Classic scams like Nigerian princes in need of financial assistance and unexpected cruise tickets can seem childishly blatant, but they obscure an undercurrent of more threatening and manipulative exploitations. Over the summer, the Royal Canadian Mounted Police alerted people of an increase in fraudulent calls exploiting a duty so banal that citizens are often ignorant of its intricacies: Income tax returns.
Mary,* an international student at McGill University, was the victim of such a scam. Amid essay deadlines and caffeine-fueled sleep deprivation, she received a voicemail on Nov. 16. The call was from a Canadian number and the caller claimed to be an agent at the Canada Revenue Agency (CRA), the government body that administers taxes nationally.
“The message said I was being investigated for tax evasion,” Mary said. “I’ve never had to file for taxes, but I thought it might’ve been a bureaucratic misunderstanding. Then [the agent] said there [was] a warrant out for my arrest, that they would come to the house in an hour, and if I didn’t pay the sum in total I would get arrested. So obviously I got extremely scared and I just couldn’t think clearly.”
The caller was quick to legitimize herself, providing Mary with a case number, transferring her to various superiors, and citing government legislation. She then concluded that Mary owed the CRA $4,200.83 and cited criminal charges to impose restrictions upon her.
“She set up this thing she called a protocol,” Mary said. “[...The] protocol basically had two rules. The first rule was [that] I could never hang up the phone [...] because it would seem like I was evading the government. The second rule [...] was that I couldn’t tell anyone that this was happening. She said if I told anyone what I was being investigated for or that I was under investigation, they would also be under investigation for collusion.”
Mary was given the opportunity to postpone the imminent arrest if she gave the caller $1,500 in iTunes gift cards. She dutifully spent the $300 she had in her bank account on gift cards at the grocery store Provigo, with the caller on the line all the while.
"Then [the agent] said there [was] a warrant out for my arrest, that they would come to the house in an hour, and if I didn’t pay the sum in total I would get arrested. So obviously I got extremely scared and I just couldn’t think clearly.”
“[The caller] said she was helping me out because I was being so cooperative,” Mary said. “She was like ‘We’re here to help you, to make sure you don’t get arrested, because you’re being cooperative and you’re following the protocol we’re not going to send the police right now.’ She said that I couldn’t let the store owners know what the cards were for, because otherwise they would try to intimidate me and they would quickly call the police.”
As an international student, Mary knew that her parents would be unable to transfer money to her on such a short-notice. The caller instructed her to take out a loan from her bank. Her application was denied. She managed to borrow an additional CAD$200 from a friend but it wasn’t enough. Eventually, fearful but resigned to her fate, she called her father, who reassured her that she had been taken advantage of by a financial scammer.
Upon later reflection, Mary explained how, although she had doubts about the authenticity of the caller, she was compelled to obey out of shock and fear. She worried that if her doubts were wrong, the price would be unbearable.
“I know it’s partly my fault because I should have gotten more educated, but I didn’t know how [I was] supposed to act,” Mary said. “Obviously, on TV you hear that everyone has a right to representation, but when someone tells you you’re about to get arrested, you kind of do what they want [....] I knew they couldn’t lock me away, but I still thought they could detain me before I could get representation, and I just didn’t want to be detained because, while obviously I have friends here, I don’t have an adult figure [in my life who] could come bail me out, or protect me.”
Fortunately, legitimate police investigations are less abrupt than what Mary faced. Law enforcement does not conduct random cold calls like the one Mary received. Instead, they keep individuals aware of ongoing investigations. Police forces may only unilaterally enter an individual’s home and arrest them under urgent circumstances, such as threats to national security or public safety, although civil forfeiture laws do allow the police to seize an individual’s property if they suspect it was used to perpetrate a crime, or was obtained as a result of a crime. Sentencing for fees can only be carried out within the judiciary system.
“The police officers of the [Service de Police de la Ville de Montréal] SPVM do not arrest people [who] did not pay their taxes, nor ask for money over the phone,” Darren McMahon-Payette, a spokesperson at the SPVM, said. “Depending on the gravity of the crime, investigators from the SPVM can call suspects to let them know they are considered a suspect of a crime, to ask to meet them to know their version of the story, or even ask them to go to an operational center to be officially arrested.”
Mary’s caller’s protocol had no legal standing. Individuals are under no obligation to speak to the police beyond identifying themselves, after which they have the right to speak to an attorney, many of whom are available for free or at low cost.
“A police officer may not demand that you stay in constant contact with them,” Giovanna Annunziata, lawyer at Cabinet Gelber Liverman, a Montreal law firm, said. “You have the right to not speak to the police besides for purposes of identification.”
From a legal perspective, tax evasion is not as clear-cut as scammers would have their targets believe. International students need only file taxes if they establish residency within Canada, or stay in Canada for over 183 days in a year. Moreover, scholarships for full-time education are not taxable, and only individuals with a taxable annual income higher than $11,635 need to pay federal taxes.
Section 238 of the Income Tax Act specifies for a fine between $1,000 and $25,000 as punishment for tax evasion. Additionally, Section 380 of the Criminal Code calls for up to two years of imprisonment if the tax evasion involved less than $5,000, and up to 14 years of imprisonment for larger sums. However, tax evasion rarely results in jail time: CBC reported that 26 per cent of the 98 people convicted of tax fraud in 2014 received prison sentences. Overall, the judiciary consider a variety of circumstances when deciding sentences, among them being whether the offense was intentional.
“When evaluating the proper sentence, the Court will look at a number of factors such as: number of offences, number of people affected, whether the victims were particularly vulnerable (children, elderly folks, etc.), whether the offence could’ve potentially destabilized the Canadian economy, etc.” Adam Ginzburg, lawyer at Ginzburg Legal, wrote in an email to The McGill Tribune.
“If there’s a link in the email, there is a 99.99 per cent chance it is fraud.”
Cold calls like Mary’s happen quickly. By the time legal expertise becomes relevant, the scammer might have already obtained their victim’s personal information. The CRA provides an extensive list of scammers’ strategies and the basics of identifying authentic transactions. Karl Lavoie, media relations representative at the CRA, empathized with victims of scams, and underlined the importance of authenticating instructions before acting.
“The CRA never asks taxpayers to provide their personal or financial information by email, text message, or by clicking on a link,” Lavoie said. “The public can confirm the authenticity of a call that appears to be from the CRA by calling individual income tax enquiries at 1-800-959-8281 [....Taxpayers] should always go to the CRA’s website or to their online banking to initiate the payment rather than clicking a link from an unknown source.”
Scammers may provide links to fraudulent websites that appear to be official sites, but these can be proven fake by checking for discrepancies in the URL such as unexpected words, unusually long streams of symbols, or random letters. It is also important to remember that the CRA, as well as other financial institutions like the Royal Bank of Canada (RBC), observes a strict policy of not sending website links via email.
“If there’s a link in the email, there is a 99.99 per cent chance it is fraud,” Charles Toth, banking advisor at RBC, said. “Now, if you clicked, that doesn’t mean necessarily that now that you clicked we’re not going to [reimburse you for scams], that is a case-by-case thing, but no, we would never send you links in our emails.”
While email scams can be foiled by not opening suspicious links, scammers over the phone can be more persistent. A common clue for identifying phone scams is the scammers’ propensity to demand payment through gift cards, which they likely change into cash through conversion websites such as cardcash.com. Gift cards present a unique challenge because they are intrinsically hard to keep track of.
“Some of these [gift card scams] are difficult to trace because the scammers are usually sitting in another country and creating fake websites in a third country,” Benjamin Fung, associate professor at McGill’s School of Information Studies, wrote in an email to the Tribune. “Solving these cases requires international efforts.”
GiftCards.com, a gift card sales website, offers its clientele both eGift cards and physical gift cards from popular brands such as Amazon, BestBuy, and Staples. Sarah, a clerk at giftcards.com who declined to give her last name, confirmed how difficult it is to trace gifts cards.
“We can tell when the gift card was used, how much it was used for, and the location [where] it was used, but nothing more,” Sarah said.
Unfortunately, educating oneself about gift cards may not be enough going forward. Fung predicts an increased usage of untraceable cryptocurrency, which may be a more credible channel than iTunes gift cards for scammers to receive money.
“I would predict a rise in cryptocurrency [like Bitcoin] for scams because [it] is the default currency in the world of darknet,” Fung wrote. “Some cryptocurrency exchanges [disappear] overnight. One of the most well-know cases was Mt. Gox [where $460 million worth of bitcoins were stolen by hackers].”
“[In] a positive scam, i.e. we owe you a big refund, just send us your bank account data and we’ll deposit it to your account, your susceptibility to greed and your unjustified self-confidence [...] will be triggered.”
Although Apple has warned customers that iTunes gift cards should only be purchased for use on the iTunes store, distributors of gift cards appear to be more concerned with identity theft than coercive purchases.
“For the big transactions with gift cards, we must ask them for ID, to make sure [...that] the credit card [was not stolen],” Denis Potier, supervisor of the Provigo location where Mary bought the gift cards, said. “The reasons why people buy the gift cards are not important.”
However, not only are gift cards complicated to trace, but the scammers themselves may be difficult to identify over the phone. Scammers can adapt to victims’ characters more easily when conversing in real-time dialogue rather than through written messages. Don Donderi, retired associate professor in the Department of Psychology, categorizes scams as either positive or negative.
“[In] a positive scam, i.e. we owe you a big refund, just send us your bank account data and we’ll deposit it to your account, your susceptibility to greed and your unjustified self-confidence [...] will be triggered,” Donderi wrote in an email to the Tribune.
Meanwhile, a negative scam preys upon senses of unfamiliarity and fear. Scammers attempt to coerce their victims into giving them money by preying on their lack of knowledge of Canadian tax laws.
“Your fear of being chucked out of the country is right up there with waiting to be manipulated by an ‘official’ agency, a long arm of authority that you can’t afford to defy,” Donderi wrote. “Of course many international students come from countries whose bureaucracies are really less on your side, so to speak, than the government of Canada. [They] are a bit afraid, unfamiliar with the Canadian online bureaucracy’s look and feel, and unfamiliar with what they might legitimately ask of you.”
In general, scammers exploit insecurities their victims’ insecurities. The prevalence of CRA scams suggests that misunderstanding tax laws is a common problem. Organizations such as PennyDrops, which was founded by McGill students to improve financial knowledge amongst marginalized populations, seek to combat rising financial illiteracy.
“Entering the workforce after university, we are faced with complicated financial concepts that we never encountered in our studies,” Isaac Cox, U3 Management and chief growth officer at PennyDrops, said. “For example, we have to file income taxes, start putting money aside for retirement, and live on a fixed budget. Without the proper financial education, these new responsibilities create unnecessary stress and anxiety.”
If a McGill student is the victim of a scam, they might feel that they can rely on their parents’ financial experience or, failing that, their rights against unlawful arrest as Canadian citizens. However, when scammers come across students like Mary, who is a part of the 30 per cent of McGill students from outside of Canada, their unfamiliarity with foreign laws adds another manipulatable factor.
“I think the biggest fear they play on is that you’re alone in this country which is not really yours, and this fear of being imprisoned in a country where your rights aren’t really as strong,” Mary said. “Because if you’re detained and you’re at home you can easily call your parents and your parents will come and help, but if you’re far away from your parents you’d have to deal with this by yourself, and it’s that fear of not being able to protect yourself.”*Name changed at the request of the student.