How fraudsters got a slice of Canada’s bread price-fixing settlement

Ken Wu was on his phone this past spring, scrolling through the popular Chinese social-media app RedNote, when a stranger messaged him with a proposition.

The stranger explained how Mr. Wu could make some easy money off a landmark class-action settlement. Canada’s largest grocer, Loblaw Cos. Ltd. L-T, and its parent company had agreed to pay $500-million in compensation for their role in a high-profile scheme to fix bread prices.

The settlement was the first to come out of lawsuits that were launched after the companies reported an alleged industry-wide conspiracy to the Competition Bureau in 2015, in exchange for immunity from criminal prosecution. (Other grocers have denied involvement.)

The person reaching out to Mr. Wu was among millions of people who had registered on the official website, Canadianbreadsettlement.ca, to receive recompense. For most recipients, that added up to $49.11 sent in the form of an e-transfer via digital-payments giant Interac.

There was much more up for grabs than that paltry sum, the RedNote user explained to Mr. Wu. The stranger had registered for multiple payments using different e-mail addresses, and had received not just one Interac link, but many. The links could be forwarded, and anyone who clicked on them would be able to deposit the money.

But there was a snag: Claimants needed a Canadian bank account to accept the e-transfer, something the stranger didn’t have.

If Mr. Wu, a Vancouver resident, would agree to use his account to make the deposit, the user would ask for an upfront payment for the links, a price lower than the payout that would land in his account – effectively meaning they would split the proceeds.

As a newcomer to Canada who had not purchased bread at Loblaw-owned stores during the time covered by the lawsuit, Mr. Wu knew he wasn’t eligible for a payment.

“I don’t have that right,” he said.

He refused the offer. And several others. But he wasn’t the only person being solicited.

As soon as the bread settlement was distributed in May, a market for the e-transfer links emerged on RedNote – and not just in private messages.

When people began posting that they’d received bread payments, the comments on those posts were wall-to-wall with other people hawking links, some offering generous terms to anyone with a Canadian bank account willing to make, in some cases, hundreds of deposits.

As with any questionable offers made in online forums, it’s impossible to say how many of those posts were selling working e-transfer links, versus looking for a mark who would hand over money and receive nothing.

But around the same time, warning signs began flaring inside Canadian banks. Three small institutions reported unusual account activity to the settlement administrator, Verita Global LLC, and its banking partner that helped make the payments, the Bank of Nova Scotia.

Multiple deposits of the bread money were being funnelled into the same accounts. In one case, a single bank customer deposited roughly 1,000 such e-transfers.

Suddenly, one of the country’s biggest-ever class-action settlements had a big problem.

JUDGES

Approved the settlement

THE PAYERS

Agreed to pay a $500-million settlement

Loblaw Cos. Ltd. and George Weston Ltd.

PLAINTIFFS’ LAWYERS

Worked with settlement administrators to make the payments happen.

Ontario

Strosberg Wingfield

Sasso LLP and

Orr Taylor LLP

Quebec

LPC Avocats and

Renno Vathilakis

Avocats Inc.

SETTLEMENT ADMINISTRATORS

These administrators were listed in court documents last year. Hired by the lawyers, they are responsible for implementing

security procedures to prevent fraud

Ontario

Verita Global LLC

Quebec

Concilia Services Inc.

and Richter LLC

BANKING PARTNERS

Chosen by the settlement administrators to make the settlement payments

Ontario

Bank of Nova Scotia

PAYMENT PARTNER

For settlement

payments made

by e-transfer

BANK CLIENTS

Canadian consumers who bought bread

between 2001 and 2021 and were

eligible for a settlement payment

MURAT YÜKSELIR / THE GLOBE AND MAIL,

SOURCE: COURT DOCUMENTS

JUDGES

Approved the settlement

THE PAYERS

Agreed to pay a $500-million settlement

Loblaw Cos. Ltd. and George Weston Ltd.

PLAINTIFFS’ LAWYERS

Worked with settlement administrators to make the payments happen.

Ontario

Strosberg Wingfield

Sasso LLP and

Orr Taylor LLP

Quebec

LPC Avocats and

Renno Vathilakis

Avocats Inc.

SETTLEMENT ADMINISTRATORS

These administrators were listed in court documents

last year. Hired by the lawyers, they are responsible

for implementing security procedures to prevent fraud

Ontario

Verita Global LLC

Quebec

Concilia Services Inc.

and Richter LLC

BANKING PARTNERS

Chosen by the settlement administrators to make the settlement payments

Ontario

Bank of Nova Scotia

PAYMENT PARTNER

For settlement

payments made

by e-transfer

BANK CLIENTS

Canadian consumers who bought bread between 2001 and 2021 and were eligible for a settlement payment

MURAT YÜKSELIR / THE GLOBE AND MAIL, SOURCE:

COURT DOCUMENTS

JUDGES

Approved the settlement

THE PAYERS

Agreed to pay a $500-million settlement

Loblaw Cos. Ltd. and George Weston Ltd.

PLAINTIFFS’ LAWYERS

Worked with settlement administrators to make the payments happen

Ontario

Strosberg Wingfield

Sasso LLP and

Orr Taylor LLP

Quebec

LPC Avocats and

Renno Vathilakis

Avocats Inc.

SETTLEMENT ADMINISTRATORS

These administrators were listed in court documents last year.

Hired by the lawyers, they are responsible for implementing

security procedures to prevent fraud

Ontario

Verita Global LLC

Quebec

Concilia Services Inc.

and Richter LLC

BANKING PARTNERS

Chosen by the settlement administrators to make the settlement payments

Ontario

Bank of Nova Scotia

PAYMENT PARTNER

For settlement payments made by e-transfer

BANK CLIENTS

Canadian consumers who bought bread between 2001 and 2021 and were eligible for a settlement payment

MURAT YÜKSELIR / THE GLOBE AND MAIL, SOURCE: COURT DOCUMENTS

Class actions are designed to deliver justice to people who have been wronged. But when bad actors succeed at faking claims, legitimate claimants get a smaller slice of the pie.

The highly publicized bread settlement attracted a large number of applications for the funds, many of which were bogus. Official estimates of suspicious deposits that flowed into Canadian banks have grown.

Court records from June show that, at the request of administrators, Interac provided an estimate that roughly $3.7-million in payments were suspicious, and possibly fraudulent. Within a month, that had been revised to $8.5-million, a figure that has not been previously reported.

But it’s still just an estimate. There has been no official, transparent accounting of how many people received multiple suspicious deposits of $49.11 over the 14-day payment period.

While Canada’s largest grocer paid the settlement money, it did not manage the distribution. The apparatus that oversaw the process involved the court, lawyers, administrators and payment distributors – and it is difficult to determine who is ultimately accountable for the losses.

It’s not clear that any of these actors have a complete picture of how much was taken.

The three small financial institutions that first raised the red flag account for only a tiny fraction of Canada’s banking sector.

Other banks were asked to return bread settlement payments from accounts their own internal systems identified as suspicious. But some are still reviewing the amounts, and others confirmed they had no funds to return, a class-action lawyer told The Globe and Mail.

The Big Six banks, which hold about 90 per cent of Canadian personal deposits, declined to answer questions from The Globe about what their fraud-detection practices found in this case, and whether they froze any accounts related to suspicious payments or returned any funds.

But a fraud specialist from one of the banks told The Globe the number of suspicious transactions discovered in its system pushes the total higher than has been publicly disclosed. The Globe is not identifying the source because they are not authorized to speak publicly about the matter.

Two years after the settlement was first announced, it is clear that fraudsters exploited the system.

And two questions remain unanswered: How much money did they siphon off, and could they have been stopped?

Applying for the Canadian bread settlement was a model of ease and simplicity: Only a handful of basic details were needed, including your name, date of birth, contact information and an attestation of where you bought bread between 2001 and 2021. But more proof was not required.

Huge consumer lawsuits, where a large number of people are eligible to claim compensation, are “a constant battle between accessibility and fraud,” said Suzanne Chiodo, an assistant professor at York University’s Osgoode Hall Law School and author of The Class Actions Controversy, a book about the origins and development of Ontario’s class-action law.

When a class action is resolved, lawyers and settlement administrators have an obligation to ensure as many eligible people as possible receive their payouts. (In the industry, this is known as the “take-up rate.”)

Historically, take-up rates have been very low: Many people simply couldn’t be bothered filling out the forms, particularly when their share of a settlement was relatively small. To combat the problem, lawyers in a case like this are reluctant to set up a process that asks for too much verification – such as proof of purchases that may have occurred years in the past, or banking information to process payments.

As people become more aware of online scams, they are reasonably hesitant to hand over detailed personal information. So while security measures are needed in these cases, ideally the process will avoid scaring off legitimate claimants.

The problem is, the easier a claim is to make, the easier it is to scam. “The wider you open the gates, the more likely you are to get some bad actors,” Prof. Chiodo said.

The lawyers involved in the bread settlement said they tried to strike an appropriate balance at the outset.

“If the payments process has too much friction, the number of paid claims shrinks. That is contrary to the objective of the class action,” said David Wingfield of Strosberg Wingfield Sasso LLP, a lawyer for the plaintiffs in the Ontario class-action suit over the bread scheme, which covered claimants across most of the country. (A different class-action suit covered Quebec consumers. The settlement resolved Loblaw’s involvement in both.)

Because of the structure of this settlement – and many more like it – fraud is, to some extent, baked in. Administrators in this case were fending it off from the beginning.

On behalf of the class, lawyers hired Verita, which did not respond to questions from The Globe, to oversee the distribution of the settlement outside Quebec. The legal and fiduciary services company screened the applications looking for nefarious actors.

Verita’s firewall blocked 40 million attempted claims before they were filed, for example by rejecting requests to the website where bot activity was detected. Many of those fraudulent attempts came from outside Canada.

Then, an initial screening process looked for people who had filed multiple applications using the same home address or e-mail. That led to millions more claims being rejected.

Another layer of screening examined the digital attributes of each device used to make a claim. Nearly 14 million more suspicious claims were rejected as a result.

But some fraudulent attempts still sneaked through.

All told, Verita approved nearly 3.6 million claims for payment, totalling roughly $174-million – the amount reserved for customers outside Quebec, after factoring in $136-million in legal, administrative and other costs, as well as a chunk of money already paid out in gift cards and payments to businesses that were affected by the scheme.

Once the settlement was divvied up, each successful individual applicant received an e-transfer for $49.11. (For those who registered for and accepted a $25 gift card Loblaw distributed in 2018 as an apology for the scheme, the payout was $24.11.)

But once those payments were sent out, Verita had no line of sight into where the money was flowing. Because of confidentiality rules, neither Interac nor the receiving banks could provide Verita with any confirmation that the names or e-mail addresses on the settlement claims were linked to the accounts where the money was deposited, according to court documents filed in June after allegations of possible fraud were brought forward.

A Verita executive explained in an affidavit, filed in Ontario Superior Court, how someone could enter an e-mail address on the settlement website, then simply forward their Interac e-mail payment to someone else.

“That e-mail may be forwarded on to another e-mail address without impacting the functionality of the deposit link,” Ivan Bobanovic, Verita’s vice-president of settlement administration in Canada, stated. “A person who clicks the Interac deposit link may choose to deposit funds into any Canadian bank account.”

An analysis of posts on RedNote from May, translated from Chinese, shows how that feature made it possible for people without Canadian bank accounts to get in on the action. They could offer to share those links with other users who had ties to Canada – for a price.

The analysis does not suggest that fraudulent activity was limited to RedNote. The Globe focused on the app because a high volume of solicitation was taking place out in the open. RedNote did not respond to multiple requests for comment.

In one RedNote thread, a user posted a screenshot of a successful deposit of $49.11 into an unidentified TD Canada Trust account, along with the reference number, as proof of the legitimacy of the links they had for sale. They touted a “large shipment just in,” with 500 links available.

Other users went as far as to post prices that were advertised in cryptic shorthand. Comments such as “2.8” or “3.3” communicated that payment for the links would be settled in Chinese yuan, at multiples of the $49.11 settlement payout. For example, a price of 2.8 meant a buyer would multiply 49.11 by that number, and as a result pay roughly 138 yuan for each Interac link, which they could then deposit into their Canadian bank account.

Because the currency exchange rate at the time was just under five yuan per Canadian dollar, each link at that 2.8 rate would net a buyer roughly $21 in profit. Because sellers were offering links in bulk, that margin quickly added up. In this scenario, a person who bought 200 links would net a profit of roughly $4,200 after paying the fraudster nearly $5,600.

In some cases, the more links people were willing to buy, the lower the price.

But people also used RedNote to warn each other away from such schemes. Not long after the payments went out last spring, users began posting about accounts being frozen after multiple payments were deposited.

One user identified themselves as a bank employee who had dealt with customers whose accounts were locked for “over-claiming” bread money.

“Because the eligibility bar is so low, bad actors quickly smelled a ‘business opportunity’ and started spreading offers widely on WeChat groups, RedNote, and similar platforms: ‘Help us collect settlement payments, easy commission,’ ‘Buying settlement eligibility at a high price,’ ‘Help receive e-Transfers, we’ll give you a better exchange rate,’” wrote another user, Montreal financial adviser Tim Wen, in a post warning his clients and the broader RedNote community.

“What you stand to gain is only a few dozen or a couple hundred dollars, but what you risk is having your account frozen, your credit damaged, and getting pulled into an anti-money-laundering investigation – it’s simply not worth it,” the same post stated. “If it’s not your money, seriously, don’t touch it.”

Ken Wu said his decision to reject the offers to buy links had nothing to do with avoiding such consequences.

“For me, it’s simply a matter of right and wrong,” he said. “You shouldn’t do something that’s wrong.”

Asked for comment on The Globe’s reporting, Loblaw’s senior vice-president of corporate affairs and communication, Scott Bonikowsky, noted that Loblaw and its parent company were not involved in this year’s settlement distribution process.

“We support efforts to protect the integrity of the claims settlement process as any attempt to exploit that process and divert funds intended for eligible Canadians is concerning,” he wrote in a statement on behalf of Loblaw and George Weston.

The people overseeing the bread settlement payments may never have known about any of this without the tip in late May from three banks identified in court filings as “smaller” financial institutions.

They alerted Verita and Scotiabank that multiple e-transfers were being “aggregated” and channelled through the same accounts, court documents show. Verita then tried to find out if other banks had made similar reports, and why some accounts would be receiving multiple payments.

“Given the receiving banks’ confidentiality obligations, after numerous discussions, the only meaningful insight available was from Interac,” Verita’s Mr. Bobanovic stated in an affidavit sworn in early June. (Seeking a formal court order to compel information from the banks would be a lengthy, expensive and unrealistic process, class-action lawyers explained.)

Scotiabank communicated with financial institutions – including the major banks – requesting that they return any settlement funds that had been deposited to accounts that appeared suspicious.

“Canadian banks have robust monitoring in place to flag suspected fraudulent transactions,” Ethan Teclu, a spokesperson for the Canadian Bankers Association, wrote in an e-mail to The Globe. “When transactions are deemed fraudulent, banks work to return the funds wherever possible when requested by another financial institution.”

The Big Six banks – Scotiabank, Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank – did not answer The Globe’s questions about frozen accounts, suspicious payments and returned funds.

Meanwhile, Verita asked Interac to investigate how many more potentially fraudulent payments were made. Interac’s $8.5-million estimate, which was provided to The Globe in July by Mr. Wingfield, the class-action lawyer, would equal just under 5 per cent of the payout.

Interac spokesperson Cillian Murphy declined to explain how the company arrived at the updated estimate and why it grew.

Bryan Heller, co-founder and chief operating officer of Covalynt – a technology provider that specializes in fraud detection and prevention in class-action settlements – told The Globe that judging by his own experience in similar cases, such a low percentage is almost certainly not a complete picture of the fraud in the bread case.

“I’ve frankly never done a settlement with that few claims having fraud,” Mr. Heller said. “It’s significantly higher percentages than that, on 100 per cent of the cases that we do.”

By his guess, “a lot more than 5 per cent of these claims are fraudulent.”

Just a tiny fraction of the money has been reclaimed so far.

As of the end of September, just $14,831.22 had been returned as requested; another $376,176.78 in frozen payments was in the process of being returned, according to information provided by Mr. Wingfield that has not previously been reported. The amount of funds that had been frozen and were being investigated was still to be determined, he said.

The court approved a protocol for returning funds in cases where banks determined that accounts were used improperly, Mr. Wingfield said. “Recipient banks must make these decisions.”

Returned funds could eventually be added to future settlements in the bread price-fixing case, which involves other corporate defendants.

Lawyers in Quebec have said such problems were not present in their separate class-action case, though Quebec applicants were asked to provide similar information. The lawyers declined to answer questions about how they were able to verify that all payments went to legitimate claimants.

Whatever the scale of loss in this case, this kind of fraud is not unique to Canada’s bread settlement.

Another example of alleged large-scale fraud came to light in New York just a week before the first reports of suspicious payments in the Canadian case.

In May, police raided a home in Greece, a suburban town in upstate New York a short drive from the shores of Lake Ontario. As they swept the premises, law enforcement found photoshopped documents sporting fake names; electronic devices with records of class-action lawsuit filings; and multiple paper cheques from settlements.

A 38-year-old named Phillip Digennaro was arrested and charged with conspiracy, wire fraud, aggravated identity theft and money laundering. He stands accused of gathering more than 27,000 payments from various settlements, totalling roughly US$1.3-million, which he deposited into 480 bank accounts. None of the allegations have been proven in court.

While fraud has always been a risk in class-action settlements, the rise of digital payments has reshaped the landscape.

In 2020, only 16 settlements in the U.S. used digital payments over the course of the year, according to a report published by Western Alliance Bank; by 2024, the number of settlements paying out digitally had skyrocketed to 426.

The reason is clear: The courts prioritize forms of payment that are most successful in reaching the people who are entitled to the compensation. The report, published in April last year, found cheques are deposited much less frequently than digital payments, which are cashed 98 per cent of the time in class actions and mass torts, another type of legal proceeding with multiple plaintiffs.

It also costs less to send a digital payment than to mail a cheque, an important consideration for settlement administrators tasked with keeping costs down to ensure more of the settlement money goes to class members.

The digitization of class-action settlements has given rise to a cottage industry of fraud. In the U.S. alone, “significant” indications of fraud in class actions and mass torts ballooned by more than 19,000 per cent between 2021 and 2023, according to the Western Alliance report.

“There’s big money in this,” said Prof. Chiodo of Osgoode Hall.

Settlement administrators have upped their security measures in response. But while it is possible to weed out rudimentary bot attacks, as technology develops, it’s becoming easier to file more of these fraudulent claims at scale.

“The level of sophistication is insane,” Mr. Heller of Covalynt said.

He has seen fraudsters that seem to test how many applications they can send from a single IP address before being rejected, and then consistently file claims under that threshold before moving on to another IP address.

He said fraudsters will sometimes use “phone farms,” essentially a server stack filled with cellphones controlled by a computer that can reconfigure a device’s fingerprint – telltale signs such as the IP address, the operating system, the text-size setting, the track record of applications, the security permissions it allows, and other details that can identify it – to make it appear as a new, unique device to get around bot detection.

“I deal with a lot of settlement administrators that think they have it figured out, and they do not,” Mr. Heller said, speaking generally about the class-action landscape.

“If you just use these bot-detection tools, somewhere in the ballpark of 35 to 80 per cent of ‘valid’ claims are actually fraudulent,” he added. And with the rapid evolution of artificial intelligence, further advances in fraud technology are inevitable.

The Western Alliance Bank report identified three types of fraud that are most commonly involved in such cases: fake-identity fraud, which uses made-up identities to make claims; synthetic-identity fraud that makes claims using real people’s stolen information; and duplication fraud that uses one person’s information to make multiple claims.

Experts say that for those looking to steal compensation from legitimate class members, this kind of scam can be perpetrated on a mass scale, is seen as relatively low-risk and can be extremely lucrative.

“About two years ago, I would say, all of a sudden the level of the fraud increased and the sophistication of the fraud increased,” said Linda Visser, a class-action lawyer at Siskinds LLP with broad experience in price-fixing and consumer-protection cases. It’s “a widespread problem” in Canada and the U.S., she said.

Jean-Marc Leclerc, a Toronto-based partner at Sotos LLP, has had a front-row seat for the explosion of fraud in recent years.

Mr. Leclerc represented the plaintiffs in a series of class actions over allegations of price fixing against companies that supply parts to automobile manufacturers. The cases resulted in tens of millions of dollars in settlement payments.

In the first round of applications, in 2020, more than 120,000 people made claims to the funds. In the second round, in 2023, “it was in the millions,” he recalled.

“They were slamming the website, filing claims every second,” Mr. Leclerc said of bot activity in the auto-parts case. He’d never seen anything like it.

It created a mountain of work for the settlement administrator, which in this case was Verita. Along with class-action lawyers, they sifted through the claims, knocking out those they deemed fraudulent. The lawyers also used ClaimScore, Covalynt’s fraud-detection software, to do a second analysis.

“There were an overwhelming number of fraudulent claims compared to valid claims,” Mr. Leclerc said.

After that, Verita made “significant investment to strengthen its security framework” to identify and reduce bot attacks, the company’s operations director, Brett Parker, stated in an affidavit filed with the court in July, 2025, related to that case.

Just months after Mr. Parker detailed his company’s efforts to combat fraud, Verita ran into the problem again – in the bread settlement.

This case is not over.

When Loblaw and its parent company, George Weston, first admitted to price fixing in 2015, they alleged the conspiracy was “industry-wide,” implicating other companies and shattering many Canadians’ trust in the multibillion-dollar grocery sector.

The lawsuits triggered by that admission also name other grocers and a bread manufacturer as defendants. All have denied participating in the alleged scheme, except for Canada Bread.

Under a new owner, Grupo Bimbo, which acquired the company in 2014, Canada Bread pleaded guilty in a Competition Bureau investigation in 2023, and agreed to pay a $50-million fine. (Maple Leaf Foods, which owned a majority stake in Canada Bread at the time of the alleged price fixing, has denied unlawful behaviour at Canada Bread while it was a shareholder.)

The question is, as lawyers continue to press for further settlements in the bread case, how can more theft be prevented?

“In the future, it may be necessary to accept much more friction in class action payment protocols to minimize fraudulent activity, such as by using physical cheques for payment,” Mr. Wingfield, the lawyer in the bread case, told The Globe.

“But this will also reduce the number of legitimate claims paid and increase distribution costs. This is a difficult balance to achieve.”

When lawyers ask courts for approval for a settlement process, it is largely expected that they do their best to combat fraud. But they are also expected not to be profligate with whatever money remains to be paid out to the class – after lawyers’ fees, which can be significant.

“If you have a possible $25 claim, which many of the claims were in this bread case, you don’t want to spend $10 trying to reduce the fraud on a $25 claim, per claim. You want it to be proportionate,” said Pujan Modi, a class-action lawyer at Silver Tree LLP.

Ultimately, the banks have the most visibility. It’s why smaller institutions were able to flag the wrongdoing in this case. Mr. Teclu of the Canadian Bankers Association suggested banks are aware of the role they can play in combatting fraud into the future.

“The banking sector shares information, as appropriate and in compliance with applicable laws, related to a range of ever-evolving fraud and scams and works closely with law enforcement nationwide to help prevent and minimize the impact of fraud and theft,” he wrote.

The fear is that if fraud runs rampant, it could jeopardize trust in the system.

“People are jaded enough about class actions,” said Mr. Leclerc from Sotos, adding that the public is aware of how much lawyers make on successful cases while individual payments may be relatively small, as they were in the bread settlement.

In addition, lawyers have to be able to tell judges they can ensure the money goes into the pockets of the people who actually deserve it.

“So it’s a question of credibility with the public. It’s a question of credibility with the courts,” he said.

Class actions were designed to compensate people who were wronged, and to deter misconduct, said Prof. Chiodo of Osgoode Hall. Instead, when fraud occurs, some of that money is rewarding bad actors.

“The whole point of class actions is access to justice,” she said. “And you’re not going to get access to justice if money is hemorrhaging to fraudsters.”

With a report from Stefanie Marotta

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