TORONTO – Canadians lost over $638 million to fraud in 2024, with cases nearly doubling in the last decade. We’re talking about online fraud, or “scam”: it’s a phenomenon that’s literally rampant. And according to technology expert Carmi Levy, artificial intelligence is further fueling the increase, and this growing trend is creating a crisis in financial services that will likely get even worse.

According to the Canadian Anti-Fraud Centre (CAFC), reported losses have exceeded $2 billion since 2021, though it’s estimated that only 5-10% of fraud cases are reported. In a February press release, the Competition Bureau stated that impersonation fraud—when scammers pose as a bank representative, member of a well-known organization, or another individual to trick people into providing sensitive information or money—is one of the fastest-growing types of fraud.

CTV reports (here) on the case of Claudine Jeanson of Granby, Quebec. In June, she was contacted on Facebook Marketplace by someone interested in purchasing an item she was selling. The person asked for her cell phone number to send $100 via wire transfer. The link didn’t work, and she agreed to meet the buyer in person. But a few minutes later, Jeanson received a call from someone claiming to be a “representative of a Royal Bank of Canada (RBC) anti-fraud agency…”. The call, on Claudine’s phone, appeared to be coming from RBC, and the person on the other end warned her that someone was attempting to withdraw $10,000 from her account and instructed her to wire transfer the $10,000 to a supposedly secure account while the bank was handling hers. Claudine opened the banking app and noticed that a contact named “RBC” had already been added, so she sent the transfer, confident that the bank was handling her. But, unfortunately, it was not the bank that was handling her, but a scammer. And those $10,000 ended up who knows where.

After the incident, Claudine contacted RBC and discovered that, before she sent the wire transfer, there had already been three attempts to withdraw $10,000 from her credit line, but the bank had blocked them. So, in effect, the bank blocked those three attempts, but not the transfer of the same amount. Why? Responding to CTV, the bank in question stated that it investigates fraud on a case-by-case basis but could not comment on Claudine’s situation.

“We remind clients that an RBC representative or employee will never ask a client to share one-time passcodes, to send money to secure their profile or to share the link to an e-transfer deposit” the bank said. “Additionally, RBC will never ask to access a client’s online banking to add payees on their behalf or ask clients to participate in an undercover operation to prevent a fraud…”.

CTV asked RBC about its process for blocking transactions, but the bank did not provide details. And, according to technology expert Carmi Levy, the continued rise in these types of scams suggests that current measures are insufficient. “It’s not enough to say after a fraud has occurred, ‘Well, you should not have handed that information over. You should have ended the call.’ The financial services industry and Canadian banks need to be far more proactive, far more aggressive at educating their customers and being front and centre in terms of fighting this scourge” Levy said. Yes, a scourge: according to the CAFC, approximately 34,642 victims reported fraud in 2024.

Levy emphasized that banks place the onus on clients to act as the final line of defence in recognizing that any unsolicited requests for authentication information should be treated as an “enormous” red flag. “They will not be compensated if they, in fact, follow through on that” he said. Levy said stronger rules are needed to ensure financial institutions have proper fraud-prevention tools and provide clear, centralized resources for customers. And he also called for greater accountability and government legislation to protect consumers when banks fail to prevent fraud. And stop this spreading plague.

Photo by Glenn Carstens-Peters from Unsplash