E-Transfer Fraud Soars During Pandemic

May 6, 2021 Share Source

As the use of e-transfers in payments has risen, so too has associated fraud, with present circumstances creating a ‘fraudster’s paradise’, according to the Canadian Anti-Fraud Centre.

In 2020, e-transfer fraud reached a total of nearly three million Canadian dollars, up more than $400,000 from 2019. According to Royal Canadian Mounted Police intelligence analyst Jeff Thomson, these reports only represent the tip of the iceberg.

With the pandemic, you have an increased pool of victims—more people at home looking to acquire products and services they can’t go out and get. It’s a ripe environment.
" Jeff Thomson Intelligence Analyst and Spokesperson RCMP

Canadian broadcaster CBC highlights the case of entrepreneur Alysia Lok to illustrate the personal dimension of this growing problem. Selling sweet snacks online, Lok fell victim to a fraudster who redirected an e-transfer payment made to her in November 2020. Her financial institution told her that not only was the money ‘gone for good’, it was also not responsible for reimbursing her.

They say e-transfer is ‘fast, easy and secure’, so we used it, thinking that was true.
" Alysia Lok, Owner of Caramunchies

Previously selling in person at farmer’s markets and pop-ups, Lok was obliged to move her business online when the COVID-19 pandemic reached Canada. Now, e-transfers make up around 95 percent of her payments, which she has learned are not as secure as they purport to be.

A client sent a payment of $320 via e-transfer. When Lok tried to accept it, she received a message saying it had already been deposited. Initially assuming it was a glitch, she was told by the client’s financial institution that ‘there must have been an email hack’ and the money had been redirected into an account at another bank. As they ‘have no control over email security’ they accept no responsibility for such fraud.

Banks need to be more transparent with the risks of using e-transfers, instead of advertising it to be so safe and secure until something happens and they take zero responsibility.
" Alysia Lok, Owner of Caramunchies

Toronto-based lawyer Paige Backman, Co-founder of Knowledgeflow Cybersafety Foundation—a non-profit that aims to educate the public about cybercrime—says she has also noted the increase in e-transfer problems since the pandemic began, ‘likely because so many people are making payments online instead of using cash.’

Like Lok, Backman feels banks should play a larger role in preventing e-transfer issues, which could begin with legislation. Unlike the EU and U.S., most financial institutions in Canada do not yet require two-factor authentication for these transactions. She also notes, however, that customers must do their part to protect their money. One option for doing this is, of course, using cash.

Last Updated: May 5, 2021

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