Blinded by hope: Moncton couple loses last $600 in suspected scam
Nathan and Madison Donovan were hoping to use a $7,000 loan to get a car and get off social assistance
Nathan Donovan said hopes were running high over the weekend when he and his wife were approved for a $7,000 loan, but now the couple believe they are the victims of a scam — and it's cost them their last $600.
The couple, who are parents to an infant and a toddler, live in a New Brunswick Housing unit and receive social assistance.
It would get us up out of the hole we're in. To be able to work and not to be on assistance. So I think it was the hope that kind of blinded us to the reality that this was a scam.- Nathan Donovan
Nathan is disabled after breaking his back in a car accident in 2010, and said his wife, Madison, was hoping to go back to work.
She wants to return to the night shift at a downtown call centre but needs a vehicle to get back and forth since buses don't run overnight.
"It would get us up out of the hole we're in," Nathan said. "To be able to work and not to be on assistance. So I think it was the hope that kind of blinded us to the reality that this was a scam."
Nathan's mother, who lives in Nova Scotia, agreed to be a co-signer for the loan. Since it would be difficult for her to travel to Moncton to sign documents, the couple decided to go with an online lender that offered "bad credit loans."
After googling, the couple found EastLiberty Finance Group, based in New York, as the fourth or fifth listing on the search results page.
"It wasn't, like, on the 14th page and it's getting kind of sketchy," Nathan said. "It was on the first page."
"The website looked very legit. They had licensing numbers, their tax numbers … they sent us their loan papers and we were able to sign them online, like digitally sign them. Everything looked on the up and up."
After providing all of their personal information, and his mother's personal information to a loan officer, Nathan said, they were approved and told the money would be sent within four to six hours.
When the couple later called back to find out why the money hadn't arrived, they were told they had to provide "further collateral" of $600 and would have to buy loan insurance, Nathan said.
Later that same day he wired the money through Western Union to someone in Ontario.
"They said it needed to be sent to Ontario to be able to transfer the money to the United States because the company was based out of New York. So I kind of fell for it there — you know, it had to be sent over the border, so maybe there were some protocols that I didn't know about. I bought it."
Reported to police, but little hope of refund
The loan never arrived and Nathan said they have demanded their $600 back, but now the company website has been removed, and no one answers at the toll-free number.
"It's pretty embarrassing really," Nathan said. "I'd say a lot of people probably get this done to them … and they don't say anything because they're embarrassed."
The Moncton couple don't expect to see their $600 again, although they have reported the incident to the RCMP, the Better Business Bureau and the fraud division at Western Union.
CBC New Brunswick also contacted EastLiberty Finance and left messages but those calls were not returned.
The RCMP commissioner has said police in Canada are struggling to keep up with cyber crimes.
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RCMP Cpl. Laurent Lemieux, who is with the financial crime unit in New Brunswick, said all complaints are investigated, but in many online scams the money ends up outside of the country, where police don't have jurisdiction.
Lemieux said even in cases like this, where the money is transferred to a Canadian location, the person who picks it up is often also a victim, and being used by criminals outside the country.
"The middle person would not even benefit,' he said. "They're just in a love relationship and they're being told, 'I need help to get $4,000 over here. I've got a friend that's going to wire it to you, can you forward.'"
Preying on the poor
Peter Moorhouse, president and CEO of the Better Business Bureau in Atlantic Canada, said not all online lenders are bad, but what makes this case a "scam" is that an advance fee had to be provided before the loan was granted.
"That's actually illegal in Canada," he said. "So the fact that that was the structure of this arrangement, that's what distinguishes it as a scam."
Moorhouse said these advance fee loans show up every year on the BBB's Top 10 list of most frequently reported scams, with victims losing millions of dollars.
And while the BBB tracks the company names used, the scam continues to repeat itself. The people behind it build a website, defraud a group of people, then shut down the website and within days are back up and running with a new name, new website and new phone number.
"It's most frustrating when you see scams that target the most vulnerable members of society in this way," Moorhouse said.
"I think you have to be a special sort of evil to target people who can't really afford to be scammed in the first place."
Police funding inadequate
David Shipley, CEO of Beauceron Security and a certified cyber security expert in Fredericton, said police want to help but are simply "overwhelmed" by the increasing number of online crimes.
"What's really sad is that when you're talking about the $600 — it's really meaningful to that couple but from a policing standpoint, they just aren't resourced to deal with crimes under $50,000," he said.
"The way that we fund policing in Canada doesn't work in a digital era."
Shipley said since funding is calculated based on population, big cities like Toronto and Calgary have more resources to investigate cyber crime, while New Brunswick is limited.
Only criminals win
"I have no hope of getting the money back honestly — I just would like to let other people know," Nathan Donovan said of his decision to share his story.
Shipley hopes it serves as the catalyst for a larger discussion and said no amount of education or policing will solve the growing problem of criminals targeting people who are vulnerable online.
Instead, he said, Canada should look hard at a universal basic income because ultimately it is poverty that is leading people into the hands of online criminals.
"How do we help people get a hand up so that they can do what this couple was trying to do, which is get re-established and live healthy, productive, economically well-off lives," Shipley asked.
"Leaving people trapped in the social assistance side of things is not winning for anybody — except for … criminals."
Nathan said he will continue to call the company every day, but for now the couple's goal of getting a car, a job and getting off social assistance has been "dashed."
"I almost walked out of Sobeys the other day with two loaves of bread and I turned around and went back," he said.
He didn't have enough money for two, he explained.