And two key consumer types are also increasingly targeted by identity fraudsters
Fraud is rising and for Canada’s small business owners it’s becoming harder to avoid becoming one of the victims.
Two new surveys released this week highlight the growing threat and concern of businesses, with financial losses typically running to several thousand dollars.
The Canadian Federation of Independent Businesses teamed up with Interac to survey its members with 50% of respondents indicating they had been targeted – either successful or not – by fraudsters and one third of those who were victims reporting financial losses.
The average lost over the last year was $7,800 but the financial cost was exacerbated by the time lost to dealing with the fraud, the negative emotional impact, and effect on staff morale.
"Whether you're a consumer, a mom-and-pop shop or a big industry player, we've all been impacted by fraud in some shape or form,” said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. Dealing with their consequences can be frustrating and time-consuming, especially for small business owners who often don't have enough time or resources to address this growing issue."
Scams involving email, phishing, texts, and calls are the most prevalent cited in the poll, but fraudulent payments and chargebacks, while less common, are more likely to result in business losses.
Nine in ten (90%) business owners are also worried that the rise in the use of artificial intelligence (AI) will make fraud more sophisticated and harder to detect.
Credit applications
Meanwhile, Equifax Canada says that there is rising fraud in the automotive sector which is up 54% year-over-year despite an overall decrease in credit application fraud. Application and identity fraud are both key risks for this industry with Ontario seeing the largest increase in incidents.
Identity fraud, including the synthetic variety where real and fake data are used, are rising and some people are more at risk than others, the research reveals. Older consumers with high credit scores are increasingly being targeted, while 40% of third-party identity fraud cases involved victims with credit scores above 800, and 76% of these consumers had no prior delinquency on their credit files.
But while criminal activity is a concern, one of the most common types of fraud is from first parties, with credit applicants misrepresenting their circumstances.
“Consumers choosing to falsify their income, employment, and financial information to secure credit are a growing concern for lenders. This deceit may provide short-term financial gains for the consumer, but certainly can lead to long-term consequences such as loan denials, damaged credit, and legal ramifications,” said Carl Davies, Head of Fraud and Identity at Equifax Canada.
