This week is Consumer Protection Week – but honestly, consumers should be on their guard about potential scams and fraud every single week of the year. In 2016, people who reported fraud to the Federal Trade Commission (FTC) paid $744 million to scammers – with a median payment of $450. Those are only the reported cases – many people are embarrassed to admit that they fell for a scam. Experts put scam crimes more on the order of $30 to $40 billion a year.
In looking at the top fraud in 2016, the FTC said that of those who specified how they were contacted by scammers, 77% said it was by telephone, with only 8% contacted by email and 3% by traditional mail. That tells you to be alert for suspicious calls.
Also notable in 2016, the FTC reports that for the first time, imposter scams passed identity theft for the number of complaints, and debt collection was the top complaint for the second year in a row.
Imposter scams are scammers who pretend to be someone else: the IRS, debt collectors, tech support – the FTC has posted examples of different types of imposter scams that have been reported.
Why are people susceptible to fraud?
Scammers are masters of human nature and prey on our weaknesses. They appeal to fear by posing as the IRS, debt collectors or other authorities, making harsh threats and you-must-act-now demands. They exploit our hopes of winning or getting something for free or for an incredible price. They take advantage of naive computer users with popups, phishing scams, unsafe apps or links and social media targeting.
In What Makes People Fall for Online Fraud? Rick Paulas reports on an AARP survey about risk factors involved with falling for Internet scams.
” … there’s a correlation between fraud victims and the activities people perform online. For instance, those willing to post their birth dates or relationship status on social media are 8 percent more likely to be victims of online fraud than those who keep mum. Those who sign up for free trial offers are 10 percent more likely to get swindled. People who click on pop-ups are 16 percent more likely. “Victims tend to be more open,” Shadel says. “But people wise up. They realize you shouldn’t be clicking on every pop-up you get.””
The article 10 Types of People Who Fall for Scams, Schemes and Cons by Marilyn Lewis says that:
Victims include older people, yes, but also younger ones. Educated and undereducated. White-collar and blue-collar. Dumb people and smart ones. The Stanford study says:
An emerging conclusion in profiling research is that there is no generalized profile of a “typical” victim. Profiling studies that analyze victims by type of scam, however, have yielded a clearer picture of scam-specific profiles. In other words, while everyone is vulnerable, some people may be more vulnerable to particular scams than others.
The article is very interesting, examining various demographic groups and what type of scam is likely to be most successful for that group. For example white men are the most likely victims of investment fraud; lonely people are more susceptible to dating fraud.
Even relatively sophisticated and alert people can let their guard down and fall for a scam. One way to keep suspicion high is to periodically review the FTC Scan Alerts to learn the latest scams that are circulating. It’s also important to report fraud should yo be come a victim. That is how the authorities catch criminals and alert others about new schemes.