By Lori Lee
NDG Contributing Writer
Tax season is a good time to watch for scams, with more than 75,000 Americans losing over $28 million to imposters pretending to be with the IRS, the Federal Trade Commision (FTC) advises.
The agency receives millions of reports each year from consumers about experiences with fraud in the marketplace, explains Maria Mayo, Acting Associate Director for the Division of Consumer Response and Operations in the Bureau of Consumer Protection at the Federal Trade Commission (FTC).
The FTC provides law enforcement agencies with access to information obtained from these reports through the Law Enforcement Database. After investigating these claims, the FTC attempts to enforce consumer protection laws and refund consumers.
Though the number of scams decreased over the past year, the amount of money taken from consumers has dramatically increased, totaling over $8.8 billion in losses, the highest amount in history, reports Mayo.
The top two schemes over this time involved investment schemes and imposter scams, she explains.
Investment scams, which doubled last year, became the number one generator of losses, averaging $5,000 per consumer. Investment scams get your attention with promises to get rich quick. Many real estate investment seminars are scams, sometimes offering a free seminar only to hit you with exorbitant fees in the end. Other schemes promise financial freedom by coaching on stocks, bonds, tax liens, or foreign currency investing.
Cryptocurrency schemes have been on the rise, especially over the past year. Most often originating on social media, these schemes have become increasingly sophisticated, offering fake websites that claim to track customer investments.
Following investment schemes, imposter scams caused the greatest losses to American consumers, claiming $2,000 per consumer last year. This type of scam involves entities that claim to be well-known businesses, government agencies, or personal relations. The FTC reported 725,000 such schemes last year, and more than half of those posed as businesses, mostly Amazon.
The sale of online goods, which people reported purchasing but never received, became common during the pandemic, and they continue today.
Another common trick is to inform people they’ve won a lottery but charge a fee to receive it. This has been reportedly occuring over the past year via telephone.
Formerly, the telephone was the primary means of contacting people. More recently, other contact methods have been increasing, especially social media, which accounted for the highest aggregate dollar losses last year, the FTC reports.
Social media tends to target younger people, enticing them to order online merchandise, or offering jobs and business opportunities as a means of obtaining personal data.
A real-life example involved a cold call to a man in his 30s, where a well-known media company offered a job with very high pay. The victim had diligently searched online and found the named individual on the staff directory. Though the caller eventually caught on, many consumers realize what’s happening only after they’ve given out a social security number or a copy of their license, later to be used for identity theft.
Another scheme and perhaps the most embarrassing, involved imposters pretending to be a romantic interest. Approaching victims through social media, these imposters tend to offer an excuse for not meeting in person, like being in the military, and they tend to use a photograph rather than a real image, explains Mayo.
While social media most often targets younger people, those falling between the ages of 30 and 39 were more likely to fall victim last year, Mayo reports. Enticed to order online merchandise, this age group most often used credit cards to pay for purchases that they never received.
People 80 and older are targeted most often by telephone, as technical support specialists or business imposters. They demand money or attempt to gain private data. Such scams resulted in more than $1,600 in loses last year, and most of these victims paid scammers with credit cards, according to the FTC.
People who are new to the U.S. are particularly vulnerable. Those who lack knowledge of our system can be easily taken advantage of when seeking out work, purchasing vehicles, or going through the immigration process, explains Cristina Miranda, Consumer Education Specialist for the FTC’s Division of Consumer and Business Education.
Yes, scammers have the ability to create fake adds in a number of languages. Some of the top scams reported by Latino immigrants were investment and debt collection schemes, and scams involving car dealerships. Although the FTC has stopped the practice for the time being, auto dealers have been caught charging higher fees to minority populations, including Black people.
Both Black Latinos and Latinos have also been targeted with fake job offers and businesses opportunities, like at-home sales of luxury products.
Similarly, members of the Black community have reported incidents of fraud through payday loan and debt relief schemes, where information was fraudulently obtained via online applications, reports Rosario Méndez, senior member of the Division of Consumer and Business Education in the Federal Trade Commission’s Bureau of Consumer Protection.
Some important signs that should make consumers wary include robocalling. Legitimate marketers will not usually try to sell something or ask for money via robocalling, reports Mayo.
Secondly, the method of payment requested can be a strong indicator. Consumers should avoid requests through wire transfer, gift cards, and cryptocurrency, the FTC advises. The FTC warns, the federal government will never ask for gift cards, wire transfers or cryptocurrency payments. These are unregulated forms of payments that are both difficult to trace and offer no fraud protection. Such requests should automatically seem suspect. Losses soared using these types of payment last year, especially in minority communities, the FTC reports.
Most notably, government institutions, like the IRS, contact people via U.S. Mail. If someone claiming to be a government agency reaches out by telephone, email or text, consumers are advised to gather legitimate contact information and inquire with the agency if needed. Avoid pressing buttons or otherwise engaging with people using these tactics, advises Mayo.
Consumer education is the best line of defense. If you spot a scam, consumers are encouraged to report it at FTC.gov/complaint. All consumers are advised to report matters related to identity theft to identitytheft.com, and for those who have paid a scammer with a gift card, please visit FTC.gov/gift-card-scams. To help all communities avoid fraud, the FTC now has a multilingual platform, and anyone can sign up to receive consumers alerts to keep them current on ongoing scams.
