Nearly $400M lost to fraud not a ‘priority’ to federal government, former Mountie tells MPs

OTTAWA – Canadians only recovered the equivalent of one per cent of the “historic” $379 million declared lost to fraud last year, leading one veteran retired RCMP expert to call for an overhaul of how authorities combat the crime.

“If the status quo approach to fraud awareness worked, we would not be seeing losses growing on a yearly basis,” John Mecher, an RCMP fraud investigator for 10 years who retired in 2019, told MPs on the federal industry committee Monday.

“We need to do much more, and we need to do it now,” he added. “It’s my humble position that the RCMP and, by extension, the federal government, doesn’t see fraud and fraud awareness as a priority.”

Mecher testified alongside other experts as well as three RCMP officials during the committee’s second meeting of its latest study on fraudulent calls in Canada, a national scourge that has impacted almost all Canadians who own a phone within the last few years.

During the same meeting, the director general of the RCMP’s National Cybercrime Coordination, Chris Lynam, told MPs that 2021 had been a “historic” year in the worst way possible for fraud prevention.

That year, Canadians declared close to $400 million in losses to fraud to the Canadian Anti-Fraud Centre (CAFC), a 130 per cent increase over the previous year and a record for Canada.

He said the vast majority of those declared losses were tied to cybercrimes, but phone scams remain a prevalent issue. In 2021, the CAFC received 34,000 reports of fraudulent calls.

And that’s only the tip of the iceberg, as officials estimate that only five to 10 per cent of all frauds are reported to authorities.

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But Canadians hoping to recover those lost funds best not hold their breath. Lynam said that in 2021, the CAFC “assisted” in 34 instances in which a total of only $3.4 million were either frozen or recovered. That’s less than one per cent of the total amount of fraud declared during the same year.

“However, we recognize that fraud in all its forms is an omnipresent and lasting challenge, and that we can not simply proceed with arrests to get away from the problem,” he said, pointing to the need for international partnerships to conduct investigations and arrests abroad as well as increased cybercrime and fraud awareness and prevention.

But Mecher told MPs the government has failed to implement measures that are known to reduce fraudster’s access to our phone systems even though call scams have been around “for decades.”

He illustrated his argument by pointing to the well known “Canada Revenue Agency scam” where fraudsters call claiming to be from the tax agency and extorting money out of victims by threatening them with audits.

“With a view to the CRA scam that arrived in Canada in 2014, along with subsequent variants, I remain unconvinced that there is any sense of urgency in creating a barrier to the exploitation of our phone systems.”

Acting RCMP officer in charge of the CAFC, Guy Paul Larocque, told MPs that the force is doing more and more fraud prevention, but that “we’ll never do enough.”

But Mecher said current fraud prevention methods are clearly not working and the RCMP needs to rethink how it reaches out to Canadians, and particularly seniors who are less likely to be online.

“Fraud awareness is the solution and that needs to be employed. However, it needs to be employed in a meaningful, relentless and focused manner. That does not always happen,” Mecher said.

“Although fraud awareness can involve websites and social media. However, if potential victims are unaware of those platforms, it’s pointless to believe that a series of tweets or online posts can create meaningful fraud awareness.”

He says it’s more crucial than ever for the RCMP to review its fraud prevention outreach programs to make them more effective because “we’re seeing losses completely off the charts to what we were seeing 10 years ago.”

Larocque said older Canadians (60 years and older) represent 30 per cent of fraud losses on an annual basis.

Larocque also told MPs that combatting fraud such as scam calls is always challenging namely because criminals are often based in foreign countries and because they are always changing their methods to stay one step ahead of the curve (and police).

“Fraudsters are always adjusting to their target audience with the aim of maximizing their profits,” Larocque said in response to questions from Bloc Québécois MP Sébastien Lemire.