“We’re seeing dollar amounts between $1,000 to $10,000 being stolen in each case,” says Ajay Sood. “Bitcoin machine operators [in Toronto] are telling us that almost every person coming in to use Bitcoin, are using the machine to pay their taxes.
The majority of these fraudulent calls begin the same way. Someone posing as a Canada Revenue Agency agent calls you and says your taxes were filed incorrectly, you owe them money and that you need to transfer money over to them immediately. The fear tactics ensue, and victims are often told they may be faced with a serious fine, or worse, jail time, if they don’t act quickly.
“They prey on fear,” says Sood. “It gets people thinking more in the line of fear and it silences the logic and reason part of them.”
But more recently, victims are no longer being asked to use their credit card to transfer the money, but instead, are directed to withdraw money from their bank accounts, visit a nearby Bitcoin machine and deposit the money into the system. The machine converts the cash to Bitcoin – currently valued at approximately $11,000 CAD – and transfers the funds to the caller. It’s next to impossible to trace, explains Sood.
Toronto Police issued a statement January warning residents of a fake CRA scam that asked people to pay taxes with Bitcoins.
“Police are reminding people that the CRA does not ask for Bitcoin payments, send QR codes to request payments or send police officers to arrest people for immediate non-payments,” the statement read.
Technology isn’t going to help reduce this type of crime, says Sood, only education will.
“It’s hard for a technology-based solution to solve this. I can’t stop you from going to a Bitcoin machine and putting in money,” he says.
But unfortunately, the situation might only get worse before it gets better, according to Sood. Attackers don’t need to be tech savvy anymore, and with Bitcoin entering the equation, it makes it that much easier for scammers to grab the cash and disappear.
“I would say it’s at a fever pitch now … but I’ll be honest with you, I don’t think we’ve scratched the surface of Bitcoin fraud or digital wallet fraud yet. Credit card fraud, we hit the nexus of that a while ago. It’s a multi-billion dollar industry. In digital currency fraud, we’re only in the tens of millions. I feel like this is still the proving ground for Bitcoin … there will be more innovative and nefarious attacks down the road.”
When it comes to software such as TurboTax and StudioTax, Canadians shouldn’t be worried about using them, says Sood.
“Those systems are very highly guarded … I have a high level of confidence in those systems.”
Deborah McCoy – Is an investigative journalist and has over 17 years of investigation experience in both the private and public business sectors. Since joining CFN, Ms. McCoy has become a true advocate for victims of fraud and increasing the public’s awareness in fraud prevention.