Banks blame customers duped by fake cheques in online job scams

Ivy Hotchkiss says she believed a fake cheque was real because the money initially showed up in her bank account, prompting her to e-transfer $3,500 to scammers. A consumer protection law professor says financial institutions should do more to protect customers.

Law professor says financial institutions must do more to protect customers

Bank blames customer for fake cheque from job scam | Go Public

2 years ago
Duration 2:03
A TD Bank customer says banks need to take more responsibility after she was told she was responsible for losing almost $3,500 after depositing a fake cheque from an online job scam. TD eventually reversed course after being contacted by Go Public.

Ivy Hotchkiss remembers the moment last December when she realized she was the victim of an elaborate online job scam.

"I sat on the floor in shock and disbelief," said Hotchkiss. "Just clutching my computer, thinking, 'What am I going to do?'"

The 22-year-old Toronto student had spent weeks looking online for part-time work, to help cover expenses in her final year at college.

"I had applied to every Tim Horton's, every McDonald's," Hotchkiss told Go Public.

She thought she had finally secured a job working from home as a data entry clerk for Aritzia — a trendy women's clothing chain, based in Vancouver.

"They offered me $30 an hour, which I thought was amazing," she said. "I immediately said yes."

Her new employer sent a cheque for $3,485, instructing her to e-transfer those funds to an office supply company to purchase needed equipment.

She deposited the cheque, watched her balance increase, waited 48 hours to make sure the money remained in her account and then sent the e-transfer.

Two days later, the cheque bounced. She had lost the money in an elaborate scam involving a fake Aritzia website, fake employment contract, fake managers, a fake office furniture company and — most devastating — a fake cheque. 

"That was going to be my food and rent for the next month," said Hotchkiss. "It was the most panicked feeling I've ever felt."

TD Bank told Hotchkiss that she was to blame, because she'd deposited a counterfeit cheque.

After Go Public made inquiries, TD offered to reimburse her as a one-time "goodwill gesture."

Scammers lured Hotchkiss by posing as job recruiters for Aritzia, a national women’s clothing company. (Erica Johnson/CBC)

Hotchkiss is one of a growing number of people hoodwinked by a pandemic-fuelled explosion in job scams, according to the Canadian Anti-Fraud Centre (CAFC).

In the first nine months of this year, the CAFC received reports from almost 1,400 victims who lost just over $8 million — almost double the losses reported in 2020.

A professor of consumer protection law at Ryerson University in Toronto says financial institutions need to do more to protect customers from falling prey to fake cheques, particularly in this turbulent job market.

"For banks to protect customers from fraud takes resources, time and money," said Daniel Tsai. "It seems they'd rather be spending that to sell GICs, mortgages and basically increasing their bottom lines."

The scammers had told Hotchkiss to order equipment from Tech Insight Services — the same phoney company involved in a similar scam reported by Go Public last year.

She says she fell for the elaborate ruse because TD accepted the cheque and her balance remained high for two days, before she sent the e-transfer.

The counterfeit cheque scammers sent to Hotchkiss, supposedly to cover office equipment. She believed the cheque was real, because her TD Bank account indicated an increased balance. (Submitted by Ivy Hotchkiss)

"I'm frustrated that the bank allowed the money to appear as if it was there," said Hotchkiss. "It's totally misleading."

Hotchkiss filed a police report and a complaint with TD, but the bank said she was responsible and the money had already been accepted by fraudsters.

Then TD suggested that it put a security measure on her account, preventing access to funds from future cheques until they have been verified. 

Hotchkiss wonders why she hadn't been offered this protection before.

"It should be standard for all the Canadian banks to delay deposits until they can be proven they're legitimate cheques," she said. "It would prevent this scam from happening to anyone else."

Go Public asked TD why it doesn't give customers that option.

Daniel Tsai teaches consumer protection law at Ryerson University. He says financial institutions should do more to educate customers about fake cheques. (Greg Bruce/CBC)

TD didn't address that question, but in an email, a spokesperson included a link to the bank's hold funds policy, which explains that, when a cheque is deposited, the bank is essentially offering credit until the cheque clears.

If the cheque eventually bounces, the customer owes the money to the bank — similar to policies at all of Canada's big banks.

"Bank account agreements are so pro-bank that they absolve the banks of any liability," said Tsai.

"They usually have clauses in there to ensure that they are not responsible for the customer losing funds due to fraud."

He says it wouldn't be difficult for financial institutions to let customers know that cheques can take days or even weeks to clear, by sending out texts and emails.

"They do it to sell us mortgages, loans and investments," said Tsai. "They can surely do this to protect their customers who have worked hard for their money."

Henrietta Fleischer says she asked a Simplii Financial agent several times whether money from this fake cheque was actually in her account, and was told it was. (Submitted by Henrietta Fleischer)

Bank said money was in account

Henrietta Fleischer got similarly duped because an employee at her bank said the money was in her account.

The Toronto mother of four had just returned to Canada from Ghana last year and was looking for a second job to support her family. She believed she'd been hired as a data entry clerk by the transportation company Ryder.

But before e-transferring $3,475 for non-existent office furniture, Fleischer called Simplii Financial (an online subsidiary of CIBC) to make sure the money was actually in her account.

She was told it was. 

"I wouldn't have gone ahead with the transfer if I knew the money wasn't in the account," she said. 

Even after listening to the phone recording, Simplii insisted Fleischer was at fault for depositing a fraudulent cheque.

"After every call with the bank, I'd just be shedding tears," she said. "I'm like, 'Oh my god, don't let these people tell me I've lost it [the money].'"

After she wrote several letters and filed a complaint with the bank's ombudsman, Simplii gave the money back — with no explanation or apology. 

In a statement to Go Public, a spokesperson said: "Protecting our clients from fraud is important to us and we advise clients to be cautious when accessing funds until cheques are cleared."

'Banks should enhance efforts'

Two months ago, the Better Business Bureau released a report on job scams, saying banks should do more to warn customers about fake cheque scams.

The study found that job scams have been growing since 2017 — targeting people across North America between ages 25-34.

"The estimated losses [over the past four years] is $2 billion," said Simone Lis, president and CEO of the Better Business Bureau of Mainland B.C. "This is crazy large."

Of those caught in job scams, says the report, 36 per cent are misled by counterfeit cheques.

"In the bank's desire to provide a service and get money to consumers as quickly as they want, it's created this opportunity for scammers," said Lis.

Financial institutions must "play a greater role in educating and saying, 'No, that money is not there,'" she said. 

Hotchkiss graduated last spring and, this time, used an employment agency to find work — full-time at an automotive assembly plant in Guelph, Ont.

"It's turning out to be a wonderful job," she said. Still, she says, she'll never forget the heartbreak of losing all her savings to scammers.

"I really hope that all of the banks change their systems," said Hotchkiss.

"Cheques must be looked at and confirmed that they are legitimate before the money is deposited and accessible in customers' accounts."

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Erica Johnson

Investigative reporter

Erica Johnson is an award-winning investigative journalist. She hosted CBC's consumer program Marketplace for 15 years, investigating everything from dirty hospitals to fraudulent financial advisors. As co-host of the CBC news segment Go Public, Erica continues to expose wrongdoing and hold corporations and governments to account.

With files by Enza Uda