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How to spot and avoid scams in online classifieds

June 21, 2023

Classified ads can be a great way to buy and sell used items and search for your next apartment or vacation rental. But online marketplaces are also a prime hunting ground for scammers, who have figured out plenty of ways to fleece people looking for a bargain. Here are some common traps to watch out for, plus some tips for how to stay safe when buying and selling online.

Examples of 3 common scams

Fake rental listing scam

You find an apartment or vacation rental listing online. The description is detailed, the photos look genuine and the price is likely lower than the going rate. You respond to the ad and, because the place is so popular (or for some other seemingly legitimate reason), the person who replies tells you they need an e-transfer to hold the place for you or guarantee a visit. It's only when you knock at the door that you realize you've been scammed. The real owner of the place has no idea that someone has posted a fake ad online using photos taken from social media or a property rental website.

Watch out for this kind of scam in ads for pets, used cars and RVs too.

Roommate scam

You're looking for a roommate and, little do you suspect, a scammer replies to your ad. They might say they live abroad or too far away to visit the apartment right now, but to show you they're serious, they send you a cheque and ask you to take the ad down. The cheque you receive is for too much money, though—often, there's an extra zero bumping $1,000 up to $10,000, for instance. The scammer claims it's just a mistake and asks you to deposit the cheque and then wire or e-transfer the difference back to them. When you deposit the fraudulent cheque, it becomes your problem. The cheque won't clear and you'll lose the amount you thought you were depositing as well as any money you transferred to the scammer.

Overpayment scams like this are often used when selling things too.

Fake job posting scam

Maybe you've responded to a job posting that promises the opportunity to make money working from home or doing some administrative work. Or maybe you've been approached by someone who's found your résumé online and encouraged you to apply for a position they're trying to fill. The thing is, the job doesn't exist. It's all a scam to harvest your personal and financial information. The scammers might say they need more information about you for the hiring process or to set up direct deposit for your pay. Or, they might want you to help them test the company's payroll system and send you a cheque to deposit (spoiler: it's fake), then ask you to refund the money. If you fall into the trap, you can kiss your money goodbye.

Preventing fraud: What to watch out for in the online marketplace

  • Be suspicious if someone offers you more than the asking price for an item. If someone sends you a payment for more than the agreed amount, decline it.
  • Don't accept payments by cheque. Cheques take time to process after you deposit them and if they bounce, you're the one who loses out. Ask for payment in cash or by Interac e-Transfer instead.
  • Never send a payment before seeing an item in person or visiting the inside of a rental property.
  • Do your homework to make sure the ad is genuine. For a rental property, you can check the names of the owners on the property assessment roll or check the province's or territory's business registry. And of course, if you're going to pick up a used item, check the address first to make sure it exists.
  • Limit the information you share online and on social media.
  • If a stranger sends you money and asks you to deposit it, don't.

Red flags to watch out for 

Scammers are sneaky and often have more than one trick up their sleeve. Details vary from one scam to another, but the approaches they use tend to be quite similar. Keep your eyes peeled for the following signs of a scam.

Things that seem too good to be true

Maybe you're selling something online and someone tells you they'll buy the item sight unseen. Or maybe you've responded to a job posting and you're offered the position right away without an interview or reference checks. Trust your instincts. If something seems too good to be true, it could be a scam.

Also, be suspicious if a rental property or an item for sale is listed for an unusually low price, even if the seller gives you a convincing explanation. This is a common tactic used by scammers to lure potential victims and get money out of them in different ways.

Sellers who ask for payment in advance (and buyers who pay too much)

Scammers may ask you for a deposit or for payment in advance and tell you it's because of high demand or because they've been let down before by potential buyers who weren't serious. This is a tactic they use to scam many people out of large sums of money at the same time before vanishing and leaving them high and dry.

If the tables are turned and someone sends you more money than agreed, decline the payment and insist on a new one for the correct amount. This is a common tactic used to scam people not once, but twice. They don't get their money because the initial payment is fraudulent, and if they've refunded the scammer's overpayment, they lose that money too. 

People who won't meet you in person

Be wary if someone you're communicating with can't meet you in person. They might say they're out of the country, taking care of a sick family member or live too far away to risk a wasted journey. And they might say they'll send a courier to collect the item and ask for your email and your full address to arrange the pickup. It's also a red flag if someone insists on communicating by text, instant message or email and claims their connection isn't good enough to speak to you on the phone or by video call. Be vigilant. All of these communication methods make it easier for scammers to conceal their identity.

Phantom sellers

Be especially on your guard when communicating with someone whose online profile is scant on detail. If you don't see any (or very few) photos, posts or previous transactions, or if they don't have many friends or have only recently joined the platform, it could be a fake account created by scammers to stay anonymous.

What to do if you suspect a scam

If you suspect you've been a victim of a scam, don't blame yourself. Scammers are constantly refining their tactics and can be very convincing.

It's important to act quickly and notify:

You should also report the incident on the classified ad platform you used, and report it to the Canadian Anti-Fraud Centre External link. This link will open in a new window. and the Autorité des marchés financiers External link. This link will open in a new window. (in Quebec). You'll be doing your part to fight fraud and help other people avoid falling into the same trap.

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