Top Three Scams of 2020

April 22, 2021

The Federal Trade Commission (FTC) has released its list of top scams reported in 2020. This year, for the first time, the list reflected reports to ReportFraud.ftc.gov, a new FTC-founded site for people to report illegal business practices. These reports are stored in the Consumer Sentinel Network (known as Sentinel), a secure online database available only to law enforcement. In addition to receiving reports directly from people who call the FTC’s call center or report online, Sentinel also includes reports filed with law enforcement agencies, as well as organizations like the Better Business Bureau and Publishers Clearing House.

During 2020, Sentinel received over 4.7 million consumer reports, accounting for total losses of $3.3 billion. From the 29 categories the FTC tracks, they have identified the top three frauds that cost consumers the most: identity theft, imposter fraud, and online shopping scams.

A Banner Year
According to reporting agencies, 2020 was a banner year for all types of frauds. This growth was fueled at least in part by the COVID pandemic and accompanying economic hardships, as well as the unprecedented rollout of so-called ‘stimulus checks’ to millions of Americans. One interesting fact to come out of these reports: younger people report losing money more often than seniors, but when the target was over 70 years of age, the financial loss was much higher.

Identity Fraud
Identity fraud schemes include a wide portfolio of tactics: everything from phishing for important personal data, to hijacking banking or credit records, to filing false tax returns – in short, using your personal information to pose as you for fraudulent purposes. One unique twist during 2020 was criminals using people’s Social Security Numbers in order to file for and receive their Economic Impact payments, or ‘stimulus checks’.

This kind of fraud ranges widely in terms of damage. At the lowest end, a fraudster may steal individual pieces of your personal information (such as email and other logins), pretend to be you, and order goods or try to ensnare your contacts. At worst, criminals can completely strip you of your identity, including Social Security Numbers, bank accounts and other property, draining all your assets and requiring you to take massive steps to get your life and good credit back.

Imposter Fraud
There are probably hundreds of permutations of imposter scams, but they all boil down to the same thing: a person pretending to be someone they’re not, in order to convince you to send them money.

In this category we have calls, texts and emails from people claiming to be calling from the IRS, Social Security or Medicare demanding immediate payment (or else!); a cop in a city you’ve never heard of, claiming to have your grandson in custody; the administrator of a lottery (you won! Just send cash to secure your winnings!) Tech Support (your computer is infected! Act immediately!); a smitten overseas suitor who needs money to come see you; etc., etc., etc.

By now you should know that government agencies such as the IRS and Social Security will not call or email you out of the blue demanding money. If you are contacted by someone who sounds legitimate, hang up (if by email, don’t click on any links) and contact the company through a number you know to be authentic. The bottom line: if someone wants you to pay him or her with a cash equivalent such as a gift card or wire transfer, back off. It’s almost certainly a scam.

Online Shopping
With COVID sending people online in search of scarce goods, or keeping them home for the sake of their health, it’s no surprise that 2020 saw a big spike in online scam reports. According to the Better Business Bureau (BBB), online scams accounted for 38% of the complaints to its Scam Tracker in the first seven months of 2020 — up from 24% in 2019.

The BBB reports that the #1 reason people lost money in these scams was the enticement of a rock-bottom price. Combined with widespread shortages of needed products (think gloves and hand sanitizer), these low prices made many people ignore their better judgment.

And it’s not just a case of following an iffy link from an Internet search; many people who lost money reported seeing the product on such high-confidence sites as Facebook, Google and Instagram, or what they thought was the merchant’s own website. But the sites were bogus, made to look like the real thing. Other people clicked on links that popped up via social media when they were actively shopping and were taken to websites for businesses that don’t exist at all.

According to AARP, some of these copycats do deliver merchandise — low-quality knockoffs worth far less than even their cheap purchase price. But many times, people aren’t aware they’ve been scammed until their purchases fail to arrive. The FTC reports that these ‘no-shows’ reached record highs in the spring of 2020 as the spread of COVID-19 fueled a spike in online shopping.

As 2021 gets underway, caveat emptor (buyer beware). It’s never been a better time for fraudsters. Steer clear.

 

This article is designed to provide informative material and is distributed with the understanding that it does not constitute legal or other professional advice. Opinions expressed herein are subject to change without notice. Information has been obtained from sources believed to be reliable, but its accuracy and interpretation are not guaranteed.


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