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The Alarming Rise of Scams Targeting Older Adults

There is an alarming upward trend of scams which are targeting older and vulnerable adults in Canada. The rise of artificial intelligence (“AI”), social media, and cryptocurrencies have not only exacerbated the situation but have also empowered fraudsters to expand the scope of their nefarious activities. In an attempt to raise awareness, the following documents some recent developments.

In 2021, the Canadian Anti-Fraud Centre (“CAFC”) reported that $380 million was lost to fraud while 2022 figures dramatically increased to $531 million. As of June, 2023, that number has already reached $283.5 million.[1]

Predatory lending scams

In August, the Law Society of Ontario (“LSO”) raised the alarm on exploitative loan agreements by releasing a notice to the professions.[2] The notice came on the heels of well-publicized reports of vulnerable home owners falling victim to unfair door-to-door sales which left them with either the registration of a Notice of Security Interest (“NOSIs”) or high-interest mortgages against their homes.[3]

Earlier this year, a 78-year old victim of a mortgage fraud brought a motion for an injunction to prevent lenders from taking any steps to enforce the mortgage until trial. In Sanders v Canada’s Choice Investments Inc.,[4] the older adult lived alone with Alzheimer’s in her semi-detached home on a modest income of less than $60,000 per year. In May of 2021, fraudsters visited her home and, through a series of misrepresentations and pressure tactics, persuaded her to take out a $500,000 one-year loan secured by a first mortgage on her home. Through her litigation guardian, she commenced an action, asserting that the mortgage is unconscionable. The court sided with her and granted the injunction on the grounds that she made out a strong prima facie case that the mortgage is unconscionable and that she was induced to enter into it through fraudulent misrepresentations.[5]

Similarly, Sherri Clarke, an older adult living with multiple sclerosis, ended up paying $192,500 for renovations to her home after NOSIs registered on her property were paid through a $570,000 mortgage with a 12.99 per cent interest rate. Clarke, who was assured by a door-to-door salesperson that the work wouldn’t cost her anything, did not see anything wrong with the offer because she had previously received renovations from the charity March of Dimes Canada to make her home accessible and safe.[6]

In May of this year, a lawyer who acted for a mortgage lender, Canada’s Choice Investments (“CCI”) and a related company, Canada Choice Capital (a NOSI lender), in at least 31 transactions received an interlocutory suspension while the Law Society’s disciplinary panel conducts a hearing on the merits.[7]

In October of this year, a second lawyer who had represented senior borrowers in about 20 transactions involving CCI received an interlocutory suspension. In that case, the Law Society’s investigation determined that the lawyer “never cautioned the clients about the onerous terms of the mortgages or the extremely high cost of lending.”[8]

Romance scams

Romance scams are particularly insidious since they involve fraudsters preying upon older adults seeking companionship. Often, the fraudster is from another country, making it harder to track and prosecute their crimes. However, there are a number of recent cases where fraudsters operating in Canada have been arrested and charged with crimes. In 2021, the CAFC reported that victims to romance scams lost $64.6 million to fraudsters.

Earlier this month, a 26-year-old Toronto man was arrested and charged in connection with an alleged online romance scam which defrauded a 73-year-old victim of over $250,000.[9] The suspect claimed he owned an ‘Oil Rig’ in the Middle East and urgently needed money. The victim, who only communicated with the suspect electronically, read a media report about romance scams and realized she had become a victim herself.

In October of this year, the Grenville County Detachment of the Ontario Provincial Police arrested and charged at 37-year-old resident of Toronto after defrauding an older adult out of approximately $27,000.[10]

In an extreme case, a grandmother from Ontario was not only bilked out of over $200,000 to a romance scam but also spent nearly nine months in a Hong Kong prison on drug smuggling charges. The Barrie, Ontario woman was duped into moving clothing containing cocaine (hidden in buttons) from Ethiopia to Hong Kong after her fraudster paid for and sent her tickets to Addis Ababa, Ethiopia.[11] When she arrived, the fraudster sent her the clothing by delivery and asked her to travel with them to meet him in Hong Kong.

Update to the ‘Pig Butchering’ Scam

A highly sophisticated romance and cryptocurrency investment scam originating from China has been targeting older adults. This scam, known as the sha zhu pan or ‘butchering the pig’ scam, involves fraudsters, mainly working for organized crime gangs who use social media and AI to pose as attractive professionals or entrepreneurs looking for love. They convince their victims to build a future together by investing in cryptocurrency.[12]

Earlier this month, the United States Department of Justice seized nearly $9 million worth of Tether tokens which were linked to an organization that exploited more than 70 victims through the “pig butchering” scam.[13] The organization was discovered through an investigation into an international human trafficking syndicate.[14]

Talking to your loved one’s about scams

As reported by Adrienne Vickery, Associate Vice President, North American Fraud Operations, Customer, Colleague & Strategic Initiatives at TD Bank Group, “Seniors are often targeted by fraudsters because they are perceived to have more wealth and presumed to be less knowledgeable about navigating online.” But what can be done to help prevent these frauds?

TD recommends that loved ones have a conversation with their loved ones about how fraud can impact them. They highlight important tips such as:

  • Learning to recognize common scams by talking to the older adults in your life about how to spot some of the more common types of scams;
  • Talking to friends and family about how they can protect themselves including reminding them of the importance in not sharing personal or financial information with someone over the phone or online;
  • Encouraging older adults to monitor their finances by suggesting best practices such as regularly reviewing account activity or signing up for text message fraud alerts from their bank; and,
  • Letting them know that it’s okay to ask for help through ongoing conversations that remind them that if something seems strange or too good to be true, its okay to ask someone for a second opinion.[15]

[1] Canadian Anti-Fraud Centre, “The impact of fraud so far this year” (November 8, 2023), accessed online: https://www.antifraudcentre-centreantifraude.ca/index-eng.htm.

[2] See Brett Book, “Notice to the Professions: Exploitative Loan Agreements” (August 31, 2023), WEL Newsletter, accessed online: https://welpartners.com/blog/2023/08/notice-to-the-professions-exploitative-loan-agreements/.

[3] See Caitlin Taylor, Stephanie Kampf, David Common, and Katie Swyers, “Elaborate scam leaves seniors with high-interest mortgages they didn’t want or understand” (March 31, 2023), accessed online: https://www.cbc.ca/news/business/seniors-mortgages-marketplace-1.6795104.

[4] 2023 ONSC 196 [Sanders].

[5] See Sanders, supra at paras. 73-74.

[6] Stephanie Kampf, David Common & Katie Pedersen, “Man alleged to be behind high-interest mortgage scam living large on social media” (November 24, 2023), CBC Marketplace, accessed online: https://www.cbc.ca/news/business/man-alleged-to-be-behind-high-interest-mortgage-scam-living-large-on-social-media-1.7036852.

[7] See Law Society of Ontario v. Harrison, 2023 ONLSTH 80.

[8] Law Society of Ontario v. Jain, 2023 ONLSTH 132 at para. 13.

[9] Peel Regional Police, “Arrest Made in Online Romance Scam” (November 9, 2023), accessed online: https://www.peelpolice.ca/Modules/News/index.aspx?feedId=d6aa0ab4-eb5f-4b5e-a251-0e833d984d68&keyword=&date=11/01/2023&newsId=70d5e2d6-43ff-4976-b4c6-4cc7d2620a6f.

[10] Inside Ottawa Valley, “Romance scam investigation nets catfish who allegedly stole $27,000” (November 6, 2023), accessed online: https://www.insideottawavalley.com/news/romance-scam-investigation-nets-catfish-who-allegedly-stole-27-000/article_6dbee0ca-ed5b-5f11-9c6c-ac029e3722eb.html.

[11] Avery Haines, “I wanted to collapse: A Canadian grandmother’s journey from romance scam victim to unwitting drug mule” (October 7, 2023), accessed online: https://www.ctvnews.ca/w5/i-wanted-to-collapse-a-canadian-grandmother-s-journey-from-romance-scam-victim-to-unwitting-drug-mule-1.6592267.

[12] See Carlo Handy Charles, “Analysis: Organized crime has infiltrated online dating with sophisticated ‘pig-butchering’ scams” March 2, 2022, McMaster University Brighter World Research, online: https://brighterworld.mcmaster.ca/articles/analysis-organized-crime-has-infiltrated-online-dating-with-sophisticated-pig-butchering-scams/

[13] See Lieth Carrillo, “Crypto firms help take down International ‘Pig Butchering’ Scam” (November 22, 2023), accessed online: https://www.occrp.org/en/daily/18242-crypto-firms-help-take-down-international-pig-butchering-scam where the author describes how Tether participated with another prominent crypto firm, OKX, and the U.S. Department of Justice in a months-long investigation that allowed authorities to trace illicit funds from the romance scam network.

[14] Ty Roush, “Feds seize nearly $9 million in cryptocurrency linked to romance scams amid human trafficking investigation” (November 21, 2023), accessed online: https://www.forbes.com/sites/tylerroush/2023/11/21/feds-seize-nearly-9-million-in-cryptocurrency-linked-to-romance-scams-amid-human-trafficking-investigation/?sh=2cc2b9eba21d.

[15] TD Stories, “How you can help seniors avoid becoming victims of fraud” (May 8, 2023), accessed online: https://stories.td.com/ca/en/article/prevent-seniors-fraud#:~:text=As%20of%20March%2031%2C%202023,totaling%20more%20than%20%24133.7%20million.

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