/Identity theft: How criminals use a low-interest credit card scam to steal from you (Marketplace)

Identity theft: How criminals use a low-interest credit card scam to steal from you (Marketplace)

Video: Identity theft: How criminals use a low-interest credit card scam to steal from you (Marketplace)


[♪♪] So we're about two minutes away from her house. And I'm going to make a right here. We've obtained a secret list. Yeah this is the street. Used by criminals to exploit Canadians. We have the names of thousands of Canadians from across the country. We have credit cards. Addresses. Social insurance numbers. One by one we're warning them. They're victims of identity theft. I think she's going to be surprised obviously to see us at her door. -Hi, are you Fernanda? -Yes. Hi, I'm so sorry to bother you so late. My name is Makda, I'm with the CBC and the TV show Marketplace. We believe your personal information may have been compromised.

So what do you see there? It's my name and my phone number, right? Mmm-hmm. -Are you Arsenio? -Yeah. That's your SIN number? Mmm-hmm. Yes. That's your credit card number. You know you're one of thousands of Canadians that are on this database. Youch. [Makda] How did these Canadians get onto this list? They were lured in by a phone call. Do you recall ever getting a phone call about reducing your interest rate on your credit card for a fee? I did a while ago, maybe close to a year ago Did your call go something like this? Carol, this is Ronnie in the verifications department and I'm recording this conversation. [Makda] It sounds like they're calling from a bank or credit card company. My name is Jim Mack. I'm a financial advisor here at card member services. [Makda] You may have heard the sales pitch too. I'll get you a nice decent interest rate.

[Makda] Offering to lower the interest rate on your credit card for a one-time fee. You have authorized us to charge your card for the one-time retainer fee of $595. [Makda] That fee varies on every phone call. Congratulations. You're going to have lower rates for the rest of your life and there will be a once-in-a-lifetime interest charge on your account in the amount of $795. [Makda] Sounds like a pretty good deal. If you want to save money while paying off your debt. But these agents won't reduce your interest rate. And it's not all about that one time fee. What they're really after, your identity. It's called a "low interest" scam. Every year, the Canadian anti-fraud centre gets about 300 complaints.

But our investigation reveals a much bigger problem. We have the names of close to 3000 victims. From just one call centre. Along with the list, our source sends us hidden camera video from Pakistan. Inside call centres. How do you spell your first name? [Makda] Listen to how much info the scammers can get. Remember the victims believe they're talking to a bank or credit card company. Can you please verify me the account number on the face of your card? 6019 18– Can you just verify the last four of your social? 6444. Crap I probably verified that, my information. You have a lot of people out there dishonest, and just try to rip off other people. [Makda] Muhammad Yousfi used to be one of those guys. A fraudster. He says operated a low-interest call centre in Pakistan. [Muhammad] We've done a whole lot of things, a whole lot of bad things, to a lot of good people. And by giving something back gives me closure. It gives me the ability of being able to feel like a human being again. [Makda] He says he's now helping victims get their money back.

And wants to expose this scam. [Muhammad] The whole idea is to actually get a consumer's personal information. It could be used to go ahead and apply for new credit cards. We have actually gone as far as refinancing a guy's– a person's mortgage. We can pretty much redefine their lives by having that information. [Makda] In just one month, close to 3000 Canadians targeted by one call centre. The ultimate goal– stealing your identity. I'm not going to trust nobody else anymore [Makda] Identity thieves steal billions of dollars every year. Is there a way to fight back? ♪ Getting to know you ♪ ♪ Getting to know all about you ♪ [voice-over] Equifax complete is everywhere you can't be. Thank you for calling TransUnion. Thank you for calling Equifax. [Makda] When it comes to flagging fraud in Canada, TransUnion and Equifax recommend two options– a fraud alert and credit monitoring. But do they really work? We're going to put them to the test. First, credit monitoring. What is credit monitoring? If there is any changes made to your file you will receive alerts as well from TransUnion.

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So if someone opens a credit card in my name I should know about it. -That is correct, sir -How much does it cost? It will cost you $19.95 monthly. [Makda] We sign up for credit monitoring with TransUnion and Equifax. That's about 500 dollars a year. Does it really work? I'm sure it does. [Makda] Next, our Marketplace producers apply for new credit cards. If they work we expect to get email notifications from both credit bureaus. Next product, fraud alerts. What's a fraud alert? A fraud alert, ma'am, is a protective statement which stays on the file for six years. We request the creditors to give you a call before extending any kind of credit It's free of cost. [Makda] If the fraud alert works, the credit card company or the bank should call to verify we are, who we say we are, before opening any accounts in our names. That's what we're going to test.

By signing up for more credit cards. One batch of cards with credit monitoring. Another batch of credit cards with fraud alerts. If TransUnion and Equifax protections work, we expect to be tipped off every time. While we wait, we track more Canadians targeted by the low interest scam. Hi, are you Grace Johnston? Yes, I am. [Makda] This time our list takes us to Winnipeg. I want you to take a look at this. What do you see there? That's a lot of my personal information. We've got your credit card number. Yeah. Yeah. The CVC number on the back. Holy-moly. Yeah there's my birthday, my phone number, my address, my email, my mother's maiden name. Enough information to open a credit card, an account. It's just overwhelming to know that it's out there like that. [Makda] Grace can't believe she's on this list because she says she took extra steps to protect herself when she was scammed 3 years ago.

The Royal Bank sent me, you know, a letter saying, "Come pick up your credit card." And I hadn't applied for one. [Makda] She went to the bank, changed her credit card. Got a new password. You thought you had protected yourself. Yeah [Makda] But her new credit card info is still out there. It was a violation of my privacy, it was unnerving. And it keeps coming back to haunt me. So anytime you deal with identity theft, you're impacting someone's trust level, you're impacting their credit score, you're impacting their reputation, and that lasting damage can follow someone for years or decades. [Makda] Claudiu Popa is a cybercrime and identity theft expert. He advises companies and government agencies on how to protect themselves against cyberfraud. She alerted the bank, she changed her credit card and yet this is still haunting her. What she could do and what many Canadians can do, is in fact, change a lot more of those identity elements.

She could change her email addresses, she could set up additional warnings. Maiden names are always used for security questions, and that's why security questions are so insecure. And should not be answered truthfully. [Makda] With that advice Grace tries fighting back against the fraudsters once again. And this time she tries something new. Like us, she signs up for credit monitoring with both TransUnion and Equifax. Okay, so I've now opened it up. [♪♪] [Makda] Across the country in Vancouver, Robert Darch was a victim of old-school identity theft. We meet him at his music studio. I had my wallet stolen, I did what I thought I needed to do. Notified TransUnion, notified Equifax. [Makda] Darch says he signed up for fraud alerts with both companies, if there was any suspicious activity, he expected someone would call to verify his identity. Yeah, I thought, once you notify Equifax, once you notify TransUnion, uh, there's like a firewall in place and you are protected, but that was not the case.

[Makda] Months later he noticed something on his credit report. People were still able to open up bogus cell phone accounts in my name. [Makda] He says creditors never called to verify his identity. But a local news crew did. [mana] Time to get to the bottom of it. -I'm Rob, Rob Darch. [man] The real Rob. The real Rob Darch. I was extremely embarrassed when CTV showed up to my house and asked me why I was selling stolen cell phones on Craigslist. [Makda] Not only was he a victim, his stolen identity was used to defraud others. [Makda] What do you think of fraud alerts? I don't think they have any teeth. I don't think that they are going to protect Canadians. They definitely didn't protect me. [Makda] This is your Marketplace. ♪ ♪ Almost 3000 Canadians targets of a convincing scam. We're gonna go ahead and put the one-time lower activation fee of $995 as well on this account.

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[Makda] That one-time fee goes right to the fraudsters. But the real score? Banking codes. Credit card numbers. SIN numbers. You've been a victim of this more than once? Three or four times. They were trying to take money out my account. When I realized I go, "Oh my God." [Makda] So after the scammers get our private information, where does it all end up? The answers might be in Baltimore at Terbium Labs. Companies hire them to monitor the dark web for stolen information. What is the dark web? The dark web is a part of the internet that is, it's unindexed, it doesn't show up on Google, it's not something you can stumble upon, it's not something you can easily access. [Makda] Emily Wilson is a certified fraud examiner at Terbium. Dark web marketplaces are these big ecommerce platforms where people can buy and trade and sell stolen information.

It is basically Amazon or eBay but for illegal content. So it's like online shopping for criminals? It's exactly that. [Makda] Could Grace's info be on these sites? With her permission we provide Terbium her personal information. What did you find? I found a few things that were concerning to me. We found something that seemed to match pretty closely to what might've been one of Grace's credit cards. So if we go over to one of these carding markets, this is actually the market we found Grace's card on. [Makda] This one here? -This one here. [Makda] But that posting was from a few months ago. It's no longer on the site. The fact that it's no longer there means that someone has probably bought it already, which means that she may be at risk for even more compromise now.

[Makda] We break the news to Grace. Again, violated. The deeper it goes, the more it gets out there, the more it gets out there the more a victim I become, and I don't like being a victim. [Makda] So who is buying and selling our stolen identities? [woman] We've got thousands of Canadian profiles for sale here. [Makda] We go hunting for answers on the dark web. [woman] 1000 SIN numbers. Being offered up for $104 total. [Makda] We reach out to top sellers. Some speak to us, on the condition we don't reveal their usernames. We ask them how they got into identity theft. Identity theft is more profitable than selling drugs? Up to 10 thousand dollars a week? So what will hurt their profit margins? We ask one seller about credit monitoring services. Remember we've signed up for them. They don't know what credit monitoring is? Are they even afraid of getting caught? They're not afraid of the police. So is there any way to stop these identity thieves? We're about to find out. Remember, two Marketplace producers put fraud alerts onto their credit files with TransUnion and Equifax.

They then signed up for new credit cards. To see if the companies would flag it. For service in English, press one. [Makda] For five credit cards. We expect five fraud alert calls. We only get three. Okay, there is something on your credit bureau report. That's why we called you. [Makda] That means fraudsters could've scammed us 2 out of 5 times so how about credit monitoring? This time… We sign up for 6 credit cards. We add credit monitoring from Equifax and TransUnion. If it works, we're expecting to get two alerts for every application so 12 alerts, right? Wrong. For 6 credit card applications, we get six alerts. But they come from one credit bureau never both. Confused? We are too. Turns out banks or credit card companies usually only do credit checks with one credit bureau. Not both. And good luck figuring out which one.

So if you don't pay hundreds of dollars a year for credit monitoring with both Equifax and TransUnion, you may be a victim of fraud and not even know it. We show our findings to cybercrime expert Claudiu Popa. Definitely it's a flaw in the system, no amount of monitoring will give you 100% guarantee that you're going to be protected against identity fraud and identity theft. So essentially, someone can steal your information, open an account, a credit card, and you would only find out afterwards? That's right. It's a reactive system. So is there anything that would work? A credit freeze is an organization tries to check your credit, and your account is frozen, that credit check would fall flat and would not be possible to be completed. [Makda] A credit freeze locks your credit report with TransUnion and Equifax. No one. Including fraudsters. Can access your credit unless you unfreeze it. Can Canadians get a credit freeze? Credit freezes are not available in Canada. [Makda] And here's the thing. They are available. In the US. For free.

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In Pakistan, whistle blower Mohammad used to run a low-interest call centre scam. He knows how effective credit freezes can be. If the Canadian consumer had the ability of imposing a credit freeze that would actually be a huge, a huge blow to the lower interest rate credit card scammers, hackers. In general criminals all across the globe. [Makda] To prove the point, he provides us with an audio recording of a low-interest scam in action. Note the person getting the call is an American, who appears to have a credit freeze. We heard back from the banks. Unfortunately, because the way your credit reports is set up we cannot get through to see what your credit score is. -Yeah. -I'm gonna shred your file. Yeah, okay. What do you think about that? This is a credit freeze working for the consumer. Clearly, it's a good preventative tool, and everyone should have access to it. It worked.

Yeah, it worked in that situation. Then, whatever we have in place is not working. Could a credit freeze have made a difference for you? It probably would have. But you don't get that option, as a Canadian. That's very frustrating and depressing to hear. I would encourage the governments to give us a situation where we can freeze our credit, can protect ourselves from fraud. I don't see a good reason why we can't have that in our country. [Makda] This is your Marketplace. We have the personal information of thousands of Canadians. They're victims of a credit card scheme. Sorry to have to deliver this kind of information. That's okay. If it's not you, then it'll be somebody else, right? I really thank you for talking to me. Thank you so much for helping. You're welcome.

Their personal information, SIN numbers, credit card information, with some of that ending up for sale on the dark web. Equifax and TransUnion offer credit monitoring and fraud alerts to protect you against identity theft but our test found they don't always work. They tell us credit monitoring is a good way to stay alert to unauthorized activity. Equifax also says it would be a mistake to discourage consumers from signing up for fraud alerts. Experts tell us one of the best ways to stop scammers. A credit freeze. But they're only available in the US, where credit bureaus must offer freezes for free, by law. So why not Canada? [Makda] Turns out, Ontario planned to do the same thing. But that legislation stalled after last year's provincial election. We want to know why but the minister in charge of consumer protections, Bill Walker, who supported freezes while in opposition won't grant us an interview. So we catch up with him at an event in Owen Sound. Minister Walker, I'm Makda from CBC's Marketplace.

-Pleasure, how are you? -Nice to meet you. Well, we've reached out to your office a few times to talk about identity theft protections. Can you tell me why credit freezes are not available in Ontario? I'm just really looking at all of those things. I don't have a specific answer for you at this point. Certainly, what we want to do is make sure, it's paramount that consumer protection is paramount for everyone and we want to make sure we do things right. The legislation already exists, it already passed your government just needs to proclaim it. So why has that not happened? What I can tell you is anything that I do I want to have balance, I want to ensure that I'm doing things that are going to truly protect people. But credit freezes are available in the US. They have been free since last year. So shouldn't people here have that same protection? I certainly want to commit to the public of Ontario that if there's anything going on from a scam or a fraud perspective we want to make sure we jump on it and understand it and take action.

[Makda] What do Canadians who've had their lives disrupted by identity theft have to say? That's our information, and if I can control that being put out there, that would be, that would make me feel a lot better. If they can do it in the States, why can't they do it in Canada? ♪ ♪ [Makda] Have you been a victim of identity theft? Send us your story to marketplace@cbc.ca..