Tag Archives: Better Business Bureau

Corona Virus Opens a Pandora’s Box of Scams

If Willie Sutton were alive, he wouldn’t be robbing banks, more likely he’d be a scam artist, siphoning off a portion of the almost $70 million that Indiana consumers alone have reportedly lost to fraud even before the COVID-19 pandemic opened up a pandora’s box of new scam opportunities.

“At the Federal Trade Commission, we always say the fraudsters follow the headlines,” explained Todd Kossow, Director of the Midwest Region of the FTC. “They take advantage of the major news stories of the day and find new ways to access consumer’s personal financial information. The corona virus pandemic has been no exception to that.”

Kossow’s remarks were delivered at an on-line convening for ethnic media primarily covering Indianapolis and nearby regions. In addition to FTC staff, presenters included representatives from state and local agencies responsible for consumer protection, as well as from non-profits like the AARP, the Better Business Bureau, and others on the frontlines of battling scams and deceptive marketing practices.

“Scammers are like vampires who bleed their victims not just of money but of hope and self-respect,” said conference moderator Sandy Close, director of Ethnic Media Services. Close urged media participants “to shine a light on these activities through your media coverage and your community service.”

Susan Bolin, from the Better Business Bureau, concurred with the need for increased media coverage and involvement. While acknowledging active media participation in Fort Wayne and Evansville, “we still need more help. Just imagine the impact that we can have if every media outlet partnered with us.” Ultimately, Bollin said she wants to make Indianapolis a scam-free zone.

The goal is a daunting one.

Scams that have proliferated since the pandemic include large up-front money payments to companies claiming they can assist homeowners to renegotiate mortgage payments they missed because of COVID linked job layoffs; or scams that promise small businesses an inside track to securing federal paycheck protection funds to retain employees.

“So what are the main types of COVID-19 related scams that we’re seeing?” Kossow asked. “Scammers who are pitching so-called treatments and cures for COVID-19 without any proof that they work. The FTC has sent warning letters to nearly 250 companies making such claims.”

Presenters cited several “red flags” typically associated with scams: run out and buy a gift card to make a payment; a money wire transfer is required; an upfront payment is necessary before a prize can be claimed; authentication of your bank account number or verification of your Social Security number as mandatory in order to speed or complete the application or funding process.

Several speakers said that humiliation over being scammed often discourages victims from reporting what happened. There’s also a sense that trying to recover the money is a hopeless task. This is particularly true with gift card transactions. At least with payments made on credit cards, victims have a bank record to point to in filing a fraud claim. Moreover, victims have a self-interest in reporting scams, Andrew Johnson, Chief of Staff of the FTC’s Division of Consumer Affairs, emphasized

“Since July, 2018, In just a two-year period, the FTC mailed $23.6 million to almost 140,000 people in the state of Indiana, which is pretty remarkable,” Johnson said. “Generally, when the FTC settles or wins a case, and we get money that we can return back to consumers, one of the main ways we determine who to send money to, is we look back at our database of who reported to us.”

One net result of the pandemic’s advent is a decrease in face-to-face counseling that would encourage reporting to the FTC.

Cheryl Koch-Martinez, who works at Indiana Legal Services, said her organization assists low-income residents in understanding their financial options and advising them on consumer fraud cases. Given the imperative for social-distancing, “face-to-face communication is just not there,” she said. Telephone and e-mail are inefficient substitutes for the sensitive conversations that need to occur.

Reverend David Green, Senior Pastor, Purpose of Life Ministry, shared the experience of a maintenance engineer at his church. Originally from El Salvador,

he immigrated to the United States 20 years ago and obtained citizenship. He sent $1,000 to purchase a trailer in Kentucky and then sought to make arrangements with the sellers to personally pick it up. “They said, ‘no,’” Green reported. “They said they needed to deliver it and that if he would go to PayPal and send $600 for the insurance on the delivery of the trailer, that when the trailer got delivered, he would get the $600 back.”

In this case, Reverend Green encouraged his church’s employee to file a report with the FTC and the Better Business Bureau after the seller would answer phone calls but promptly hang up.

Several speakers highlighted the debilitating effects of scams that prey on people’s loneliness. While romance scams come readily to mind, scammers also have used a victim to become unwitting money mules, someone who moves money to a third-party. The use of third parties makes the origin and movement of financial transactions more difficult for authorities to trace.

Such was the case Assistant U.S. Attorney MaryAnn Mindrum described of an elderly woman who was told she’d won the lottery and had to pay fees before she could secure her winnings. She did not win the lottery, lost a substantial amount in so-called fees, “but,” Mindrum explained, “she talked to the scammer for two years!” Mindrum said her office stepped in to end the relationship, extradited the scammer to the U.S. and successfully prosecuted him. The woman was not charged.

 

You Have Been Scammed!

It was the end of February and I was at a pharmacy in Delhi, India. The house-help Julie looked over my shoulder at the medicine I was buying for her and whispered “Sunny Tiger (hand wash)” in my ear. “Sunny Tiger,” she said, “I want Sunny Tiger as well.” The threat of coronavirus hung in the air. TV stations had been exhorting people to buy sanitizer.

At the very same time in Kelowna, Canada, Councilwoman Mohini Singh was sitting down to her morning emails when her daughter Tara leaned over her shoulder and said, “Mum order some sanitizer please.” 

Tara took her mother’s credit card and went online to order three bottles of sanitizer.

When the bottles arrived in the mail they were the size of her index finger. The charge was $80.

Scammers have made off with $34 million in coronavirus-related fraud since the beginning of the year, reported the Federal Trade Commission.

Interestingly the fraudsters have targeted all age groups. Younger Americans ages 30 to 39 reported the greatest number of scams, while Americans ages 50 to 59 reported the highest financial loss. About 44 percent of the fraud complaints came from people who actually lost money – $5.85 million.

 

As part of their Family Emergency Scams advisory, the FTC warned grandparents specifically against family emergency messages that come from unfamiliar numbers and request wire transfers.

Scammers follow the money. They follow the headline, says Monica Vaca, Associate Director for the Division of Consumer Response and Operations in the Federal Trade Commission’s Bureau of Consumer Protection. The Division hears from consumers across the country about problems they experience in the marketplace, and manages and provides law enforcement access to the Consumer Sentinel Network. They deliver refunds to consumers resulting from FTC law enforcement actions.

Speaking at a webinar organized by Ethnic Media Services, Monica Vaca warned people to be careful of the offers — whether it’s by phone, by email or text. Government agencies and legitimate firms never ask for payment with a prepaid gift card or wire transfer. She told people to beware of logos and verbiage that are trying to masquerade as official, as they are scams to trick people into sharing personal information. 

Exploiting the fears and uncertainty triggered by the pandemic is the scam artist’s game.

The top category on the FTC’s list of complaints was travel and vacation; more than 5,700 complaints were filed with consumers reporting more than $8.7 million in losses.

Travel cancellations triggered by the pandemic proved a ripe breeding ground for scams. People who had to cancel travel plans they made in previous months lost money in airfare, hotels, and other components of planned vacations. Online shopping scams were also responsible for a significant chunk of consumer-reported claims.

The pandemic has enabled fraudsters to have a buffet of options. An offer of help could be very alluring to people grappling with understanding the Economic Impact Payment or stimulus payments promised by the government. Online shopping for the uninitiated can be a maze. Cures for the dreaded Coronavirus, flights home for students, and Facebook endorsements of companies are potential quagmires. 

Be warned, says the FTC.  A quick click of the mouse promises to make it all easy but can trick you into giving away personal information. Report scams to  ftc.gov/coronavirus. Check with the Better Business Bureau for businesses and charities you can trust and for warnings of the latest scams. If you have already paid, ask your credit card company to treat it as an unauthorized transaction. Beware of phishing emails and text messages that tell a story to trick you into clicking on a link or opening an attachment. 

The Federal Trade Commission announced the launch of two new interactive dashboards reporting on international fraud and scams related to the pandemic. One site, a partnership of 34 consumer protection agencies around the world, gathers and shares complaints about international scams submitted by consumers to econsumer.gov.  Another site has data on international reports submitted to the FTC’s Consumer Sentinel Network.

In a recent case originating from Nigeria, scamsters tricked the German health authorities into transferring EUR 880,000 as an advance for facemasks. The Germans were scrambling to find facemasks and other critical medical equipment as the pandemic grew, said Interpol, when the scamsters struck.

The German government was not the only one overturning every rock to find equipment in Corona times. When President Donald Trump posted on Twitter to urge Ford and General Motors to “START MAKING VENTILATORS, NOW!” – Yaron Oren-Pines, an electrical engineer in Silicon Valley tweeted back: “We can supply ICU Ventilators, invasive and noninvasive. Have someone call me URGENT.”

Three days later, Buzzfeed reported that New York State paid Oren-Pines $69.1 million. The payment was for 1,450 ventilators — $47,656 per ventilator, at least triple the standard retail price of high-end models. 

No ventilators were delivered.

Ritu Marwah is a 2020 California reporting and engagement fellow at USC Annenberg’s Center for Health Journalism.