TORONTO -- Members of a federal government committee that regulates Canadian banking say they want the big banks to provide consumers a faster avenue to shut down fraud on their accounts — or face further action.
The moves come after a CTV News Toronto investigation into a widespread fake taxi scam that showed how cunning fraudsters duped Torontonians wanting to help others during the pandemic — and then exploited weaknesses in fraud detection system to make off with thousands per case.
In one case, a Toronto woman realized she’d been scammed, phoned her bank to cancel her card, and found herself waiting on hold for 40 minutes — while she watched thieves take thousands more out of her account.
“A bank customer in an emergency should not have to sit on the line and watch the money roll out of it. They need a way to freeze these funds quickly,” said Liberal MP Wayne Easter, the chair of the Standing Committee on Finance, saying he would call a banking group himself and ask for improvements.
“This really should be a simple fix where you have a dedicated emergency line,” he said. “It’s something that requires urgent attention.”
His colleague on the committee, NDP MP Peter Julian, told CTV News Toronto the banks should have to testify in front of the committee on their fraud response. He said they have been given tremendous federal support during the pandemic and it’s time to pass that on in the form of investments in better service.
“We’re still seeing massive banking profits through this pandemic, and yet consumers are left unprotected. That has to change,” Julian said.
CTV News Toronto interviewed four victims of a fake taxi scam that has been the subject of multiple warnings by various police departments in the Greater Toronto Area. Each of them were approached by a vulnerable-looking person asking for help to pay a taxi because they said the drivers didn’t take cash during COVID-19.
That’s a ruse — cabs do take cash, companies confirmed. When the victims offered to pay with debit, the taxi driver noted their pin through a card reader, used sleight of hand to give them a different card back, and then immediately started draining their accounts to the tune of thousands of dollars.
“The losses are massive,” said Claudu Popa, a cybersecurity expert. He said that the reason the scam works so well is because it doesn’t involve any hacking or expensive equipment, so it flies under the radar of fraud detection software.
“These fraud detection systems work on anomalies. That’s largely dependent on location and these charges are largely in the same location, even the same neighbourhood as the victim. The bank has seen transactions in that neighbourhood for years. They just let them go through,” he said.
That even includes a string of four transactions at the same store within 10 minutes totalling some $2,500, mostly gift cards purchased at self-checkout machines, said one victim in Vaughan, John Mazzella.
In his case, TD’s fraud detection system shut down his card after fraudsters had taken out the maximum $1,000 withdrawal two days in a row, part of a series of transactions that added up to almost $7,000.
“There’s a pattern there. I would have expected their algorithm to catch it,” Mazzella told CTV News Toronto.
Aminah Sheikh caught on quickly and tried to phone her bank to shut the problem down, but watched on her app as the criminals kept racking up charges.
“I don’t know how much money they could have taken out because I don’t think the bank noticed,” Sheikh said.
Mazzella and Sheikh are both customers of TD Bank and said the company has offered to cover the losses.
A test by CTV News Toronto showed long waits aren’t uncommon — both TD and Bank of Montreal offered 33 and 32 minute hold times to a customer reporting a stolen card.
That's a long timeframe for fraudsters who can act locally quickly, said Popa.
“If I were a bank I would see this as a huge opportunity to beef up fraud protection by looking at other indications of a compromised card,” said Popa, pointing to amounts being transferred in a short amount of time, or repeated transfers at the same store.
“If there’s any opportunity to build a pattern, and observe a pattern, they should use it,” he said.
Popa said it’s better to use a credit card than a debit card as fraudulent transactions are more likely to be caught earlier, and there’s a greater chance your financial institution will pay you back for the money that’s lost.
Conservative MP Ed Fast said in a statement Wednesday that he supported bringing the concerns over the apparent delays to the federal committee.
“It is completely unacceptable that an individual is 'on hold' with her bank for this length of time while their money is being stolen. Conservatives support bringing this issue to the Finance Committee for a thorough review,” he said in the statement.
