Some people try to trick you into donating money to a fake charity or cheat you when you buy or sell something. Learn how to identify and guard against charity and sales scams.
Scam 1. Charity scams
A charity scam is when someone asks you to make a donation to a fake charity or pretends to be from a real charity.
They might approach you on the street, at your door, over the phone or on the internet. If they’re collecting money for a fake charity, often the name will be similar to a legitimate and respected charity. Some will say their charity helps police, firefighters, children with cancer, or some other worthy cause. Some try to take advantage of a recent natural disaster such as an earthquake or flood.
If you have never heard of the organization before or it sounds sort of but not exactly like a well-known charity, it may or may not be a registered charity. A registered charity is a non-profit organization that has exclusively charitable goals such as relieving poverty, advancing education or religion, or benefiting the community.
You can check whether a charity that has approached you is genuine by searching over the Canada Revenue Agency’s Registered Charities Listing.
If you are not sure whether a charity is genuine, ask them if they can issue an official donation receipt. Only registered charities and selected others are entitled to issue official donation receipts. You can use the receipt to claim a tax credit on your income tax, reducing the amount of tax you owe.
Fake charities will typically try to pressure you to give a donation on the spot. If you do not want to donate any money, you don’t have to. Simply ignore the email or letter, hang up the phone, or say “No thanks, I’m not interested” to the person at your door.
A good question to ask is how much of your gift will be used to run the charity’s programs, and how much will go towards the charity’s administrative costs. Legitimate charities have no problem giving you this information. If they refuse to provide details about the charity, including their contact information, this is a major warning sign.
If you are considering a donation, ask for information to be sent to you in writing. Do some research on the charity. Get the charity's contact details from the phone book or a trusted website, and contact them directly to make a donation.
If you are feeling pressured, do not give money or credit card information. Once you make a donation, there is usually nothing you can do to get your money back.
Ask the person seeking your donation what percentage of your gift they will keep. Some third party fundraisers keep upwards of 95% of the donation. If you're not comfortable with the amount, you may want to consider other options for donating.
Scam 2. Free trial scams
“I saw an ad online for a diet pill called BurnFast. If I paid the $1.95 shipping & handling charges, I could get a free trial. I decided to try it, and received a sample shipment of pills. A month later another shipment of pills arrived and my credit card was billed $90 for my ‘monthly supplies’. When I complained, BurnFast said I had agreed to a monthly subscription.”
– Barney, Revelstoke
Ads for free trial scams promote any number of things—a miracle vitamin, a teeth whitener, a set of kitchen knives—by inviting you to try out the product for free or for a very low cost (such as if you cover the shipping and handling charges).
What they don’t tell you is that when you sign up for the free trial, you may be signing a membership, subscription or service contract that allows the company to charge fees to credit cards.
Some “free trials” disguise the true nature of their offer, hiding the terms and conditions in small print or using pre-checked sign-up boxes as the default setting online.
Often, they automatically enrol you in a club or subscription. For example, a company might offer you a free introductory package of yoga videos or skin cream. If you sign up, you may be agreeing to enrol in a club that will send you more products and bill you until you cancel, or to a subscription that's automatically renewed each year.
Review the terms of any “free trial” offer carefully before you provide any payment information. If you don't want to buy what you've tried, you will likely need to cancel or take some other action before the trial is up. If you don't, you may be agreeing to buy more products.
If you sign up for a free trial online, look for already-checked boxes. That checkmark may give the company the green light to continue the offer past the free trial or sign you up for more products—only this time you have to pay.
Scam 3. Door-to-door scams
Some people rely on old-fashioned techniques to try deceiving you. In a door-to-door scam, someone knocks on your door and offers a product or service, but their true goal is to steal from you. They will typically do this by convincing you to pay cash up-front for a service that is never provided. The service might be roofing your home, pruning your trees, or installing a security system.
If they actually perform the work, it will typically be substandard and there will be no way to contact them later. The bill will often include items you did not agree to, and their "money-back guarantee" will be worthless.
Under BC law, if you sign a contract at your door, it is called a direct sales contract. The contract must contain a detailed description of the goods and services to be provided, an itemized purchase price, a notice of your cancellation rights, and many other details. You can cancel the contract by giving notice to the company within 10 days after receiving the contract. You don’t have to have any reason for cancelling.
If you are considering an offer from someone who has come to your door, insist on a written contract. Take the time to read and understand it. If you are feeling pressured, do not sign anything. Close the door.
Do not agree to offers or deals right away. If you think you have spotted a great opportunity, get the name and contact details for the company. Insist on time to do research or get advice before making a decision.
Scam 4. Overpayment scams
“I listed my bike for sale on Craigslist. A buyer agreed to my asking price, but sent me a cheque for a larger amount. He asked me to send the extra money back to him by wire transfer. I did that, and it turned out to be a big mistake. The next day, his cheque bounced. I never got my money back. Thankfully I hadn’t also handed over my bike.”
– Tom, Whistler
If you are selling something online or through newspaper classified ads, be alert for an overpayment scam. A potential buyer says they’d like to buy, and agrees to your price. They send a cheque or money order, but the amount is more than the agreed price. The buyer may tell you that the overpayment was a mistake, or they may invent an excuse, such as the extra money was intended to cover possible delivery charges.
If you are asked to refund the excess amount by money transfer, be suspicious. Your buyer is likely hoping you will transfer the refund before you discover that their cheque or money order was counterfeit. You will lose the transferred money as well as the item if you have already sent it.
Don't accept a cheque or money order as payment for something when the amount is more than what you agreed on. Send the payment back and ask the buyer to send you payment for the agreed amount before you deliver the item to them.
1. Never pay at the door
Never give money or credit card information at the door. One option is to make out a cheque to the charity or company and mail the cheque later, after you’ve had a chance to do some research.
2. Research the company
If you are asked to donate or invited to buy something, ask for written information to be sent to you about the charity or company. That way you can do some research.
Contact the Better Business Bureau to find out what they know of the charity or company.
See what other people are saying about them by searching online for the name of the organization and the word “reviews” or “complaints”. Complaints from others can tip you off to "catches" that might come with an offer that seems enticing such as a free trial.
3. Make sure you understand the offer
Take the time to understand all the terms and conditions and costs involved before making a purchase or donation.
If you’re buying something, make sure you understand the refund policy.
4. Protect your personal information
Don’t give out your credit or debit card information unless you are certain the company or charity is genuine.
Don’t give out your bank account numbers to anyone unless you intend to have money withdrawn from your account.
5. Read your statements
Read your bank and credit card statements. That way you'll know right away if you're being charged for something you didn't authorize.