Fabricating Labor Shortages to Justify Hiring Foreign Workers

The Labour Market Impact Assessment (LMIA) scam is a fraudulent scheme that exploits Canada’s Temporary Foreign Worker (TFW) program, allowing employers to hire foreign workers for jobs that could easily be filled by Canadians or permanent residents. This deceptive practice often involves selling LMIAs to desperate immigrants or exploiting workers through underpayment, all while sidestepping regulations meant to protect the Canadian job market. Drawing from insights shared in discussions about combating LMIA fraud, this page explores how the scam operates, the loopholes and corruption that enable it, and the government’s evolving response to curb this abuse.

Leveraging Loopholes and Corrupt Practices to Facilitate Fraud

At its core, the LMIA scam revolves around faking labor shortages to justify hiring foreign workers. Employers are required to advertise jobs, often on platforms like Job Bank, for a set period and prove that no suitable Canadian candidates applied. Fraudulent employers bypass this by either not advertising genuinely or falsely claiming no one applied. When Canadians do apply, scammers dismiss them with flimsy excuses, like claiming applicants didn’t answer calls or were unsuitable, paving the way to hire TFWs. A particularly brazen tactic involves listing jobs at inflated wages, such as $36 per hour for low-skill roles like cooks or food supervisors, to qualify for the less restrictive high-wage LMIA stream. In reality, workers are paid far less—or nothing at all—while the LMIA is sold to foreigners for thousands of dollars as a pathway to work permits or permanent residency (PR). Until recently, LMIAs boosted Express Entry scores by 50 points, making fake job offers a lucrative tool for employers who demanded under-the-table payments or wage kickbacks, often in fields like healthcare, construction, restaurants, or gas stations.

Exploiting Vulnerable Workers for Profit Through LMIA Sales

The scam thrives on loopholes and corruption. In the past, employers could hire corrupt chartered professional accountants to produce letters falsely claiming financial capacity to pay TFWs, which was enough to secure LMIA approval. This loophole has since been closed, with only verifiable Canada Revenue Agency documents now accepted. Immigration consultants play a pivotal role, assisting employers in crafting fraudulent applications, setting up shell companies—sometimes headquartered in residential areas or far from work sites—and connecting with foreign workers willing to pay exorbitant fees, ranging from $2,000 to $200,000, for “guaranteed” job offers or work permits. These workers often face exploitation, such as low or no pay, wage repayments, or nonexistent jobs. Some workers are placed through subcontractors, obscuring the actual workplace from public LMIA lists, which hides the exploitation of those performing unskilled jobs that could be done by local candidates.

Government Oversight Failures and Recent Regulatory Reforms

The profit model is built on exploitation. Employers or consultants charge high fees for LMIAs and job offers, promising a shot at the “Canadian dream.” Workers arrive only to face abuse, funding the scam while chasing residency. The scam has historically targeted low-skill sectors like food service, gas stations, and fake office jobs, though high-demand fields like healthcare and construction are harder to fake due to extensive paperwork. Between 2022 and 2024, lax oversight led to widespread fraudulent approvals, but new LMIA applications have since plummeted by about 90% year-over-year due to tightened regulations, making approvals extremely difficult.

Persistent Vulnerabilities and the Need for Public Vigilance

Past government failures fueled this problem, with previous policies reducing fraud checks and leaving processing units powerless without tools to verify claims. Recent reforms have shifted the landscape significantly. Loopholes, like approvals for inflated-wage jobs, have been closed, with such applications now refused and flagged as dishonest, impacting future eligibility. Job Bank now monitors employer engagement with applicants, closing accounts of those who ignore submissions. Inspections are targeting fraudulent employers from 2022-2024, with penalties increasing in number and severity, though some argue they remain insufficient compared to the profits scammers reap. Stricter rules, such as denying low-wage LMIAs in areas with unemployment above 6%, make renewals challenging. Pre-September 2024 LMIAs, valid for up to two years, may not renew if conditions are unmet, while post-September LMIAs are limited to one year. The introduction of an “apply direct” portal on Job Bank allows Canadians to apply easily, exposing non-engagement by employers. Employment and Social Development Canada and Job Bank now track application data, flagging suspicious patterns, like rejecting numerous applicants for simple roles.

Safeguarding the System Through Continued Action

Despite progress, vulnerabilities persist. Sophisticated fraud involving consultants and lawyers who obscure their tracks through complex networks remains a challenge. Other programs, like the Global Talent Stream or agriculture until January 2026, are still exploitable. Public action is critical to maintaining pressure on the government. Exposing businesses offering suspicious jobs, such as high wages for low-skill roles, helps sustain reforms. Organizing Access to Information requests to obtain government documents on LMIA fraud and consultant actions can uncover hidden players. Targeting immigration consultants, not just employers, is essential, as they often orchestrate the scams. Suspected fraud can be reported to the Canadian Anti-Fraud Centre or Immigration, Refugees and Citizenship Canada’s fraud reporting lines, and checking the College of Immigration and Citizenship Consultants registry helps verify if a consultant is licensed, as unlicensed “ghost consultants” are a common issue.

The LMIA scam exploits Canada’s TFW program through falsified labor shortages, inflated wages, and fake job offers, often driven by immigration consultants. While 2025 has seen significant strides in curbing fraud through stricter regulations and enhanced monitoring, ongoing vigilance is crucial. By applying to suspicious jobs, exposing fraudulent players, and pursuing information requests, the public can help prevent a resurgence of these exploitative practices, ensuring the system protects both Canadian workers and vulnerable immigrants.