mail from your mailbox orredirect your mail.

• Tamper with automated teller machines(ATMs) and point-of-sale debit machinesso they can read your debit or credit cardnumber and personal identificationnumber (PIN).

• Retrieve personal information from gar-bage or recycling. This information mayinclude transaction records, copies ofcredit applications, insurance forms,cheques, financial statements and oldincome tax returns.

• Buy the information from someone whoworks where personal and/or financialinformation is stored.

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What you can do to minimize the risk

You can minimize the risk of someonestealing your identity. Here are some strat-egies you can use:

1. Immediately notify the issuer if any ofyour identity documents are lost orstolen.

2. Give your SIN only when absolutelynecessary, and do not carry your SINwith you.

3. Never give personal or financial infor-mation to anyone who phones oremails you unless you know who theyare or can confirm they are legitimate.Be aware that police and financial insti-tutions never call or email to ask foryour bank or credit card details or PIN.

4. Tear or shred receipts and copies of pa-pers you no longer need, such as oldtax returns, credit applications, insur-ance forms, physician statements andcredit offers you get in the mail.

5. Don’t leave personal information lyingaround at home, in your vehicle, at theoffice or on your computer. Don’t leavereceipts at an ATM, a gas station, oranywhere else where you are purchas-ing goods or services.

6. Carry only the documents and cardsyou will need during your day.

7. When you receive a renewal or replace-ment for a document that containsidentity information (e.g., your driver’slicence), return or destroy the old one.

8. Sign your credit and debit cards assoon as you get them. Cut up expiredand unused cards. A card may have ex-pired but the number may still be valid.

9. Keep key documents such as your birthcertificate, passport and social insurancecard in a safe place when you’re notusing them. Also keep other importantdocuments such as tax returns, yourwill, marriage certificate, diplomas anddegrees in a safe place.

10. Make a list of the names, account num-bers and the expiration dates of yourcards in a secure place. (Do not carrythis list in your wallet.) This will help ifyou need to alert your credit grantorsabout a lost or stolen card.

11. Know when your credit card and finan-cial statements and utility bills are due.Pay attention to credit card expirydates. Keep credit card, debit card andATM transaction records so you canmatch them to your statements.

12. Do not put more than your name andaddress on your personal cheques.

13. Lock your household mailbox if pos-sible. Pick up your mail promptly.When you are away, have a trustedperson pick up your mail.

14. Use passwords (for your credit card,bank account, etc.) that do not containeasily available information like yourbirth date, phone number or SIN.

15. On your computer, make use ofspyware filters, email filters and firewallprograms.

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16. If you use secure sites for financialtransactions, make sure you under-stand and follow all of the instructionsfor security when you enter and exitthe site.

17. Do not send personal and financialinformation by email. It may not besecure.

18. Make sure personal information isreally deleted before you sell, recycle ordiscard your computer. You may havedeleted files from folders but the infor-mation may still be on the computer’shard drive.

What you can do if your identity isstolen

Dealing with identity theft is time-consuming. You need support and infor-mation. This section suggests actions youcan take to stop the thief and regain con-trol of your identity documents.

If you suspect you have become a vic-tim, you need to contact financial institu-tions, credit issuers, other companies andcredit reporting agencies. Keep a log ofdates, person(s) that you speak with orwrite to, what they say, and how to contactthem again if you have more questions.

1. Report the incident to PhoneBusters.See page 25 for contact details.

PhoneBusters has an Identity TheftStatement you can use to send to finan-cial institutions, credit issuers, othercompanies and credit reporting agencies.You can download it from the websiteand make copies.

The Identity Theft Statement explainsthat identify theft has occurred, andthat you did not run up the debts orcharges. It includes a space where youcan provide the details that companiesmay need to begin an investigation.

2. Contact your financial institutions,credit issuers, and other companies.Tell them what has happened and askthem to investigate. Cancel any cardsthat were affected, and close anyaffected accounts.

– Find out if the company requireswritten documentation to begin inves-tigating your claim of identity theft.

– Do they accept the Identity TheftStatement?

– Do they require any additional infor-mation?

Send the company the documentationthey require as soon as possible.

3. Contact Canada’s major credit report-ing agencies: Trans Union Canada,Equifax Canada, and Northern CreditBureaus Inc.

Equifax:Telephone: 1-800-465-7166 (toll free)Website: www.equifax.com

Trans Union CanadaTelephone: 1-866-525-0262 (toll free)Website: www.tuc.ca

Northern Credit Bureaus Inc.Telephone: 1-800-532-8784Website: www.creditbureau.ca

Ask each agency to send you a copy ofyour credit report. The credit report

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may show if there are other companieswhere the identity thief has opened ac-counts or incurred debt in your name.

Discuss with the credit reportingagency whether to have a “fraud alert”placed on your file. A “fraud alert”means that creditors call you beforeopening any new accounts or changingyour existing accounts.

4. If your government-issued documentswere lost or stolen, contact the depart-ment or ministry, explain what hap-pened, and request new documents.

5. If you think your mail is being stolenor re-directed, contact Canada Post.

6. Report the incident to your local policedepartment. Ask the police to take areport, if possible. If a police report isavailable, include it in all your corre-spondence about the identity theft withfinancial institutions, credit issuers,other companies and credit reportingagencies.

Internet Scams

As a global method of communication, theInternet provides many new opportunitiesfor legitimate sellers. It also provides a newtool for consumer fraud. Old scams havegone online and new scams specific to theInternet have emerged.

Whether they’re misrepresenting goodsand services, making exaggerated claimsabout earnings potential, seeking advancepayment for bogus deals, or secretly hi-jacking your modem, scammers are just amouse-click away.

Here are some common Internet scams:

Scam 1: Web auction scams

Buying at online auction sites is fastbecoming one of the most common waysto purchase consumer goods. While thereare many reputable dealers, there are alsoscammers. Scammers offer attractive dealsto lure bidders. You may win the bid, sendthe money, and receive nothing. Or theitem may be of much lower quality thanadvertised. In addition, there may begroups suspected of driving up bids, or theprice may be hiked after the highest bidhas been accepted.

Remember: scammers open and closetheir business quickly, so sellers with nocomplaints registered on an auction siteare not necessarily legitimate.

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Scam 4: “Phishing” or brand spoofing

This scam is a form of identity theft.Scammers create email messages and webpages that mimic those of a bank, creditcard company, auction site or escrow ser-vice such as Paypal. The scammers sendemails randomly to “fish” for passwordsand financial data, hence the term,“phishing” (pronounced “fishing”).

These emails often ask you to “re-register”or “reactivate” an account. They provide alink to a website that appears to be thelegitimate site of the company or financialinstitution. The goal is to trick you intoproviding personal, financial, or passworddata. Once the scammers have your infor-mation such as credit card numbers, bankaccount information, social insurancenumbers, and passwords, they use it tocommit more fraud.

Scam 5: Bogus Internet services andaccess scams

There are numerous scams that take yourmoney for Internet services that you didnot order, or that you were told were free.

In one scam, you get a call from acompany offering you a free website for acertain period of time. The caller says youcan continue the service for a smallmonthly fee and cancel at any time. Thecaller obtains your contact informationand a description of your business. Thenyou receive a bill, whether or not youordered the service.

Scam 2: Nigerian scam

This scam, which has been around for longtime, now uses email addresses. It is some-times called the 4-1-9 scam, after thesection of the Nigerian criminal code thataddresses fraud schemes.

The email may come from anywhereoverseas, usually somewhere in Africa.

The email claims that an importantevent (e.g., a change of government) hasresulted in a person having a large sum ofmoney which needs to be transferred over-seas. The sender claims that if you helpwith the transfer, you can keep a portionof the money. If you reply to the email, youreceive official-looking correspondenceand are requested to provide your financialdetails, such as bank account information.Then something “goes wrong” and you arepressured to save the deal. The scammerdemands advance fees for various taxes,legal fees, transaction fees or bribes. Thereare many variations of the scam, but allaim to steal your money.

Scam 3: Computer equipment/softwarescams

These scams include sales of computerproducts that are never delivered or arenot as advertised. Many offers for free orlow-cost computers are scams. “Free” mayapply only to the hard drive, and the realcost may be hidden in a disclosure in fineprint. You may need to pay for all of theother components. Or you may need tosign a contract with a particular Internetservice provider for years of service.

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In another version of this scam, youreceive credit card or telephone charges forservices that are misrepresented as free.These often include charges for accessing“adult” materials. For example, you arepromised free access to the site if you giveyour credit card number to prove you areover 18. The scammer then runs upcharges on your card.

Scam 6: Modem hijacking

Modem hijacking is also known as “Internetdumping.” It only affects computer userswith dial-up connections. It happens whenpop-up windows or websites secretly uploada program to a person’s computer and in-structs the modem to dial a number to whichexpensive charges apply. You receive a phonebill that has very high long-distance ratecharges to remote places.

Telephone companies have responded tothis version of the scam by automaticallyblocking long-distance calls to suspectlocations

The scam has also been used to targetusers of sites where people prefer not togive personal data. Instead of being askedto give a credit card number, you are in-vited to use a discreet billing method suchas having the cost added to the phone bill.All you have to do is download the“viewer” software. Or you may be invitedto view for free if you install the “viewer.”

When you click to agree to the offer, afile downloads to the modem, which trans-fers you to an expensive long-distancenumber. The charges show up on the yourtelephone bill.

Scam 7: Online sales scams

The Internet provides endless opportuni-ties for selling products, with sales ofeverything from T-shirts to toys, calendarsto collectibles. If a scam is involved, theitem you purchase online may never bedelivered or may not be as advertised. Oryou may be asked to pay an advance feeand receive nothing.

Sales scams most often arrive on yourcomputer as unsolicited bulk email (“spam”)or as “pop ups” online. Many are versionsof the same old scams.

Here are eight common online salesscams:

1. Pyramid schemesYou are told you can make money throughthe products and services you sell, as well asthose sold by other people you recruit to sell.

2. Work-at-home scamsYou are given extravagant promises of highearnings. You can “use your home PC tomake money fast in your spare time.” Allyou have to do is pay money for informa-tion, kits or materials.

3. Phony prize promotionsYou receive an electronic certificate con-gratulating you on “winning” a fabulousprize, such as a vacation or money. Somesay you have been “specially selected” forthis opportunity.

4. Health care products and services scamsYou are invited to buy pills to let you loseweight without dieting or exercise, and are

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offered cures for everything for hair loss toimpotence to cancer.

5. Chain lettersYou’re asked to send a small amount ofmoney to each of four or five names on alist, replace one of the names on the list withyour own, and forward the revised message.The letter may claim that the scheme hasbeen approved by the government.

6. Investment scheme scamsInvestment schemes promise very highrates of return with no risk. The scammerstell you they have vital inside informationfor this unique opportunity. They promiseto guarantee the investment or buy it backafter a certain period of time. One versionof this scam claims to be looking for in-vestors to start an offshore bank. Anotherversion invites you to make an initial in-vestment in a day-trading system to realizehuge profits immediately.

7. Cheap rate credit card deals, guaranteedcreditYou are offered cheap-rate credit card dealson payment of upfront fees. Another versionof the scam offers guaranteed credit cardsor home loans regardless of your credit his-tory. Often the scammer claims that “offshore banks” are involved. Sometimes theseoffers are combined with pyramid schemes.

8. Credit repair: wipe your credit recordcleanCredit repair scams make a phony offer towipe negative information from yourcredit file so you can qualify for a loan, amortgage, and credit.

What you can do

1. If you are buying something at a repu-table online auction site, always checkout the references for the seller andonly buy from sellers who have goodreferences. Major online auction sitesoften allow you to send payment to areputable third party (an “escrow” ser-vice such as PayPal), not directly to theseller. Be sure to check out the escrowservice as well as the seller, since thereare scam escrow services online, too.

2. Always use your credit card for onlineservices, since this provides a papertrail to track down a bad transaction.Be sure your initial purchases involveonly small amounts of money and thatyou shop at reputable sites.

3. Never give your personal informationto a company that already has it,especially if the request for that infor-mation comes by email. Contact thecompany independently. Use thecompany’s contact information ontheir official website or on a bill.

4. Read your credit card statements andphone bills carefully. Question unau-thorized charges on your credit cardbill by calling the bank that issued thecard. Question unexpected charges onyour telephone bill by calling thephone company.

5. Check out online businesses just ascarefully as you would any other busi-ness. Demand clear conditions of sale,cost of shipping and handling charges.When buying goods or services off the

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Internet, write down the merchant’sphone number and address so you cancall if something is wrong. Don’t con-duct business with an anonymous user.Don’t send your payment to a postoffice box. Be skeptical of a companythat does not clearly state its name,street address and telephone number.Check it out with the local BetterBusiness Bureau. See page 25 for con-tact details.

6. Be wary of a request for advance pay-ment by cash or certified cheque ormoney order. Never send an advancepayment to collect a prize.

7. Read the fine print. Don’t downloadany program to access a so-called “free”service without reading all the disclo-sures carefully. Scammers sometimesbury disclosures about cost in fineprint in the hope you won’t see them.

8. Make sure the website is secure if youare buying online and you need to pro-vide your credit card number. Look forthe letter “s” (“secure”) following httpin the website address and an unbrokenkey or padlock symbol to ensure it issecure.

9. Do not open spam (unsolicited email).While some spam messages are legiti-mate sales offers, others are the sameold scams.

10. Avoid buying items offered in bulkemail (“spam”).

11. Make sure you read and understand awebsite’s privacy notice before you giveout your email address.

12. Be cautious if the seller uses a freeemail service, such as Hotmail, Yahoo,etc. Of course, most people who usethese services are honest. However, it isvery easy for the seller to keep his orher real identity and informationhidden.

13. Save copies of all of the emails andother documents involved in the trans-action. Then, if you discover you havebeen scammed, you have documenta-tion to help you deal with the problem.

14. Be wary of offers that make extrava-gant claims about performance orearnings potential. Avoid plans thatrequire you to recruit distributors orbuy inventory.

15. Use the blocking tools that are offeredby your operating system, your Inter-net Service Provider (ISP) and youremail service.

16. Use discretion when making publicposts on the Internet that include youremail address.

17. Use common sense and trust yourintuition. If you have a funny feelingabout an item, don’t buy it.

18. Report Internet scams to the BetterBusiness Bureau. See page 25 forcontact details.

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Loan and Credit Scams

Bogus loan or credit offers are oftenpitched to people who need extra money.You may see the ads in the classified sec-tion of the newspaper, or on bulletinboards, or on the Internet. Or you mayreceive a phone call from a telemarketer.

Scam 1: Advance fee loan scams

You are told you are “guaranteed” or highlylikely to get a loan. All you need to do ispay an upfront fee to process the loan.

Facts

• Bogus fee loan companies don’t send thepromised loan. Your fee is not refunded.You get a letter saying that your loanapplication has been denied.

• Legitimate lenders never “guarantee”that consumers will qualify before acredit check is done.

What the law says

In BC it is against the law for a company tocharge an advance fee to obtain a loan,even if that fee is described as the first orlast month’s payment.

What you can do

1. Apply for loans through local banksand credit unions. Know who you’redealing with.

2. If you have poor credit, it is unlikelythat any legitimate bank or other

financial institution will give you aloan. Your credit history is one of themain criteria they use to determinewhether you will be able to repay a loan.

3. If you can’t get a loan yourself, a friend,relative or employer may be willing toapply with you for a loan. Warning: ifyou co-sign for someone else’s loan,you are equally responsible for thedebt. If the other person can’t makepayments on time, you can be heldliable for the loan, and your creditrecord will be affected.

4. Get free or low-cost help with creditproblems. If you’ve got bad credit or nocredit, get advice on how to build agood credit record. See page 25 forplaces that can help.

Scam 2: Bogus credit cards

This scam claims “guaranteed approval”for a credit card, regardless of your creditrating. They want you to pay an upfront“processing fee” to get the credit card.

The pitch might be something like this:$5,000 unsecured credit card, 6.95% rate,guaranteed approval regardless of yourcredit history (bankruptcies and foreclosuresokay)!

Facts

• Few victims of these scams ever receivecredit cards.

• Those who do get a card find that thereare additional processing and annual feesthey were not told about.

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Scam 3: Wipe your credit report clean

The pitch goes something like this:Credit problems? You can now wipe yourcredit report clean of bankruptcies, judgments,foreclosures, liens, and late payments! ANDIT’S 100% LEGAL!

Usually the scam advises you to disputethe accurate negative information on yourcredit report or to set up a new creditidentity for yourself.

Facts

• There’s no legal way to erase accuratenegative information from your creditrecord.

• Legitimate financial institutions don’tissue credit cards without first checkingyour credit. Ignore these offers.

What you can do

Report suspected frauds to the Better Busi-ness Bureau and to Project PhoneBusters.See page 25 for contact details.

Scam 4: Abandoned property

Under this scam, a company contacts youand offers information on how to collectthousands of dollars in unclaimed prop-erty. They say that all you have to do issend them a fee.

Fact

• You send off the fee and receive nothing.

• In some cases, all you get is a list of banksyou can then send an application to.

• In other cases, consumers who gave outtheir chequing account numbers foundmoney had been debited from theiraccount without their permission.

• In offers that claimed that the cardwould be issued by an “offshore” bank,the credit card never showed up and thebank did not exist.

What the law says

It is illegal to make false or misleadingstatements about providing credit cards.Any company that promises approval andcharges a fee is breaking the law.

What you can do

1. If someone offers you a credit cardregardless of your credit history, bewary. It’s probably a scam.

2. Don’t give out your bank account num-ber to anyone unless you intend to havemoney withdrawn from your account.

3. Ask for written information about acredit card or any other offer to bemailed to you.

4. If the seller insists that you have toapply immediately, do not apply. Alegitimate financial institution will bejust as happy to consider your applica-tion tomorrow.

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What you can do

If you wish to seek unclaimed property —dormant accounts in financial institutions,insurance and utility companies, safe de-posit boxes and trust holdings — contactthe local Better Business Bureau for infor-mation.

What the law says about dormant accounts

The federal Bank Act requires that all char-tered banks begin trying to contact ownersof accounts after they are inactive for twoyears. If there is no response, the banksends a second letter after five years.

After nine years, the details are publishedin the Canada Gazette before the banktransfers the funds to the Bank of Canada.Amounts of over $500 are retained indefi-nitely and can be claimed at any time.

To search the database visit Bank ofCanada’s website: http://ucbswww.bank-banque-canada.ca; or contact the DormantAccount Section at:Unclaimed Balances Services,Bank of Canada,234 Wellington, Ottawa, ON, K1A 0G9.Telephone: 888-891-6398 /Fax: 613-782-7802.

The Better Business Bureau points outthat some companies charge up to 40% ofyour bank balance to make this search.This is not illegal, but you can easily do thesearch yourself for free.

Prize and Contest Scams

You may find out by mail or over the phoneor by email that you “have won first prize”or that you “have won first place in a con-test” for a valuable item such as:

• a deluxe vacation for two

• a car

• a diamond

• a TV-VCR

Or they may not even tell you what theprize is.

Some scams use envelopes announcingthat You Have Won and It’s Your Lucky Day.Some use names that resemble official or-ganizations, such as the lottery or a parceldelivery service. Others use an envelopethat looks like it contains a telegram orgovernment cheque.

Very often you will find that the prize:

• is worthless, or

• costs less than you have to spend to getit, or

• does not exist at all.

Ways these scams try to get your money

1. You have to provide your credit cardnumber to cover the shipping and han-dling fee, lawyer fees etc. or “taxes” toprocess your winnings. This may be forjust a small amount – about $3 or $4.

They want you to think, “It isn’t muchmoney, so why not risk it?”

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If you receive a call telling you that youhave won a prize but you have to pay afee, this is a scam. The caller may describethe fee as a “filing fee” or a “processingfee” or an “administrative fee.”

2. You have to call a “900” phone numberto find out what you have “won.” If youcall a “900” number you are paying forthe call.

3. You have to call a toll-free number (forexample, an “800” or “888” number)that directs you to a pay-per-call “900”number.

4. You have to make “a small purchase”(typically a few hundred dollars’ worthof small items such as pens, key chains,or light bulbs) to get the prize.

5. You have to provide your credit cardnumber or chequing account numberfor “verification” purposes. As soon assomeone has your credit card numberthey can use it; they do not need tohave your signature.

6. You have to send a certified cheque.

7. You are pressured to buy “on the spot”because the prize is available for a“limited time only.”

Facts

• If you have to pay to receive your “prize,”you haven’t won anything.

• If you have to purchase products, providea credit card or other account numbers,or send a fee in order to receive your prize,it is not a prize.

• What the scam may be after is yourname to add to “sucker lists” that it sellsto others.

• If someone else - your son or daughter,for example - makes a call to a “900”number on your telephone, you areresponsible for the costs.

• If you give out your chequing accountnumber or send a certified cheque,you’re probably out of luck.

What you can do

1. Don’t pay to win or enter. Buyinggoods or services won’t increase yourchances of winning. Prizes are sup-posed to be free.

2. Don’t call a 900 number. Calling a 900number is not a free call. If you arerequired to call a 900 number, you arebeing forced to pay to win.

3. Never give your credit card number,bank information, or social securitynumber to someone who claims theyneed it to “verify your eligibility” or to“deposit winnings” in your account.

4. Don’t send a company money for taxes.Only the government collects taxes onprize winnings.

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Pyramid Schemes

“Pyramid” schemes aim for quick profitsby selling the right to recruit other peopleto the scheme.

In a pyramid scheme, you are asked topay money to become a “distributor” of aproduct or service.

Usually you are recruited through ameeting, where you are pressured to pay(“invest”) a large amount to become a“distributor.”

You then recruit a number of otherdistributors. Each of those distributors issupposed to recruit the same number ofdistributors, and so on.

How to spot a pyramid scheme

The focus is on profits you can make bysales to new recruits who buy the productsin order to participate in the scheme.

There is more emphasis on recruitingthan on selling the products or service.

Pyramid schemes are confusing. Theylook a lot like “multilevel marketing,”which is legal in Canada.

Under “multilevel marketing” peoplesell consumer products, usually in custom-ers’ homes. The products are supplied by amultilevel marketing company.

You can obtain information about multi-level marketing from Industry Canada: 1-800-348-5358.

While multilevel marketing focuses onselling products or services, the pyramidscheme focuses on recruiting more andmore people.

What the law says:

Pyramid schemes are illegal in Canada.

Facts:

• Only the people at the top of pyramidmake any money.

• Most of the people who invest money inpyramid schemes lose all of it.

• Do not expect to get your money back.

Multilevel Marketing:Lily has become a distributor for LipstickLady. Lipstick Lady is a brand of cosmet-ics that is sold door-to-door. Lily keeps apercentage of each sale she makes of Lip-stick Lady products.

Pyramid:You can make huge profits from a miraclenew laundry product, Blue Bomber!When you become a distributor, you signup other sales people and are guaranteedto make at least $5000 a month!

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Why pyramid schemes collapse

Suppose one person recruited six distribu-tors, each of whom, in turn, recruited sixothers. Follow this through six steps.

Here’s how many people would have tobe recruited:

Number of People at Each Levelof Pyramid Scheme

Level Number of people

first 6second 36third 216fourth 1,296fifth 7,776sixth 46,656

For the pyramid scheme to work therewould have to be an endless supply ofrecruits. As soon as the supply runs out,the pyramid collapses.

What you can do

You can report a suspected pyramid schemeor get help deciding if it’s a pyramid orlegitimate multilevel marketing by phoningthe Better Business Bureau or the BC Busi-ness Practices and Consumer ProtectionAuthority. See page 25 for contact details.

Travel Scams

Need a holiday?Tempted by those glossy brochures?

There are bargains out there, but you needto be a careful consumer. Here are some ofthe major travel scams to watch out for:

Scam 1: You have won a “free holiday”

You get a letter in the mail or a phone callor an email. It goes something like this:Congratulations! You have just won a freeholiday in an exotic tourist destination.

Scam 2: “Bargain” holiday certificatesor packages

For example: Holiday cruise for four foronly $500!

To get the bargain, the scam says youhave to:

• let the travel agent book the flight fromyour home to the port of departure forthe cruise; or

• join a travel club; or

• attend a time-share presentation.

Facts

• Most people who join a bogus travel clubor purchase a bogus holiday certificatenever receive anything.

• Typically, the scam will use delays soyour offer expires before you can take atrip. Or the travel dates you prefer willbe unavailable.

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• Travel agents in BC must have a licenceto operate.

• Licensed travel agencies contribute tothe BC Travel Assurance Fund.

• This fund is used to compensate travel-ers if the travel services they have paidfor become unavailable.

• This fund is available only if you havepurchased your travel arrangementthrough a licensed BC travel agent. Notethat this applies to holiday travel, notbusiness travel.

• For more information about travelservices and the Travel Assurance Fundcontact the Business Practices andConsumer Protection Authority:Phone: 604-320-1667Toll Free: 1-888 564-9963

What you can do

1. Book through a BC registered travelagent so you are protected by the TravelAssurance Fund.

2. Do not give out your credit card num-ber, or chequing account number, orsend money until you get the full offerin writing with all costs and conditions.

Find out if the prices are quoted inCanadian or US dollars.

Find out exactly what the holiday pack-age contains in terms of transportationand accommodations and for howmany people.

3. Do not be pressured by any companyto make an immediate decision.

• There will be hidden costs for transporta-tion and accommodations. Many offersinclude only hotel costs.

Examples:

• The cruise may be discounted, but theflight to where the cruise leaves frommay be vastly overpriced.

• A holiday certificate may be for twoadults but only one adult’s airfare is paid.You have to buy the other airfare at thehighest rate.

• There may be fees, such as port fees forcruises, which have not been mentioned.A deposit is usually required which isonly refundable upon completion oftravel.

• The time-share presentation may just bea high pressure sales pitch urging you tobuy now!

• The trip is often not what you expected.People who have booked luxury cruiseshave been given a day on a barge! Yourfive-star accommodations turn out to bea dump.

What the law says

• If you have signed up for a travel club orholiday certificate in BC, you have sevendays to cancel. This is a “cooling-off”period required by law. Travel clubs inBC are limited to 2-year memberships.They are not “lifetime.”

• If you cancel within seven days, the com-pany is required to return your refund.

21

4. Get the names of specific hotels, air-ports, airlines and restaurants that are apart of the package. Contact them todouble-check the arrangements (Findthe phone numbers yourself. Do notuse a number provided by the company).If they’ve never heard of the firm offer-ing you the trip, don’t sign up.

5. Ask if the deposit is refundable, andhow much is required later.

6. Be skeptical if you’re told that you have18 months or more to take the trip. Bythe time you try to make reservations,the company could be out of business.

7. Discuss with a local travel agent what asimilar holiday would cost before youpay a deposit or make a purchase.

8. Call your local Better Business Bureauto check on the travel agent’s record.See page 25 for contact details.

Work Scams

Looking for work?Need more money?

If you see a job offer or business oppor-tunity that looks too good to be true, itprobably is.

Here are some work scams to watch outfor.

Scam 1: Work at home, make hugeprofits

The offer may be to do such things as:

• stuff envelopes,

• clip coupons,

• assemble crafts, or

• enter data on a computer.

The ad may be on television or in thenewspaper. Or you may get a phone call ora letter, or see a notice at the local commu-nity centre or even on a telephone pole.

Example: Make $50,000 in less than 90days from home!

Warning signs

This scam often:

• Demands you buy something in order tostart the program.

• Promises you guaranteed markets, hugedemand, big profits, and big earnings forpart-time work.

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• Wants money to include you in theirpromotional agency book.

What the law says

Modelling agencies that offer courses mustbe registered with the BC Career TrainingInstitutions Agency.

What you can do

Check with the Better Business Bureau tosee what they know about the agency.

Phone the BC Career Training Institu-tions Agency to see if the agency is regis-tered with them. Phone 604-660-4400.

Scam 3: Work overseas schemes

You may see an advertisement for overseasemployment.

The offer may be for a job:

• on a cruise ship, or

• with an airline.

Warning signs

This scam often

• Claims to guarantee employment.

• Claims to have access to confidentialinformation about work available.

• Wants you to send payment in advanceto receive the information.

Facts

• No employment service can guarantee ajob.

Fact

The Better Business Bureau has notreceived any reports that work-at-homeschemes produce income.

What the law says

It is illegal for an employer to require aprospective employee in BC to pay a fee inorder to obtain a job.

Legitimate companies usually do not placeopen ads for work-at-home programs anddo not require any type of payment inadvance.

What you can do

1. Learn as much about the company,product and market potential as pos-sible. Get everything in writing. Checkwith the Better Business Bureau to seewhat they know about the company.

2. Get a complete description of the workinvolved before you send any money.You should never have to pay for a jobdescription or for needed materials.

Scam 2: Bogus modeling and talentagencies

Watch out for bogus modelling or talentagencies that “guarantee” huge or instantsuccess.

Warning signs

This scam often:

• Asks you to pay for acting classes, work-shops, or photographs.

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• The access to “confidential employmentopportunities” may be no more than alist from free sources such as govern-ment lists or other newspaper ads.

What you can do

If you want to work in any country over-seas, contact the embassy of that country.They will tell what you need to knowabout permits etc.

Scam 4: Bogus franchises

Some franchises are legitimate businessopportunities. Others are scams.

What is a franchise?

A franchise is where you buy the right tosell a company’s goods and services.

Examples:

• “chains” such as many fast food outlets

• vending machines

• magazine racks

• video game machines.

A business opportunity is considered a“franchise” if:

1. You will sell or distribute goods orservices that are supplied by either thecompany or a designated supplier.

2. The company will help you by securinglocations or sites for the vendingmachines or display racks.

3. You are required to pay the company asum of money when you sign the con-tract or within a set period of timeafter you begin operations.

Warning signs of a franchise scam

• High pressure sales tactics. If you arepressured to sign immediately “becauseprices will go up tomorrow,” or “anotherbuyer wants this deal,” do not sign.

• Be wary if the salesperson makes the jobsound too easy.

• Promises of extraordinary profits withvery little risk are usually too good to betrue.Example: No experience required. Noselling. Earn $5,000+ per month.

• Excessively high start-up fees.

• Evasive answers to your questions. If aseller won’t agree to put verbal promisesin writing, avoid this seller and look for alegitimate company.

• With franchise scams you will find thatpromoters:

– Do not deliver the equipment theypromised.

– Do not provide the support servicesthey promised in the sales pitch, such asrepairing or replacing damaged items.

Tips for People Interested in Buying aFranchise

• Shop around. Compare franchises withother business opportunities.

• Talk to people who have franchises. Findout how many sales people are in thearea and whether you will have an exclu-sive territory.

• Ask the seller for a list of the names andaddresses of current owners and opera-tors. The company’s list of selected

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references is not a substitute for a list offranchise owners. Be very wary if theseller provides recommendations frompeople but never gives you a way to con-tact those people yourself.

• Ask to see a Uniform Franchise OfferingCircular (UFOC) and review it carefully.This document lists current franchisees,those who have left or quit, and givesfinancial statements of the business. Itshould give you the true picture of thefranchise operations beyond the glossysales brochures.

UFOCs are not legally required in BC,but demand one anyway. UFOCs arerequired by law in most parts of the U.S.Alberta has also introduced a version.

• Get professional advice from a lawyerand/or accountant or business advisor.Go over all the details of the franchisesystem. Always question where the fran-chise company makes its money.

• Get the seller’s promises in writing. If thesalesperson says one thing but the writ-ten contract says nothing about it or sayssomething different, the written contractis what counts.

• Sales claims about successful areas ofbusiness — “Be a part of our five billiondollar industry,” for example — mayhave no bearing on your likelihood ofsuccess. Once you buy the business, youmay be competing with franchise ownersor independent business people withmore experience.

• Before you sign any contract, take it to alawyer who is familiar with franchiseoperations. Be sure you understand whoowns what.

• Report any problems to the Better Busi-ness Bureau. See page 25 for contactdetails.

• For more information, contact Dial-A-Law, a service that provides legalinformation on tapes. Select the tape,Business Opportunity Schemes,Franchises, Pyramids and Chain Letters(Tape 259). See page 25 for contactdetails.

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Sources of Help

It’s not always easy to spot scams and newones are invented every day. If you suspectthat you may be a target of a scam, remem-ber that you are not alone.

Here are places that can help if you wantto report a scam or if you need more infor-mation.

Better Business Bureau of Mainland BritishColumbiaConsumer line: 604-682-2711Website: www.bbbvan.org

Better Business Bureau of VictoriaConsumer line: 250-386-6348Website: www.bbbvanisland.org

BC Business Practices and ConsumerProtection AuthorityInformation about how to prevent con-sumer problems and what to do if youhave a problem.Telephone: 604-320-1667;1-888-564-9963 (toll free)Website: www.bpcpa.ca

Credit Counselling Society of BCThe Credit Counselling Society of BCprovides assistance with debt problems.Telephone: 1-888-527-8999Website: www.ccsbc.org/help.shtml

Dial-A-LawDial-A-Law is a library of practical legalinformation. It is operated by the BCBranch of the Canadian Bar Association.

You can access Dial-A-Law in two ways:1. by phone, as recorded scripts

2. in writing, on the Dial-A-Law website

Telephone 604-687-4680 in the lowermainland or 1-800-565-5297 elsewhere inBC. Or go to www.bccba.org and click onVisitors and then Dial-A-Law. Look for the“Consumer” menu.

PhoneBustersPhoneBusters is a national anti-fraud callcentre jointly operated by the OntarioProvincial Police and the Royal CanadianMounted Police. PhoneBusters plays a keyrole in educating the public about specificfraudulent telemarketing pitches.Telephone: 1-888-495-8501Fax: 1-888-654-9426Website: www.phonebusters.comEmail: info@phonebusters.com

Competition BureauThe Competition Bureau of IndustryCanada deals with complaints about scamsand also provides information.Telephone: 1-800-348-5358Website: www.cb-bc.gc.caEmail: compbureau@cb-bc.gc.caAddress: 50 Victoria Street,Gatineau, Quebec K1A 0C9

Canadian Consumer Information GatewayThis federal government website includesvaluable tips on how to protect yourself invarious consumer situations, such as shop-ping on-line, investing, dealing with tele-marketers, door-to-door salespeople, orrenovation contractors, having your carrepaired, and much more.Website:www.ic.gc.ca/cmb/welcomeic.nsf/ICPages/SubjectConsumers#consumergateway

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NOTES

The People’s Law School

The People’s Law School is a non-profitsociety whose purpose is to provide BritishColumbians with reliable informationabout their rights and responsibilitiesunder the law.

This booklet is available under Publica-tions on the People’s Law School website:

www.publiclegaled.bc.ca

Credits

This booklet was prepared with the assis-tance of the Better Business Bureau of BCand the Canada Revenue Agency.

Writer: Gayla ReidProofreader: Bernice DeWitt

Thanks to our funders....

The People’s Law School thanks itsfunders for their generous support.They include:• Law Foundation of BC• Notary Foundation of BC• Department of Justice Canada• Province of British Columbia• Ministry of Attorney General of BC• Royal Canadian Mounted Police• City of Vancouver• Canadian Heritage• National Crime Prevention Centre

You should not rely on this bookletfor legal advice. It provides generalinformation only.