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Canadian Credit Cards > Credit Card News > What should you do if a friend defrauds you?


What should you do if a friend defrauds you?

By Josephine Lim

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If your identity is stolen, reporting the incident to the police is usually one of the first things you want to do. But if it turns out the perpetrator is someone close to you -- cases known as "familiar fraud," -- that decision might not be so easy. familiar-fraud

Identity theft is a growing threat in Canada. In fact, 2013 saw a record high number of identity theft cases, according to Equifax Canada.

Most of the time, the victims of identity theft do not know anything about who stole their personal information, says Susan Sproule, an information systems assistant professor at Brock University. But in a 2008 study on identity theft that Sproule helped conduct, 7 per cent of the identity theft victims surveyed said the criminal was someone close to them.

Desperate times cause reckless measures
Perpetrators of familiar fraud are desperate, says John Russo, vice president, legal counsel and chief privacy offer at Equifax Canada. The information is readily at hand and it's easier to steal from someone they know.

Perhaps the individual has lost a job or lost money to gambling or drugs, adds Patrick Baillie, a psychologist in the forensic outpatient program at Alberta Health Services. The thief may rationalize his actions by saying that the victim will not miss the money or the bank will reimburse the money.

"They think they can get away with it; they know what they're doing is wrong, but they take the risk anyway," says Baillie.

Options for victims of familiar fraud
All cases of identity fraud should be reported to the local authorities or the Canadian Anti-Fraud Centre, and an affidavit should be filed, but that doesn't always happen, says Sproule.

"The ones where [the thief] was close to the family were reported (to the police) less frequently," she says. "Either the victim was embarrassed that it happened or they're trying to protect the person."

The emotional impact of having someone you know steal your identity can be dramatic. Many people go through a period of denial; most feel a range of emotions, from anger to bewilderment. You may become hesitant to trust others, or suffer anxiety that it could happen again. Worst of all, you may even feel personally responsible for the situation if you think you were too trusting or made a mistake that led to the situation.

If you are a victim of familiar fraud, speak to a counsellor, says Heidi Illingworth, executive director of the Canadian Resource Centre for Victims of Crime.

Whether you'll want to take legal action will depend on your circumstances. Some aspects that will affect your decision include: your relationship with the perpetrator, the value of what was lost, how long it will take you to remedy the situation, whether the individual has a previous record and their attitude after getting caught.

Your legal options are:

1. Proceed as if the thief is an unknown person
If you want the protection of the law, you must file a report, and you should file it as soon as you know about the theft. When you report a case of identity theft, you'll sign an affidavit that states you were a victim of identity theft, which will help salvage your credit score when dealing with the credit bureau and creditors, says Russo.

Making a police report is not the same as pressing charges, but on the other hand, the penalties the perpetrator faces will not be your decision, adds Baillie. Consequences can vary, based on the severity of the offence and whether the individual has a criminal record.

2. Give the thief a chance to apologize and take responsibility
This option includes giving the culprit a chance to express remorse by admitting wrongdoing and committing to change. If the fraudster doesn't make amends or pay you back, contact the authorities. The down side of this option is that there's a risk the offender will continue the fraud.

3. Pay the debt and live with the consequences
If you don't report the theft, you are on the hook to repay any money the thief used. It'll take years to rehabilitate goodwill with creditors since, based on your credit score, they will assume you don't pay your bills, says Russo. Also, you're concealing a crime and perpetuating the culprit's wrongdoing, he adds.

See related: When your child uses your credit card without permission, Power of Attorney: Lessons from the trenches

Published: March 18, 2014