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Keeping Families Safe: Scams and Fraud

Senior Woman Giving Credit Card Details On The PhoneWhat is a scam?

A scam is a dishonest plan to get you to provide financial funds or personal information to the scammer. In every scheme, the scammer makes a financial profit. Older adults are one of the most targeted demographics because many of them are homeowners, have large savings and retirement funds, and excellent credit.

Scammers use a variety of methods to reach their targets, including phone calls, text messages, mail, emails, dating websites, and social media. After getting in contact with their target, scammers will ask for personal information, pitch investment opportunities, try to sell products or services, or ask for donations.

Scammers will go to great lengths to appear legitimate and trustworthy but, there are things you can do to identify a scam and protect yourself from significant monetary loss. Read through and share the information below to help protect your family and community from scammers.

Commons Scams

While scammers are constantly changing their schemes, there are patterns to the ways they try to steal your money and information. Learn about some of the most common types of scams below.

Telephone Scams

Telephone scams involve real people, robocalls, or text messages. Callers try to steal your money or personal information by making false promises or offering money through free grants or lotteries. Engaging with these callers may encourage them to continue to call and can become increasingly violent with false threats of arrest, jail time, or lawsuits.

  • Lottery and Sweepstakes Scams
    A common telephone scam involves fake lotteries and sweepstakes that claim you’ve won a prize but must pay a fee or provide personal information to collect it. Remember if you have to pay a fee or provide your personal information you haven’t won cash, you’re being scammed.
  • Grandparent Scam
    Beware of calls from people who sound like relatives asking to wire or transfer money to help them get out of trouble. Telephone scams frequently use caller ID spoofing to make it seem like you are receiving a call from a relative, acquaintance, government or local agency you trust.

Banking Scams

  • Overpayment scams
    A scammer will send you a counterfeit check and ask you to deposit it into your account and wire part of the money back to them. Since it’s a fake check you will end up paying the total amount and transfer fees.
  • Automatic withdraw
    A scam company sets up automatic debits from your bank account, to qualify for a free trial or collect a prize.
  • Phishing
    Scammers send you emails asking to verify your bank account or debit number.

Investment Scams

  • Multi-Level Marketing Programs (Pyramid Schemes)
    Multi-Level marketing programs require a constant flow of participants and cash to maintain the scheme. They are marketed as legitimate businesses and require new recruits to invest in the company. These investments are then used to pay those who recruited them and so on. New recruits are promised large profits if they can recruit others into the scheme. Often these schemes use products and services to mask the pyramid structure. There are two main factors that point to a pyramid scheme, excessive inventory and a lack of sales.
  • Ponzi Scheme
    A Ponzi scheme acts in a similar fashion as pyramid schemes, promising high returns on short term investments, when in reality there are no actual investments. The money collected from one investor is used to pay another and so on.

Charity Scams
Beware of charities and GoFundMe accounts during natural disasters, emergencies, or tragedies. These charity accounts can be set up by anyone and might not send funds to help those in need. Before you donate money, check with the National Center for Disaster Fraud, Better Business Bureau or the Arizona Attorney General Consumer Protection Office to verify the charity.

How to Report

Tips

Phone Calls

  • Never give out or “verify” your personal information such as social security number, bank account numbers, passwords, or other identifying information over the phone.
  • If a caller asks you to wire money or pay with a gift card, hang up and report the scammer right away. A bank or government agency will not ask you to pay with a gift card.
  • Don’t give in to pressure to take immediate action! Give yourself time to verify the information before making a decision, tell them you’re heading out and will call them later.
  • Talk to your phone company about call blocking tools. Learn more at FCC.gov/robocalls

Banking

  • Contact your bank and ask them to report any unauthorized or suspicious automatic withdrawals from your account.
  • Don’t trust the appearance of checks or money orders you receive in the mail, they can be made to look legitimate and official.
  • Don’t wire money to people or companies you don’t know and don’t deposit checks or money orders you receive in the mail.

Investments

  • Be wary of investments that promise quick and guaranteed high returns without financial risks.
  • Don’t get involved in a business that makes you recruit other participants and ask you to purchase a large number of products.
  • Research investment opportunities on your own and verify investments before you make a monetary commitment.

Statistics

  • In 2018, the FTC received approximately three million reports including 1.4 million fraud reports totaling in $1.48 billion dollars in losses.
  • The most common fraud complaints involved imposter scams, debt collection, and identity theft.
  • Members of the military reported over 59,000 fraud complaints totaling 34 million in financial loss.
  • Telephone calls were the most common method of contact with 69% of fraud reports involving a phone call; while only 8% reported financial loss, that loss amounted to $429 million.
  • Wire transfers are the most frequent method of payment for cases of fraud, amounting to a loss of $423 million.
  • Young people ages 20 to 29 reported a financial loss more often than people ages 70 and up, but when older people reported a loss it was at a much higher scale.

Resources

Fraud and Identity Theft Enforcement - MaricopaCountyAttorney.org/FITE
U.S. Securities and Exchange Commission - Investor.gov/
Federal Trade Commission: Consumer Information - Consumer.FTC.gov/

Sources

USA.gov Common Fraud and Scams - USA.gov/common-scams-frauds
Caller ID Spoofing - FCC.gov/consumers/guides/spoofing-and-caller-id
Pyramid and Ponzi Schemes - FTC.gov/public-statements/1998/05/pyramid-schemes#N_3_
Common types of scams - ConsumerFinance.gov/ask-cfpb/what-are-some-common-types-of-scams-en-2092/
FBI.gov Common Fraud Schemes - FBI.gov/scams-and-safety/common-fraud-schemes
Investor.gov - Investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-alert-beware-pyramid-schemes-posing-multi
FTC Consumer Sentinel Network - FTC.gov/system/files/documents/reports/consumer-sentinel-network-data-book-2019/consumer_sentinel_network_data_book_2019.pdf