The Bank of Canada has issued a warning about a new scam targeting the long-standing Canada Savings Bonds program, which officially ended seven years ago. Blacklock's Reporter says the bank announced that it had discontinued its 1-800 number for bondholders seeking to redeem their bonds and cautioned that those who called the number after February might have been exposed to fraudulent schemes.While the bank did not provide specific details about the scam, it emphasized that it does not accept deposits from or on behalf of individuals, nor does it request the transfer of funds or payments. The Bank of Canada, however, continues to manage over $533 million in dormant accounts, including private savings and unclaimed pensions, typically belonging to deceased depositors.The Canada Savings Bonds program, a Canadian financial staple for a century, was discontinued by the federal government in 2017. “The program is no longer cost-effective,” stated the Department of Finance, citing an evaluation that found no valid economic rationale for its continuation. The report noted that consumer bonds were “not a cost-effective way for the government to raise funds” and that the low interest rate environment, combined with rising administrative costs, rendered the program unsustainable.At the time of its termination, the program held $5 billion worth of bonds, owned by 2.5 million Canadians. The final bond issue in 2016 offered a modest 1% interest, a stark contrast to the 19.5% rates seen in 1981. The Bank of Canada had also engaged DXC Technology Co. to manage a contact center for bondholders, paying the external provider $33.5 million in 2016, with planned reductions in costs until 2021.The Canada Savings Bonds program has deep historical roots, originating from the 1917 Victory Loan campaign designed to finance Canada’s involvement in the First World War.In his 1921 memoirs, The Story Of Canada’s War Finance, then-Finance Minister Thomas White recounted stories of war widows who purchased bonds, often believing they were making a patriotic donation rather than an investment.“Some worthy women believed that in subscribing to a Victory Loan they were giving their money gratis to the government as a patriotic contribution towards the expenditure of the war,” White wrote. He recalled receiving touching letters from women who had saved small amounts, convinced it was their duty to contribute their life savings to the war effort. One woman, for instance, framed her $1,000 Victory Bond, thinking it was merely an official receipt, only to be astonished when she discovered it would yield her $55 a year in interest.
