Waterloo student lost $100K in extortion scam, wants you to avoid the same fate

A Waterloo student is speaking out after losing nearly $100,000 in an elaborate overseas extortion scam, in hopes he can spread awareness and keep others from falling victim to similar schemes.

Aaron Yau, a Vancouverite now in his second year in the University of Waterloo's optometry program, said it all started after he received a call stating a package in his name was being held by customs officials in China because it contained banned materials.

"I was terrified for the most part. I started panicking. You never want your name to be associated with any criminal activity, especially when you've been a good citizen," he told CBC Kitchener-Waterloo.

Over several weeks, the scammers led him to believe he was helping a police investigation into the shipment made in his name but that he had not actually sent.

"This whole time they just sort of created this bubble of protection. I was expecting that if it was a scam, that they would either ask for my personal information right away or they would ask for money right away or something absurd like that, but they didn't. They waited," he said.

"And then eventually, I suppose when I trusted then, I gave them my money. Then they took it and ran."

How the scam works

Yau says in early September 2020 he received a call from a person alleging to be from a courier company, claiming a package in his name was sent to Xi'an, China, where it was being held because it contained contraband.

Soon after, Yau was told by Xi'an Police — or who he thought was Xi'an Police — that his personal information had been used to open a bank account for money laundering and that he was now associated with a local criminal investigation.

Yau said the fake officials offered him protection and promised to investigate the incident under the condition he comply with the probe and not speak of the criminal matter to anyone. They provided him with what appeared to be official, stamped documentation and police badges.

It was more than a month later that the fraudsters requested Yau wire transfer money to make sure it wasn't laundered — or so they said. They promised to return the money once the investigation concluded. And so, Yau wired $12,530.

He says the fraudsters told him his money checked out, but that they needed to test his line of credit, which prompted a second wire transfer of $82,560.

Throughout the transactions, Yau remained in touch with the fraudsters. It wasn't until mid-December 2020 that they stopped responding.

"I started becoming anxious," said Yau, who then realized he'd been scammed.

He said it took him about two weeks to process what had happened. He contacted the Waterloo Regional Police Service as well as Vancouver and Hong Kong police officials. He reached out to his credit agencies and bank.

He said officials in Hong Kong told him they were unable to freeze the account that had been used in the scam because too much time had passed. He said his Canadian bank also couldn't intervene because he had transferred money willingly. 

Yau said local police told him it would be difficult to get his money back, saying tracing money overseas adds investigative barriers. 

Targeted scams

Yau said he believes he was targeted, in part, because he is Chinese-Canadian — and he's not wrong.

There's a history of similar scams targeting Asian communities, says Jeff Thomson, a senior RCMP intelligence analyst with the Canadian Anti-Fraud Centre.

"These specific ones targeting the Asian community aren't reported as often as some of the other variants we see, but it's certainly a very common scam that continues to be reported on a fairly routine basis."

"It's coming in the victim's home language," he said. "You have more of a relationship to that police service in that country, so you're more likely to listen to those calls."

These scams are also designed to play on people's emotions and fraudster's work over time to build trust, he added.

"When you get … police calling you that you're involved in a criminal investigation, it immediately evokes that emotional fear, people get anxious, they're fearful, and they're more likely to react and follow through with the demands or the request that the person calling is making," said Thomson.

In 2020, the Canadian Anti-Fraud Centre received more than 17,000 reports related to extortion in Canada. About 6,600 of those victims lost a total of more than $12 million. That's an increase from 2019, when there were 2,300 victims and a loss of more than $10 million.

In the wake of fraud prevention month, Thomson said its important people stay vigilant and speak out about fraud, as Yau has. 

'The only way to defeat fraud is by spreading awareness'

Yau said he's come to terms with the money he lost, but now faces financial challenges.

"The debt I'm in now, on top of student loans, it's worrying," he said, noting he started an online fundraiser to try to help cover some expenses.

He said he's learned from what happened and in hindsight recognizes the red flags he missed.

Yau said he chose to share his story to help make sure no one else goes through what he did.

"I wanted people to know more about scams in general. I wanted people to know about what happened to me in case something similar happened to someone else," he said. "It was something that I never thought could happen to me."

"The only way to defeat fraud is by spreading awareness of fraud."