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Tips to avoid financial scams

When Christina Ceolin logged in to her email account she found a message from her parents saying they were stranded in an Italian airport without wallets or passports. She would have been worried had they not been in the next room.

"[The message was] asking for people's credit card information in order to get some money wired to them," says Toronto-based Ceolin. "A couple of people responded to the email asking how they might get my parents the information they needed to transfer the money."

Recognizing this was a hoax Ceolin immediately emailed all her parents' contacts and told them the message was a sham. Not everyone is as perceptive as Ceolin and nowadays financial scams are all too common.

According to the Canadian Anti-Fraud Centre's quarterly report, from September to July 2011 more than $10 million of fraud was reported, says Jeffrey Schwartz, executive director of Toronto-based Consolidated Credit Counseling Services of Canada.

But knowledge is power. Here are some of the top financial scams and how to spot them.

1.) Email or "phishing" fraud
One of the main types of online financial scams is done via email fraud or "phishing." According to the Royal Canadian Mounted Police's website, phishing is a general term for emails, text messages and websites fabricated by criminals to look like they come from well-known and trusted businesses, financial institutions and government agencies. Their objective? They want your personal, financial and sensitive information.

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Intended to trigger a quick reaction from the recipient, the information will usually be upsetting or exciting, demand an urgent response or be based on a false pretense.

One big warning sign: Phishing messages are usually not personalized. Typically, you'll be asked to update, validate or confirm your account information or face "dire" consequences.

"If they're asking you for credit information or financial information and you don't know who they are and you haven't initiated the whole process, then there's a good chance this is some sort of scam," says Schwartz.

2.) Online auction fraud
Scoring good deals online may come with a bigger price tag than you'd expect.

"Scammers may sell a product, often at a very cheap price, just so they can steal your payment or personal information," says the RCMP's website. "They may also take your money and send you a worthless item, or sometimes, nothing at all."

But the buck doesn't stop there. Online auction fraud is committed via virtual flea markets that present new or used items for sale that you can bid on.

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-- Posted April 9, 2012
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