Familiar faces in 2012 Top Ten Scams Report – National Consumers League

In 2012, fake check scams earned the dubious distinction of being the top scam reported by consumers to the NCL’s fraud complaint site, Fraud.org. Nearly 32 percent of the total scams reported fell into this category, and it is the second time in three years fake check scams topped our list.Many consumers do not realize that if they deposit a fake check the account holder is responsible for paying the money back to the bank. Fake check scams take many forms, but the common thread in nearly all fake check scams is a request to wire money to a third party. Tip: Don’t wire money to someone you’ve never met and you should be able to avoid this scam.

Read the full report.

Internet-based scams including bogus online merchandise scams, lottery scams, and phishing scams totaled more than half of all complaints received by Fraud.org this year. The Jamaican lottery scam, which asks people to send an advance fee before receiving their prize, was widely publicized in 2012. While American and Jamaican law enforcement authorities have begun working together to curb this widespread fraud, prevention remains the best option for most consumers.

Consumers reported being contacted by phone in more than 42 percent of the total complaints received in 2012. Tip: Whenever someone asks you on the phone to send money ahead of time in order to receive a prize, don’t do it! In fact, never send money to anyone you don’t know and you will avoid much heartache and headache.

A growing scam in Fraud.org’s complaint data is the office directory/ad sales scam. Complaints about this scam increased by 7.36 percent from 2011 to 2012. In a typical office directory scam, a small business or non-profit organization is called and the receptionist or other front-line employee is asked to verify information about the business. If the mark does so, the organization shortly begins to receive threatening invoices for bogus online business listings or other advertisements. The scam artist may even threaten legal action if payment is not sent.

Regardless of the type of scam, many instances of fraud can be avoided by remembering the old rule of thumb: if something seems too good to be true, it probably is.

If you ever do have questions about a potential fraud or think you might be a victim of a scam, report it immediately via Fraud.org’s secure online complaint form. Embarrassment or fear of friends and relatives finding out about the crime causes many victims of fraud to remain silent. Only by speaking out can we give law enforcement the tools they need to bring these criminals to justice.

Launching an all-new Fraud.org! – National Consumers League

NCL is proud to announce the relaunch of its anti-fraud education and advocacy campaign, Fraud.org. Today’s announcement is the culmination of nearly a year of work by the League to update its signature anti-fraud program to address the continued challenge of fighting rampant online and telemarketing fraud.

For more than 20 years, anti-fraud education and advocacy have been at the center of NCL’s mission. In 1992, under the leadership of former NCL President Linda Golodner, NCL launched the Alliance Against Fraud, a coalition of groups from the governmental, business, non-profit, and labor communities all united around the common goal of educating and empower consumers to avoid telemarketing scams. This collaboration led to the creation of the National Fraud Information Center, which operated one of the first consumer hotlines dedicated to counseling consumer victims of telemarketing fraud.

In the mid-1990’s millions of consumers were getting online for the first time via home dial-up connections and early broadband networks. This provided fertile ground for scam artists to use the new communications medium to reach millions of potential victims. In 1996, in response to the dramatic growth in Internet-based scams, the League launched Internet Fraud Watch and the original incarnation of Fraud.org. Then, as now, the program was designed to help consumers find up-to-date information on emerging scams and connect them with law enforcement and consumer protection agencies. In the 2000’s the NFIC/IFW (rebranded as NCL’s Fraud Center) regularly published educational brochures, Web content, and anti-fraud educators’ toolkits to help consumers and the agencies that work with them to fight back against fraud.

A new decade has brought new leadership and new challenges to the Fraud Center. With the vast majority of the U.S. population connected to broadband and carrying mobile phones, con artists have never had a more lucrative audience for their schemes. According to estimates from the Financial Fraud Research Center, the annual cost of consumer financial fraud in the U.S. is approximately $50 billion, on par with the annual gross output of the radio and television broadcasting industry. There is a global community of scam artists, as networked and tech-savvy as any Silicon Valley entrepreneur. Their global reach makes it especially difficult for American law enforcement to prosecute the con artists. As billion-dollar scams like the Bernie Madoff case illustrate, even savvy consumers remain vulnerable to fraud.

In the face of this, NCL has not been idle. In 2012, under Executive Director Sally Greenberg, the League launched Fraud Alerts – a monthly email service designed to directly alert consumers to emerging scams and empower them with tips on how to avoid being defrauded. Through the Alliance Against Fraud, NCL will in the coming months redouble its efforts to identify emerging scams and develop new tools to help consumers avoid becoming fraud victim statistics. Today, NCL continues that mission with the relaunch of its anti-fraud campaign. Focused on its iconic Web site, Fraud.org, NCL remains committed to consumer education and empowerment in the fight against fraud.

Through a complete overhaul of its design, the new Fraud.org will make it even easier for consumers to find the information they need to avoid scams. The new user experience includes:

  • An updated search function to help consumers search for scams in multiple ways, enabling them to go directly to a specific type of fraud or, using a more advanced search, identify the type of scam they’ve been exposed to if they aren’t sure;
  • Content that is easily shareable via social networks so that consumers can quickly pass along fraud warnings to friends and loved ones in need;
  • The ability to sign up for regular Fraud Alerts to help consumers stay abreast of emerging scams before they become victims; and
  • As always, consumers who have been victims of fraud or been approached by scammers can file complaints through our secure online complaint form. These complaints are then shared with our network of law enforcement and consumer protection partners.

Even with these new resources, the League can’t do it alone. Fraud.org depends on partner organizations and individual consumers to join in the fight against fraud. That’s why we continue to encourage consumers to come forward and report scams via the secure online complaint form on Fraud.org. We are also seeking to expand the membership of the Alliance Against Fraud, so that, through a growing coalition of like-minded partners in the fight against fraud, our concerns will be better heard by policymakers who can help make a difference.

The relaunch of Fraud.org isn’t just about a new Web site. It’s about rededicating ourselves to the notion that no one deserves to be a victim of fraud. With the new resources of Fraud.org and the collective power of the Alliance Against Fraud, we stand a real chance of putting a dent in the pain that scam artist inflict on consumers every day. We hope you love the new site! Check it out today.

Business directory scams preying on small business owners – National Consumers League

The National Consumers League’s Fraud Center is warning businesses and non-profit organizations to be on the guard for con artists armed with bogus “invoices” for business directory listings. We regularly receive complaints about this scam, but so far in 2012, we have received more than 100 complaints, a 500 percent increase (no, that’s not a typo) versus the first nine months of 2011.“Scams tend to come in and out of fashion,” said John Breyault, Director of NCL’s Fraud Center. “It certainly appears that the business directory scam is once again the ‘con du jour’ for fraudsters.”

In a typical business directory scam, the victim (often a small business or non-profit organization) will receive a call asking the recipient to “verify” or “confirm” information such as business address, business name, or fax number for a business directory listing. If the recipient of the call provides this information, the organization shortly receives an urgent “invoice” for the cost of the alleged directory listing. In some cases, a copy of the listing accompanies the invoice, which is often just a printout of an existing online business directory listing.

In many cases, the business receiving the invoice will simply pay the bill without questioning the charge. If the charge is questioned, scammer may threaten legal action or offer a “discount” to get the organization to pay up. In some cases, the scammer may even produce a recording of the original verification phone call as “proof” that the charge was authorized.

Examples of recent scams reported to our Fraud Center:

  • A consumer from Northern California recently contacted us about a directory ad scam she was caught up in. She received a $599.99 bill for an online directory listing for a defunct company she had owned. She was told that they would close the account and zero out the bill. However, she later started receiving collections despite her clear indication that her company that was out of business could not have placed online directory listing ads. Her alleged “bill” is now up above $750 and the harassing faxes have kept coming.
  • Another consumer from Santa Barbara, California described to us a similar online directory scam. After taping an assistant manager’s alleged “authorization,” the consumer’s business received a $599 bill for online directory listings. The assistant manager had in fact received a call, but the scammer claimed it was simply to authorize the removal of an ad. After refusing to pay, the consumer has continued to receive harassing phone calls and faxes threatening to send the account to collections.

Business and non-profit organizations can take action to spot and avoid this scam:

  1. Train staff to spot this scam especially the “verification” phone calls, in staff meetings, on bulletin boards and email alerts. Special attention should be given to employees who answer phones for the organization or who have authority to write checks on behalf of the organization.
  2. Verify existing arrangements for business directory listings before paying invoices for such services. If you’re not sure you’ve ordered such a service, don’t pay the bill.
  3. Don’t be fooled by the “walking fingers” logo or the name “Yellow Pages,” as neither is trademarked or unique to any particular company.
  4. We wary of any invoice that arrives without a phone number or mailing address for the company allegedly billing for the listing service. Even if such information is on the invoice, check up on the business to ensure that it actually exists.
  5. Check with the local Better Business Bureau for the state where the business address is listed. Legitimate businesses should also be registered with their state, typically with the state’s Department of State or Corporation Commission.

Businesses or non-profit organizations that have been approached by this scam or fallen victim to it should be sure to report it to NCL’s Fraud Center at www.fraud.org. For more information on this scam, check out NCL’s fact sheet on bogus invoice scams.

Prizes/Sweepstakes bump fake checks as top scam – National Consumers League

The data is in! NCL’s Fraud Center has released the Top 10 scams of 2011, and bogus prizes and sweepstakes have bumped fake check scams to take the #1 spot. Also on the rise, and a concern for advocates, is that scammers posing as loved ones and preying on victims’ emotions, like the Grandfather Scam we’ve reported on in recent months, are on the rise.Another significant finding is that scammers appear to have targeted their scams at particular age groups more than ever in 2011. For example, complaints involving bogus prizes, sweepstakes, and free gifts made up 26.98 percent of complaints overall. However, among consumers ages 56-65 and above 65, these types of complaints made up 40.96 percent and 60.12 percent of the total, respectively. Similarly, fake check scams made up 26.65 percent of complaints overall. Among consumers age 18-25, fake check scam complaints made up 45.74 percent of the total.

Top 10 scams of 2011:

  1. Prizes, sweepstakes and fake free gifts
  2. Fake check scams
  3. Internet scams for general merchandise
  4. Phishing and spoofing
  5. Advance fee loans and “credit arrangers”
  6. Scholarships and grants
  7. Friendship and sweetheart swindles
  8. Nigerian money offers (not prizes)
  9. Family or friend imposters
  10. Fraudulent Internet auctions

New to the Top Ten Scams list this year is the Family/Friend Imposter Scam, the 9th-most frequently reporter type of fraud. In response to a rash of complaints, NCL’s Fraud Center began tracking this fraud (also known as the “Grandparent Scam”) in 2011. In these scams, a con artist typically poses as a relative in distress or someone claiming to represent the relative (such as a lawyer or law enforcement agent). The scammer frantically describes an emergency situation in which they have found themselves (such as being arrested, in an auto accident, in need of a lawyer, etc.) and asks the victim to send money for bail, lawyer’s fees, hospital bills, or other expenses. The victim is urged not to tell anyone, such as the parent of the “grandchild” because they do not want them to find out about the trouble they’ve gotten themselves into.

“Scam artists will stop at nothing to defraud consumers,” said John Breyault, NCL Vice President of Public Policy, Telecommunications and Fraud. “The scary part about these scams is that they prey on our natural inclination to want to help a loved one who is in distress.”

According to the consumer group, the majority of money lost was sent via wire transfer, a popular payment method among scammers because of the difficulty to track – and particularly devastating to consumers because of the improbability of recovering lost funds. Consumers should be wary of any offer that requires wiring of money, said NCL.

The report, which is compiled from consumer complaints submitted to NCL’s Fraud Center, examined trends in Internet and telemarketing fraud in 2011.

“Fraudulent telemarketers and Web-based scammers are hardened criminals out to take their victims’ life savings,” said NCL Executive Director Sally Greenberg. “The best way for consumers to fight back is to get educated and not be afraid to report such fraud to law enforcement. Scammers know all too well that their victims are often embarrassed and count on this to continue to perpetrate their crimes.”

For more information on NCL’s 2011 Top Ten Scams report, click here. Consumers who wish to report a fraud or potential fraud can do so via the online complaint form at NCL’s Fraud.org Web site.

NCL’s Fraud Center tracking spike in mystery shopper scam – National Consumers League

With a still sluggish economy and steady unemployment figures, many Americans are looking for work opportunities, only to be unwittingly scammed in the process. Mystery shopping scams have become an increasingly popular swindle, with complaints to NCL’s Fraud Center regarding fake check scams involving fraudulent mystery shopper and work-at-home schemes up nearly 9 percent in the last six months.Last week, NCL’s Fraud Center was contacted by a woman we’ll call “Gloria.” Gloria has two young children who just returned to school, and with some extra time on her hands, Gloria began cruising online job boards for part time work. Gloria soon came across a mystery shopping position that looked promising—the assignment was to visit a local wire transferring service and send money back to the mystery shopping company, using funds from a check the shopping company would provide. After that, all she had to do was write a brief report about her experience at the wiring service location. She immediately contacted the company and was told she was the “perfect candidate” for the job. Within a few days, she was sent a realistic looking check for $5,700 and was instructed to deposit the money in her personal bank account, keep $200 as payment for her work, and wire the remaining balance back to the mystery shopping company. Gloria gladly did as she was told, only to learn that—instead of a quick payday—the fake check bounced, and she is now on the hook for $5,700 she doesn’t have. To add insult to injury, Gloria even wrote a report about the money wiring service she used—robbing Gloria of not only her money, but her time as well.

Mystery shopping scams work by first luring the consumer with the promise of easy money; in Gloria’s case it was 200 bucks for only a couple hours of work. Victims are then instructed to deposit a fake check, keep the amount that has been designated as their “payment,” and wire the money back to the scammer. Many consumers are unaware that, by law, banks must make the funds from deposited checks available within days, although uncovering a fake check can take weeks. Consumers are responsible for the checks they deposit, so if a check turns out to be a fake, they are responsible for paying the bank back.

The experts at NCL’s Fraud Center are tracking scams like Gloria’s and are reminding consumers of the most common red flags and tips for spotting these fraudulent mystery shopper opportunities, such as:

  • A legitimate company will never ask you to use a money transfer to send cash to them or anywhere else, for any purpose.
  • Remember that it’s never a good idea never to deposit a check from someone you don’t know—especially if the stranger is asking you to wire money.
  • Never pay a fee to become a mystery shopper. Legitimate companies don’t charge people to work for them—they pay people to work for them.
  • Be suspicious of any company that hires you on the basis of an email or phone call, without any interview or background checks.
  • If you are considering becoming a mystery shopper, do your research first. Spend some time online searching for reviews and comments about mystery shopping companies that are accepting applications.
  • Any company that promises you that can make a lot of money as a mystery shopper is almost certainly a scam.
  • If mystery shoppers are asked to make purchases, it’s usually for very small amounts for which they will be reimbursed.
  • Mystery shoppers are paid after completing their assignments and returning the questionnaires to the companies that hired them. Shoppers never receive checks upfront.
  • Businesses often arrange for mystery shoppers through independent companies, many of which are members of the Mystery Shopping Providers Association (MSPA). For more information go to www.mysteryshop.org.

If you think you have encountered a mystery shopping scam, please visit NCL’s Fraud Center and file a complaint.

Scammers prey on the elderly in 2010 – National Consumers League

A phone ringing at 3AM usually means one thing: bad news. That’s certainly the case with a Grandparent Scam, in which fraudsters play on the fear that a friend or relative is in danger by calling an elderly victim and posing as a grandchild or acquaintance.The scammer then frantically tells a story of distress (they’ve been arrested, in an auto accident, are in need of lawyer, etc.) that requires money to be wired immediately. The “grandchild” begs the victim not to tell anybody about the call to avoid getting in trouble with their “parents.”

Scammers, always on the look-out for an easy mark, have been mercilessly targeting the elderly, according to the NCL’s Fraud Center and its recently released Top Ten Scams Report. The report, which is compiled annually from consumer complaints submitted to NCL’s Fraud Center, looks at trends in Internet and telemarketing fraud in the last year.

Consumers over the age of 55 make up nearly a third of all reports (32.8 percent), while baby boomers and older consumers total 54 percent of all complaints to the NCL’s Fraud Center in 2010.

“Fraudulent telemarketers and Web-based scammers aren’t just pushy salespeople trying to make a living – they are hardened criminals out to take their victims’ life savings,” said NCL Executive Director Sally Greenberg. “Con artists know that older consumers may be particularly vulnerable to falling for a bogus pitch, using scare tactics, posing as legitimate outfits, or making the offer sound so sweet that it’s difficult for consumers to resist.”

Top ten scams of 2010

  1. Fake Checks: 29.67%
  2. Internet: General Merchandise: 27.24%
  3. Prizes/Sweepstakes/Free Gifts: 20.49%
  4. Phishing/Spoofing: 8.90%
  5. Advance Fee Loans, Credit Arrangers: 2.44%
  6. Timeshare Resales: 1.56%
  7. Nigerian Money Offers: 1.28%
  8. Internet: Auctions: 1.14%
  9. Friendship & Sweetheart Swindles: 0.99%
  10. Scholarship/Grants: 0.65%

Fake check scams—in which fraudsters lure 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 29 percent of all complaints.

“There is no legitimate reason for someone to give you money and then ask you to wire money back,” said John Breyault, NCL Vice President of Public Policy. “If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.”

Fraudsters on the line

Despite our increasingly digital society and the growing prevalence of Web-ready devices such as smartphones and tablet computers, scammers have not abandoned the telephone as a method of contact. Nearly a quarter – 23.67 percent – of victims reported being defrauded over the phone, up 7.62 percent from last year.

In 2010, NCL’s Fraud Center saw a spike in telemarketers focusing on bogus prize and sweepstake scams. Among scams where the con artist contacted the victim by phone, these scams increased by 19 percent and are this year’s most frequently reported telemarketing scam.

Wire transfers: Con artists’ preferred method of payment

Wire transfers are great for scammers. Unlike reversing a credit card charge or canceling a check, consumers have virtually no way of getting their money once a transfer has been made. Because it’s such an unsafe way for consumers to pay for transactions, wire transfer remains the payment of choice for scammers, with more than 2 in 5 (41.5 percent) of consumers who reported losses sending money via wire transfer.

For more information on the top scams of 2010, read NCL’s report.

Scammers preying on weak economy in top frauds of 2009 – National Consumers League

The 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.