According to the Fair Trade Commission of the United States, over a million cases of fraud were reported between January and June 2023, amounting to a loss of 4.4 billion dollars. The modus operandi of the scammers ranges from phone calls, text messages and social media messages asking unsuspecting individuals to pay money through wire transfer, payment apps like Venmo, cryptocurrency, and even cash.
To educate citizens about these types of fraud, the FTC and Ethnic Media Services (EMS) organized a virtual workshop on September 22, 2023. Sophia Siddiqui and Lois Greisman from the Division of Marketing Practices for the FTC led the session.
How They Get You
Scammers use a variety of ways to entrap individuals into paying them money. They might pose as the IRS and threaten you with a tax fraud lawsuit if you don’t wire them some money; if you are an international student, they might pretend to be from Homeland Security and threaten you with deportation if you don’t Venmo them a certain sum; or they might pretend to ask for money on behalf of a loved one who is in an emergency. These might sound implausible and far-fetched, but the numbers suggest that many fall prey to such tactics.
“We sit here and say that doesn’t sound right. But scammers are good – scary good – at persuading you,” said Greisman. “When someone says they are from the government, and they can send someone to arrest you right now, they can be very persuasive.”
Victims are also swayed by the fact that the caller ID on their phone often identifies the caller as the IRS, DHS, USCIS or local police departments. What many do not know is that caller IDs are not foolproof and that scammers can manipulate them easily. While network providers like Verizon and T-Mobile try their best to block and screen numbers, scammers keep changing their numbers to evade identification. The FTC warns citizens to never trust the caller ID, even if it looks genuine.
Cryptocurrency, Gift Cards, Payment Apps, and Wire Transfers
Often a telltale sign of a scam is the payment method that the caller asks you to use. Scammers often ask that you complete the payment through wire transfer, cryptocurrency or gift cards. The reason is that sending money through these methods is just like sending cash – it is very difficult to recover it once the payment is complete.
Since cryptocurrency is not regulated at all, this is becoming a common mode for investment-related fraud, as it is impossible to trace the money once sent. Beware of any individual promising high returns on investment and asking for payment in cryptocurrency.
Payments made through gift cards are also difficult to reverse but the FTC advises victims of gift card scams to reach out to the company that issued the gift card for assistance. You can find more information about major gift card companies at ftc.gov/giftcards.
“The big takeaway is that nobody legitimate will demand that you have to pay with gift cards, cryptocurrency or wire transfers,” said Siddiqui. “If someone you don’t know asks you to pay using these methods, it’s likely a scam.”
Whenever possible, the FTC recommends using credit cards to complete any transaction online, as they offer the most protections for recovery in case of fraud.
The call itself is a red flag
Another type of fraud is when scammers target immigrants and pretend to be from government agencies like Department of Homeland Security (DHS), United States Citizenship and Immigration Services (USCIS) or the Internal Revenue System (IRS). The scammer then threatens the person at the other end with jail time, deportation, or a revocation of immigration status, unless they make a payment. However, such calls are almost always a scam.
“The call itself is a red flag,” according to Greisman. “That is not how any of these government agencies will contact you, let alone threaten you.” If an individual receives such a call, they should not make any payment but first get in touch with the concerned agency through their official website.
If you or someone you know have been a victim of a fraud, please visit reportfraud.ftc.gov to report it. To stay up to date with information about scams in your region, sign up for FTC’s consumer alerts at ftc.gov/consumeralerts.