Justin Smith has been hit with a one-two punch of bad luck.
First, the Toronto man was duped by a job scam that made off with $3,000. Then his longtime bank, Tangerine, helped itself to money Smith had in his tax-free savings account to recoup what it had lost in the scam.
“You keep your money in the bank because you think it’s safe,” he said. “And they treat the money like it’s theirs, and they just move it around to protect themselves. That’s not fair.”
Tangerine is an online subsidiary of Scotiabank that offers no-fee savings and chequing accounts.
Here’s how the double episode of misfortune unfolded:
Smith, who works as a delivery person, had applied to work from home as a data entry clerk for the grocery chain Sobeys. He was offered the job, and was excited to receive an employment contract along with a cheque from his new employer for $3,495 to purchase a laptop, phone system, headphones and various other office equipment.
“It all looked totally authentic and real,” he said.
Smith had checked out the names of the people who handled his hiring, and reviewed their profiles on LinkedIn to confirm they worked at Sobeys. So when he received an invoice from a firm called Tech Insight Services for the office equipment, and was instructed by the Sobeys hiring manager to make a $3,000 payment right away, he promptly sent an e-transfer.
“I only had $800 or so in my chequing account at the time, but after depositing the Sobeys cheque, I had over $4,000,” he said.
What Smith didn’t know was that the entire process was a sophisticated scam. The website where he’d applied, the supposed hiring managers, the cheque — all were fakes. His job application hadn’t been sent to Sobeys at all. He had fallen into a snare set to swindle eager job seekers. The cheque even fooled Tangerine; the bank instantly deposited it to Smith’s account.
Alarm bells didn’t start ringing until the next day, when Smith’s supposedly new employer told him he should send another $3,500 for a new desk.
“At this point, I became suspicious because no one spends that kind of money on a desk,” he said. “I called up Tangerine and I said ‘OK, I deposited a cheque yesterday, you guys let me send the money. I’m concerned that this cheque is going to bounce.'”
WATCH | Bank raids fraud victim’s account:
Go Public report investigates the banking rules that allow seizure of funds from different accounts. Check your account’s terms and conditions, it’s in the fine print under ‘right of offset.’ 2:09
Smith learned quickly that the scammers had already accepted his e-transfer, and a Tangerine representative said that meant it was too late to cancel it.
“He asked ‘Do you have money in your other accounts to make up for that?’ and I told him I didn’t want the bank to take money from those other accounts.”
Because his tax-fee savings account was registered with the federal government, Smith believed the money in it was untouchable. He was wrong.
Deep in the fine print of the agreements many customers receive when they open a bank account is a clause known as the “right of setoff,” also sometimes referred to as the right of “offset.” It states that the bank has the legal power to seize funds from a debtor or guarantor of a debt. Although that right may vary depending on the product or plan, it’s in most agreements; RRSPs and registered retirement income funds are typically exempt.
This means if the bank accepts a cheque or another type of deposit that doesn’t go through as expected, and a customer withdraws or transfers the funds, the bank has effectively made a bad loan. It then has the right to access money in other accounts it holds for that customer, in order to recover its loss. There is no need to get authorization, or even alert the customer beforehand.
Shortly after the fake Sobeys cheque bounced, Tangerine took just over $3,000 from Smith’s account.
Smith sent two letters of complaint to the bank, asking to be compensated, but was told each time that the bank is not liable for his loss, and that he should report the scam to police.
Job scams have become common during the pandemic, according to the Canadian Anti-Fraud Centre. CBC News reported on a similar scam that involved Sobeys in June. In that case, the victim’s bank, the Bank of Montreal, spotted the fraud and didn’t send the payment.
Sobeys is aware of the fake websites bearing its name, and said it is monitoring the web 24/7 to try to have them shut down. In a statement the company said anyone “looking to join the team or confirm the legitimacy of a job posting,” should check jobs.sobeyscareers.com.
After being contacted by CBC’s Go Public team, Tangerine said it will refund the $3,000 to Smith, and also pay $250 for a credit monitoring service for him.
In an email sent to Smith that was shared with CBC News, the head of the bank’s client response group, Emery Sziraky, said: “We have conducted a comprehensive review of your recent experience with Tangerine and we deeply regret that we did not meet your expectations.”
The bank also emailed a statement to Go Public, saying it was “pleased” to have resolved the matter to Smith’s satisfaction. The statement included a warning about fraud, and said Tangerine “work[s] closely with the Canadian Anti-Fraud Centre, the Canadian Bankers Association, law enforcement, and counterparts at other financial institutions,” to ensure clients are protected.
But Doug Hoyes, an insolvency trustee in Kitchener, Ont., said all Canadians should be aware how common it is for banks to access customer accounts to recover their own losses.
“It blindsides people,” Hoyes said. “I’ve seen it happen thousands of times.”
Hoyes said banks typically put a hold on large cheques deposited to the accounts of new customers; they are unable to access the funds until the cheque clears. But for longstanding, trusted customers, banks will often extend a form of credit and make funds available immediately.
Hoyes said that most customers appreciate the ability to access deposits right away.
“In most cases what the bank did is very helpful; ‘Hey, you put the money in, you can use it.’ But in this case, it backfired,” he said.
A five- or even three-day hold on the cheque Smith had received would have stymied the scammers, but he was a longtime Tangerine client. He opened an account in the late ’90s when the bank was still called ING Direct, prior to a rebranding. So he was given instant access to funds.
Hoyes added that he often tells his own clients, all of whom have money problems, to set up bank accounts at two different financial institutions. “It is wise to have your assets at a different bank than your debts, if it’s possible,” he said. That way if a payment goes wrong in any way, the bank isn’t able to dip into other accounts on file, he explained.
As for Smith, he’s still eager to find a new job, and is grateful that Tangerine decided to do “the right thing.”
“I don’t want to make myself out to be a victim here,” Smith said. “I’m just trying to help other people not become a victim of these scammers or, quite frankly, become the victim of their bank.”
The new regulations will take effect in Bowen Island, Tofino, Pemberton and 14 other communities on Nov. 1
Published Apr 18, 2024 • Last updated 2 hours ago • 5 minute read
With less than two weeks before B.C.’s short-term rental restrictions take effect, visitors staying at an Airbnb, Vrbo or other short-term rental homes are told to check with their hosts to make sure they are not staying in illegal accommodations.
Guests should ask hosts if they are compliant with the new rules, said B.C.’s housing minister, even as he reassured guests they won’t be on the hook.
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“The responsibility to comply with the rules fall with the hosts and the short-term rental platforms,” said Ravi Kahlon at a news conference with Premier David Eby in Langley on Thursday. “We encourage people to continue to explore beautiful British Columbia, and stay in legal short-term rental accommodations.”The new regulations set to take effect on May 1 would restrict short-term rentals to principal residences and either a secondary suite or a laneway home/garden suite on the property.
They apply to more than 60 B.C. communities with populations of more than 10,000 people, as well as 17 smaller communities, including Bowen Island, Tofino, Osoyoos, Pemberton, and Gabriola Island, which have decided to opt in. For these communities, the rules will take effect on Nov. 1.
The new legislation carries penalties of $500 to $5,000 a day per infraction for hosts and reach as high as $10,000 a day for platforms.
Eby said the province’s principal residence requirement is meant to crack down on speculators while allowing homeowners to rent out spaces in their principal residences if they choose to do so.
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He acknowledged the restrictions could put some property owners’ investment and retirement plans into disarray, but made no apologies, saying people with money to invest should put their money elsewhere.
“Do not compete with individuals and families who are looking for place to live with your investment dollars,” Eby said, adding the government will “tilt the deck every single time toward that family.”
The government has set up a provincial enforcement unit, currently staffed by four people, to conduct investigations into alleged non-compliant units.
The enforcement will be largely done digitally and includes the use of a short-term rental data portal that’ll help local governments monitor and enforce regulations.
Municipalities with their own short-term rental restrictions can upload non-compliant properties to the portal, said Kahlon. Platforms will have five days to verify whether the units are on their sites. Local governments without short-term rental licensing can report properties they believe are not compliant.
The platforms will be required to remove non-compliant listings at the request of local or the provincial governments and provide the province with a monthly update of short-term listings on their sites, said Kahlon.
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Companies such as Expedia and Booking.com are working to get ready for the new rules, and he’s hopeful other platforms will follow suit by May 1.
Airbnb said it has been in discussions with the provincial government for months and plans to comply with the new rules, but predicts they will harm the province’s tourism sector by taking extra income away from residents and limiting accommodation options for people, while doing little to improve the housing crunch for residents.
“They’re doing this because they say there’s going to be an impact on housing, that this will free up more housing for people,” said Nathan Rotman, Airbnb’s policy lead in Canada. “That is just not true.”
Despite several years of Airbnb restrictions in Vancouver, for example, rents have gone up while vacancies stayed low, he said.
Kahlon said the pending rules are already having a positive impact on housing availability with short-term rentals being converted to long-term use or being put up for sale.
In March, more than 19,000 entire homes in B.C. were listed as short-term rentals for most of the year, said the province. Even if half of those units are returned to the long-term market, that’ll make a “substantial difference” in communities, said Kahlon.
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Eby said there has been a “massive upswing” in hotel construction in key tourist areas as an unintended result of the new policies.
Bowen Island, a small community of 4,200 whose council voted in March to opt into the province’s short-term rental regulations, has seen increased pressure from tourists and housing demand in recent years.
The decision was council’s way “to balance what is appropriate use in residentially-zoned neighbourhoods while still allowing property owners to still do what they want with their properties,” said Mayor Andrew Leonard.
The principal residence requirement still allows for Airbnb and other short-term rentals on the island, he pointed out. “The vast majority of short-term rental operations are unaffected. This just keeps it in the homes of homeowners instead of speculators.”
Some communities, including Parksville’s Resort Drive area, were granted an exemption last month under the province’s exemption for strata hotel or motels. The area was purpose-built as tourism accommodation more than two decades ago.
The new legislation is being challenged in B.C. Supreme Court by Victoria-based groups and the Westcoast Association for Property Rights, who are calling for a review of the new rules and compensation for financial losses.
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According to Airbnb, Airbnb bookings and related spending generated around $2.5 billion in B.C. in 2023 and created 25,000 jobs.
The company says that for every $100 spent on an Airbnb booking, guests also spent about $229 on other travel spending.
More than three quarters of hosts polled by the company say they use their Airbnb earnings to cover rising costs of living, especially housing.
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Short-term rental platforms that violate B.C.’s pending regulations can face administrative penalties of up to $10,000 per day, officials announced Thursday.
Investigations into non-compliant companies and individual hosts will be conducted by a provincial enforcement unit, which will launch once the new rules take effect on May 1.
The Ministry of Housing said daily penalties will range from $500 to $5,000 for hosts, depending on the infraction, and reach as high as $10,000 for corporations.
Speaking at a news conference in Langley, Premier David Eby reiterated that the purpose of the province’s regulations is to open up thousands of potential long-term housing units that are currently being offered year-round on apps such as Airbnb and VRBO.
“The commitment that we have as government is to ensure that the housing stock that we have – the homes that are actually built – are available for people who are looking for a place to live,” Eby said.
The premier acknowledged his family, like many others in the province, has benefited from the availability of short-term rentals, and stressed that those types of accommodations will not be banned outright next month.
But the government previously calculated there were 19,000 whole homes being used exclusively as short-term rentals last year.
“I can tell you there are 19,000 families and individual that are looking for a place to live … right now that are in competition with people who are looking to operate homes like hotels,” Eby said.
Under the new rules, hosts can still rent out their primary residence, as well as one “additional unit, secondary suite or laneway home” on the same property, according to the ministry.
Those rules apply in every B.C. community with more than 10,000 residents, and to any others that opt in – as several already have, including Tofino, Pemberton, Osoyoos and Bowen Island. The rules will take effect in those smaller communities in November.
And once the regulations take effect, Housing Minister Ravi Kahlon stressed that guests themselves “will not face any fines.”
“We encourage people to continue to explore beautiful British Columbia, and stay in legal short-term rental accommodations,” Kahlon said.
Officials have recommended anyone planning to stay in a short-term rental on or after May 1 reach out to the host to confirm that the unit will be in compliance.
It’s unclear which violations will potentially cost platforms $10,000 per day. The government has said companies will be required to share user data to help municipalities and the province conduct their own enforcement, as the regulations also give local bylaw officers the ability to impose fines of up to $3,000 per day on hosts.
Platforms will be expected to remove listings from non-compliant users under some circumstances as well.
The announcement from officials came hours after Airbnb shared an “economic analysis” estimating that the platform generated more than $2.5 billion in economic benefits across the province last year.
According to the company, for every $100 a guest spent on an Airbnb rental, they spent about $229 on other local goods and services.
“B.C.’s new short-term rental law is going to significantly impact the province’s tourism sector, just as peak tourism season arrives – taking extra income away from residents, limiting accommodation options for guests, and potentially putting at risk billions in tourism spending and economic impact,” Nathan Rotman, Canadian policy lead at Airbnb, said in a statement.
But officials have claimed the pending rules are already having a positive effect on housing availability – addressing a major crisis in the province – as former hosts choose to either become landlords or put their properties up for sale.
Kahlon said some companies, such as Expedia and Booking.com, have been “actively working to get ready for the coming changes,” and that he’s hopeful other platforms will follow suit by May 1.
New short-term rental rules that will deliver more homes for people are set to come into effect on May 1, 2024, as the Province releases additional information to guide hosts, platforms and visitors through the changes.
“The effect of short-term rental apps like Airbnb, VRBO and others has been the loss of thousands of long-term rental homes in the midst of a housing crisis, driving up the cost of housing for British Columbians,” said Premier David Eby. “That’s why our government has created balanced new rules to crack down on speculators who are effectively operating mini hotels, while also ensuring homeowners can still rent out spaces in their principal residence. As we’ve already seen, these new rules are turning short-term rentals back into homes for people who live and work in our communities.”
The new rules are aimed at reining in the growing short-term rental market that is taking homes off the market. Analysis from short-term rental data analytics company AirDNA, from March 2024, shows that more than 19,000 entire homes in B.C. are being listed as short-term rentals for the majority of a calendar year. Data from a McGill University professor about short-term rentals in B.C. also shows in June 2023 that the top 10% of hosts earn nearly half of all revenue.
“We are in a housing crisis that requires strong action to deliver more housing for the people who live and work in our communities,” said Ravi Kahlon, Minister of Housing. “The changes passed last fall to tackle the growing short-term rental challenges are already bringing more long-term homes back onto the market. As the rules for hosts and platforms come into effect, we are taking another strong step to deliver more long-term homes for people in communities throughout B.C.”
The new rules that will take effect May 1, 2024, are:
In addition to the short-term rental rules going into effect, 17 communities initially exempt from the legislation have requested to opt in to the Principal Residence Requirement. For those communities, the new short-term rental rules will take effect on Nov. 1, 2024. A full list is included in Backgrounder 2.
A first-of-its-kind in Canada, the short-term rental data portal has been created to support local governments with monitoring and enforcement of short-term rental regulations and will allow local governments to have the platform companies remove listings that do not comply.
The Provincial Short-Term Rental Compliance Enforcement Unit, which will be phased in beginning May 1, will also be able to conduct investigations into alleged non-compliance, which may result in administrative monetary penalties and compliance orders. Administrative penalties for hosts breaking the rules can range from $500 to $5,000 a day per infraction, and up to $10,000 per day for corporations, depending on the infraction. Visitors and guests will not face any fines. The unit will also facilitate data sharing and requests to platforms to remove listings.
Visitors with stays booked after May 1, 2024, at short-term rentals are encouraged to check with their host directly to confirm the host is complying with their local government regulations and with B.C.’s new short-term rental rules.
Full requirements for hosts and platforms to comply with the new rules have also been released and are available in Backgrounder 1 and here: https://www2.gov.bc.ca/gov/content/housing-tenancy/short-term-rentals
Turning more short-term rentals into long-term homes is part of the Province’s Homes for People action plan. Announced in spring 2023, it sets out further actions to deliver the homes people need faster, while creating more vibrant communities throughout B.C.
Quotes:
Walt Judas, CEO, Tourism Industry Association of British Columbia (TIABC) –
“TIABC applauds the government for listening to the tourism sector and introducing regulations that will address housing shortages in visitor-dependent communities and give municipalities the tools they need to manage short-term rentals. From our perspective, the Province has found the right balance to provide more permanent homes for workers in tourism and other sectors, while also ensuring a range of accommodation options for visitors.”
Ken Sim, mayor of Vancouver –
“These short-term rental rules are vital in tackling the housing crisis not just in Vancouver, but across British Columbia. We’re eager to implement these new tools and collaborate with platforms to ensure short-term rentals in Vancouver align with these regulations. These measures lay the groundwork for a more sustainable and equitable housing landscape where Vancouver residents can thrive.”
Learn More:
To learn more about the rules that take effect May 1, 2024, visit: www.gov.bc.ca/ShortTermRentals
To learn more about government’s Homes for People action plan, visit: https://news.gov.bc.ca/releases/2023HOUS0019-000436
To learn about the steps the Province is taking to tackle the housing crisis and deliver affordable homes for British Columbians, visit: https://strongerbc.gov.bc.ca/housing
Two backgrounders follow.
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