Consumer Fraud: Statistics, Trends, and Tips

 I recently attended a webinar about fraud sponsored by Consumer Action. The title was Fraud and Scams in the COVID-19 Economy. The webinar presented statistics about the incidence of fraud and types of consumer fraud complaints, as well as “red flags” of fraud and tips for working with fraud victims.

Below are eleven of my key take-aways from the webinar:

 

¨    Fraud Reports- About 5.7 million fraud reports were logged by state and federal (e.g., CFPB, IRS, Federal Trade Commission) government agencies in 2021. The top two fraud categories were identity theft and imposter scams.

 

¨    Fraud Categories- Widely-reported fraud categories include online shopping. prizes/sweepstakes/lotteries, internet services, telephone and mobile services, investment-related, health care, travel/vacation/timeshare plans, foreign money offers and fake check scams, and business impersonator scams (especially Amazon and Apple).

 

¨    Generational Impacts- Younger adults reported losing money to fraud more often than older adults but….when people age 70+ had a loss, the median loss was much higher.

 

¨    Fraudulent Payment Methods- The top payment methods reported by Consumer Sentinel Network are credit cards, payment apps/services, debit cards, gift cards/reloadable cards, wire transfers, and cryptocurrency. Reports and losses related to cryptocurrency investment scams increased sharply from October 2020 through March 2021.

¨    Gift Card Losses- The top gift card brands ranked by reported dollar losses to fraud in the first nine months of 2021were Target, Google Play, Apple, eBay, and Walmart.

 

¨    Victim Contact Methods- Crime victims are contacted in a variety of ways. In descending order, the top victim contact methods were phone calls, texts, e-mail, a website or apps, social media, “other,” mail, and online ads or pop-up messages. Reports about fraud originating on social media soared over the past five years.

 

¨    Fraud Reporting- The go-to resource for fraud victims to report crimes is the Federal Trade Commission (FTC) website www.ReportFraud.ftc.gov. Here, victims can report a scam, a company, or an unwanted call. The website also provides information on “next steps”; i.e., what victims can do to protect themselves. The FTC shares consumer reports with their law enforcement partners to help with investigations.

 

¨    Victim Complaints- Webinar speakers advised victims to “complain to everyone.” This includes the FTC, the victim’s state attorney general, the Consumer Financial Protection Bureau (CFPB), your bank, and (if applicable), a payment processor (PayPal, Venmo) or gift card company. Also, file a police report with local law enforcement.

 

¨    Consumer Rights- Compared to debt cards and gift cards, credit cards provide the strongest scam protections due to “chargeback” rights that can be raised against the credit card company. To invoke this right, consumers must raise an objection within 60 days of receiving a statement for goods or services that were not delivered. They must also state that they are withholding payment and not paying the amount in question.

 

¨    Diversity of Fraud Victims- Fraud victims are very diverse and it is a myth to assume that they are all stupid, gullible, greedy, lonely, or elderly. The one thing that victims have in common, however, is social influence. Fraudsters are very adept at creating situations that induce compliance. In many cases, they will profile potential victims to find an “Achilles’ heel” and tailor their pitch accordingly. Anyone can be taken in by a scam.

 

¨    Fraud and Stress-  Fraud victims are more likely to experience a negative life event (e.g., a change in living arrangements, death of a spouse, divorce, unemployment, a serious injury) because that is when people are most vulnerable. Life stressors use up cognitive capacity and coping strength.

 

For more information about avoiding consumer fraud, review the Consumer Action website about scams.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.