CRA phone scam uses fear of tax man to swindle 'not so smart' Canadians

Scam artists are preying on one of our biggest fears ... getting into trouble with the tax man.

Canadians across the country are falling victim to a phone scam where the fraudster poses as an agent with the Canada Revenue Agency. People are told they owe tax money and must pay up.

The caller threatens people that if they don't act fast, their assets will be frozen and police will arrest them.

Sgt. Matthew D'Asti with the Windsor Police Service notes that the time is ripe for this type of scam because we're on the heels of tax season. "We've all supposedly filed our taxes with the government and perhaps people are thinking, 'Oh gee, maybe I do owe money, maybe I am in trouble here,' and that's what these [fraudsters] are preying on."

Callers get nasty

Versions of this type of phone fraud have circulated before, but the Canada Revenue Agency is becoming more alarmed. This month it noted on its website an increase in these types of calls and the use of unpleasant tactics such as "aggressive and forceful language to scare [taxpayers] into paying fictitious debt."

D'Asti said Windsor police have recently been inundated with complaints about the scam and that three people fell victim just last week.

"What we're hearing from these victims is, it's an urgent call. It's like a life and death situation where if you don't deal with this now, then you are going to jail."

It appears to be a Canada-wide problem. Police across Ontario, including Toronto, have recently issued alerts. So has the RCMP in Nova Scotia.

Calgary police said 50 victims have been bilked out of $100,000 total since 2014.

Kristie Verheul, staff sergeant with the force's economic crimes unit, said she believes many of the calls are coming from India and that the average victim ends up losing between $900 and $2,000.

Scammers often instruct the victim to pay the debt by wiring money or by purchasing prepaid credit cards and then telling the thieves the cards' codes so they can access them.

Fraudster calls CBC News

Sometimes unwitting fraudsters target the wrong person. I got a call at my home last week from someone with a south-Asian accent who claimed he was from the audit department at the CRA. I was told I owed $1,565 in back taxes.

He said that if I didn't pay up immediately, a "police officer will take you into custody and then you will have to resolve the matter in the court."

He also warned my passport and social security card would be cancelled and my assets frozen.

The fraudster then instructed me to remain on the phone with him while I went to my bank and withdrew the money. He would then tell me how to send the cash.

When I informed him I was a CBC News reporter and that I knew this was a scam, he didn't deny it. When pressed for comment, he said, "I have many things to say. The Canadian people are not so smart. They are fools and they are paying every day us $10,000."

Victims falling prey

D'Asti said the scammers are "very persistent and they continue until they find a victim and then they prey on them."

He reports that a man recently lost just over $1,000. After sending the money, the fraudster told the victim he made a mistake and that he actually owed a few hundred dollars more.

The sergeant explains that's when the man became suspicious. "He thought, 'That's kind of weird, the government should have that together and know exactly what I owe.'" The man then reported the case to Windsor police, but by then it was too late to get his money back.

Verheul said this month an elderly Calgary woman was instructed to go to a store and buy four prepaid Visa cards to pay off her CRA debt.

Fortunately, the store clerk saved the day. "The clerk became suspicious and asked [the victim] the reason behind the purchase and actually contacted police on her behalf and no money was lost," Verheul said.

Hard scam to crack

The sergeant said these types of phone scams are difficult to investigate, especially when many calls are coming from outside Canada.

But she is optimistic now that Calgary police have started working with Toronto police and forces in B.C. to try to crack the scam.

"The collaboration of agencies across Canada is going to be key for [solving] this," Verheul said.

She also suspects there is more than one scam operation. She said occasionally callers actually have detailed personal information about their victims and it appears some of the calls are coming from the Toronto and Montreal area.

The sergeant also believes there are many more victims out there. "We are only probably getting the tip of the iceberg reported to us. So it is really important for people to come forward and report these instances, especially in the case where they've lost money," she said.

Verheul also wants people to take note that the CRA would never ask a person to wire cash or prepaid cards as payment. She adds that the agency doesn't threaten to arrest people if they don't immediately pay up.