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Scammers preying on weak economy in top frauds of 2009

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NCL's Fraud Center has released its annual list of top scamsThe recession is helping at least some people prosper despite tough economic times – scammers preying on consumers who are looking for ways to earn money. NCL's Fraud Center has just released its annual Top Ten Scams report, and the news for consumers is that scammers are going after those of us hit hard by the economy in 2009.

The report, which is compiled from consumer complaints submitted to NCL’s Fraud Center, looks at trends in Internet and telemarketing fraud in 2009. What the report finds is startling.

“Consumers are looking for ways to supplement their income or learn new skills,” said NCL Executive Director Sally Greenberg. “Unfortunately, fraudsters know this all too well and they target vulnerable consumers with business opportunity or scholarship-related scams.”

Top Ten Scams of 2009

 

  1. Fake Checks 42.01%
  2. Internet: General Merchandise 24.87%
  3. Prizes/Sweepstakes/Free Gifts 9.57%
  4. Phishing/Spoofing 7.17%
  5. Nigerian Money Offers (not prizes) 2.88%
  6. Business Opportunities 2.02%, Franchises/Distributorships 2.02%
  7. Advance Fee Loans, Credit Arrangers 1.82%
  8. Internet: Auctions 1.17%
  9. Friendship & Sweetheart Swindles 1.00%
  10. Scholarships/Educational grants 0.95%

 

Fake check scams—in which fraudsters lure in their victims with phony mystery shopper jobs or sweepstakes “winnings,” asking their victims to cash realistic-looking checks and wire a portion of the proceeds back to the scammer before the check bounces—continued to be the most frequently-reported scam to NCL’s Fraud Center, making up 42 percent of all complaints. Internet merchandise scams, fake sweepstakes, phishing, and Nigerian money offers remaining unchanged as second through fourth most-reported scams, respectively. Business opportunity scams and scholarships and educational grant scams, which were not top ten in 2008, became the sixth and tenth most-reported scam in 2009, respectively.

This year, NCL's Fraud Center saw a spike in complaints related to bogus business opportunities and scholarship grants. Clearly, scammers know how the economic environment is affecting consumers, and they are profiting from it.

How the scams work

In a typical business opportunity scam, the victim is promised unrealistic or “guaranteed” profits in return for a significant up-front investment in a business – such as magazine stands, vending machines, or Internet kiosks. Though the profits almost never materialize, the victim still loses their initial fee and the scammer disappears. In a scholarship or educational grant scam, the victim pays a fee to the scammer in return for promises of a “guaranteed” scholarship award or generous financial aid package, which never come to fruition.

With many consumers making efforts to improve their education level or skills in order to make themselves more marketable in a tough economy, scammers are taking advantage. With state and local consumer protection budgets cut to the bone by the recession, it’s even more important for consumers to stay vigilant to avoid falling victims to these frauds.

Older consumers falling prey

NCL's Fraud Center has also noted a link between age and vulnerability to fraud. In 2009, consumers in the top age groups—56-65 and those over 65—made up a larger portion of fraud reports than in the previous year, increasing by about 2 percent versus 2008.

Advocates fear that older consumers may not be as quick to check out a company’s bogus claims on the Internet, where many scams have been exposed by previous victims or watchdogs. NCL urges relatives and caregivers to pay special attention to older family members who suddenly start exhibiting the signs of having fallen victim to a fraudster.

These signs include a sudden inability to pay monthly bills, unusually heavy volumes of junk mail or telemarketing calls, or a reluctance to discuss repeated large payments to “a friend.“ Consumers concerned that an elderly friend or relative is a fraud victim should contact their local consumer protection office or state attorney general.

Read the full report, which includes a breakdown of telemarketing and Internet fraud, locations and ages of victims, and further analysis here.