Don Butler
Sun
OTTAWA — A stunning 15 million Canadians were repeatedly targeted by mass-marketing fraud artists in the past year and one million were victims, a major study commissioned by Competition Bureau of Canada has found.
The study, the first of its kind in Canada, also debunks the myth that victims are likely to be older and poorly educated. In fact, it says, Canadians under 30 and middle-income earners are most likely to be defrauded.
Based on a survey of 6,116 Canadians, the Environics study was delivered to the Competition of Bureau Canada earlier this month and posted to a government website this week. It defined mass-marketing fraud as that committed by telephone, mail and over the Internet, including deceptive e-mail. It focused only on fraud that targeted consumers and did not examine attempts to defraud businesses.
The study looked at the 12 most commonly reported scams, including prize, lottery or sweepstakes fraud, the West African scam, work-from-home fraud, high-pressure sales-pitch vacation fraud, bogus-health-product fraud and investment fraud.
AMONG ITS KEY FINDINGS:
– Almost six in 10 adult Canadians say they were targeted by mass-marketing fraud in the previous 12 months — about 15 million in total. Targets say they received an average of 16 fraudulent contacts, mostly by phone or e-mail.
– About four per cent of adult Canadians — nearly one million — have fallen victim to one of the 12 frauds examined over the past year. Victims report an average of 21 contacts from mass-marketing fraudsters.
– Victims report demands from fraud artists averaging $1,900. Direct financial losses range from a few dollars to $50,000, with an average loss of $557. Total losses from this group of frauds alone amount to at least $450 million annually, the study says, though it adds loss estimates likely are seriously under-reported.
– Victimization crosses all demographic and socio-economic lines, the study says. In fact, the most striking characteristic of victims is their youth, the study says. Almost one-third of victims are under 30, compared to just 19 per cent of the total population. By contrast, people over 60, who make up more than one-fifth of the population, constitute just 13 per cent of victims. Victims also disproportionately have annual household incomes between $30,000 and $60,000 and live in Ontario. They are twice as likely as the general population to be at home full time. Those with university degrees and incomes of more than $100,000 are just as likely to be victimized as those who did not complete high school and earned less than $30,000 annually, the study found.
Until now, there has been no widely accepted estimate of the scope of consumer mass-marketing fraud in Canada, nor empirical evidence of its financial impact and effect on consumer attitudes and behaviour.
Environics conducted the survey between June 13 and Aug. 14, 2007. Because of the large sample size, results are considered accurate to within plus or minus 1.3 percentage points, 19 times out of 20.
The study found the telephone is the preferred tool for fraud artists, with 57 per cent of targets reporting telephone contact. E-mail, at 36 per cent, is the next most common method. Fifteen per cent report contact through the mail, and 10 per cent saw a solicitation for a fraudulent scheme on a website.
FAVOURITE FRAUDS
Here are some types of consumer-mass-marketing fraud, along with the percentage of Canadians targeted or victims of each in the past year:
– HIGH-PRESSURE SALES PITCH VACATION FRAUD
Targets offered gift or reward to attend a sales presentation where they are subjected to high-pressure sales tactics and/or misleading offers. Targeted: 34 per cent Victimized: 0.5 per cent
– ADVANCE FEE VACATION FRAUD
Targets pay an advance fee to secure or hold a discount or free vacation. Targeted: 33 per cent Victimized: 0.4 per cent
– PRIZE, LOTTERY, SWEEPSTAKES FRAUD
Targets advised they have won — or have a chance to win — something, but must first purchase something or pay advance fee. Targeted: 27 per cent Victimized: 0.3 per cent
– BOGUS HEALTH PRODUCT/CURE FRAUD
Targets purchase health product or cure that does not work as advertised. Targeted: 27 per cent Victimized: 1.9 per cent
– WEST AFRICAN/419 FRAUD
Targets promised a share of a large sum of money being transferred from another country to Canada in exchange for a fee. The fortune is fictitious. Targeted: 19 per cent Victimized: 0 per cent
– INVESTMENT FRAUD
Targets offered investment opportunity promising higher-than-normal returns, but lose most or all money they supposedly invest. Targeted: 15 per cent Victimized: 0.2 per cent
– EMPLOYMENT/WORK FROM HOME FRAUD
Targets offered employment and asked to pay advance fee to secure job or obtain materials to do work from home. Job promises more earnings than are possible. Targeted: 14 per cent Victimized: 0.5 per cent
– ADVANCE FEE LOAN FRAUD
Targets offered loan for which advance fee must be paid. Loan never arrives. Targeted: 6 per cent Victimized: less than 0.1 per cent
– BILL FOR UNSUITABLE MERCHANDISE FRAUD
Targets order and pay for something through Internet or mail-order catalogue. Item does not arrive, arrives very late or is not what was expected. Targeted: 4 per cent Victimized: 2.4 per cent