When work leads to debt
We've often included in SCAM GRAM alerts about a litany of employment schemes that target vulnerable consumers, from young adults to seniors, looking to supplement their income. An employment scheme that takes the cake (and seemingly takes us back to the indentured servitude of colonial times) involves the use of Training Repayment Agreement Provisions, or TRAPs, which require employees to work for a particular company for a certain number of years, until they've paid off debt incurred by receiving job training from the company. In a recent press release, the Student Loan Borrower Protection Center (SBPC) explained that Colorado Attorney General Phil Weiser filed a lawsuit against PetSmart for allegedly forcing PetSmart pet groomers into an illegal job training debt scheme. This suit claims that PetSmart lured would-be groomers into employment by promising “free” training and equipment, but then charged them as much as $5,500. The lawsuit further alleges that PetSmart used third-party debt collectors to collect against former groomers who quit low-wage, grueling entry-level PetSmart jobs, and capitalized on the fear of debt collection to keep others trapped in their jobs. Unfortunately, these employment schemes aren't as rare as you might think. Chris Hicks, senior policy advisor at SBPC, said that the facts of the Colorado AG’s lawsuit are "familiar to anyone who has been caught up in their own employer’s increasingly common debt-for-workplace-training scheme." SBPC, a leader in the nationwide effort to end the student debt crisis, offers several resources for learning more about and combating these predatory "TRAPs," and includes a roundup of state-by-state efforts to protect consumers from TRAP schemes, here.
Rare good news
With stories of stolen funds recovery so few and far between, we couldn't wait to relay this news about a foiled scheme not far from Consumer Action's hometown. According to a San Francisco Bay Area KRON 4 News report in late July, the Morgan Hill Police Department (MHPD) was able to recover $15,000 lost in an elder fraud case and, in a second case, arrested a suspect accused of stealing $30,000 from a different senior. An amazing part of the story is how the crimes, which were reported on a Wednesday, were both resolved before the weekend. In the latter case, the victim received a pop-up message stating that there had been a computer hack and that the victim needed to send money to “fix the issue,” KRON explained. The victim paid almost $30,000, including $20,000 in cash and in person. After the victim contacted police, officials worked to set up a follow-up meeting between the victim and the perpetrator and were able to successfully arrest a suspect. In the other case, the KRON story continued, the senior citizen victim was contacted by an FBI impersonator claiming the victim was under investigation. The senior was told to withdraw $24,000 from several banks and to ship $15,000 out of state. Police were able to intercept the $15,000 before it reached the scammers by contacting the shipping company. Morgan Hill police reminded the public that “Government agencies will never demand money via phone, email, or shipping," and encouraged everyone to talk to elderly loved ones about these types of scams. Sage advice, and kudos to MHPD for their quick action to stop the crooks.
More than one way to bake a cake
Click-to-cancel culture? Although the Federal Trade Commission’s (FTC) "click-to-cancel" rule was blocked and did not take effect last month, news outlets have been reporting on subsequent legislative proposals aiming to make it easier to cancel subscriptions that consumers might inadvertently get trapped in, such as after a free trial period. A press release by the American Economic Liberties Project cites the organization's director of policy and advocacy, Morgan Harper, as saying that “A growing, bipartisan chorus in Congress now agrees that letting consumers easily cancel their unwanted subscriptions is a no-brainer.” Harper mentions four bills, introduced by both Democrats and Republicans, to help protect Americans from subscription traps. The bills include the "Unsubscribe Act," the "Click to Cancel Consumer Protection Act of 2025," the "Consumer Online Payment Transparency and Integrity Act," and, most recently, the "Click to Cancel Act.” This flurry of proposals on the issue is encouraging—we hate to see consumers lose money to crafty long-term subscription schemes. However, before anyone gets too excited about "click-to-cancel" taking hold anytime soon, check out this piece by Michael Crider of PC World, who talks about the uphill battle facing the Click to Cancel Consumer Protection Act of 2025, and opines that the odds of any progress being made in the area of exploitative subscription tactics is "slim to none, at least in the short term." (Ugh!) We'll keep an eye on this and report back.
Price surprise. In a recent article, the Roosevelt Institute's director of the corporate power and financial regulation program, Brad Lipton, posed a few rhetorical questions that we think most SCAM GRAM readers would have firm answers for, including, for example, whether iPhone users should pay more than Android users for food delivery and whether people who live in certain ZIP codes should pay more for online test prep. Lipton's article links to several sources describing how corporations are, in fact, already using vast troves of personal data to target customers and workers with individualized higher prices and lower wages. Lipton notes that the practices, also referred to as "algorithmic price discrimination" and "surveillance pricing,” have been "supercharged" by advances in machine learning and AI. And, although Lipton explains that the FTC's inquiry into surveillance pricing was "shelved" by the current administration, he also notes that federal and state lawmakers have introduced proposals to limit or prohibit or otherwise regulate these practices. Lipton's article references the "Stop AI Price Gouging and Wage Fixing Act" recently introduced in the U.S. Congress, as well as proposed state legislation in California, Colorado, Illinois, Minnesota and Ohio, along with legislation already passed in New York. The well-sourced piece also includes a link to last month's letter from three U.S. senators to Delta Airlines, expressing concern over the airline's plan to expand the use of AI to set individualized fares. Check it out to get a good idea of the sneaky tricks even the savviest consumers are up against.
Tips
Every bit a scam. The police department in Hays, Kansas, issued a warning that can go a long way toward protecting people across the country. According to the Hays Post, police are warning about a significant increase in imposter scams in which perpetrators coerce residents into sending money through Bitcoin automated teller machines (BTMs). Hays Chief of Police Don Scheibler, cited in the story, warned that "no legitimate government agency, law enforcement, or utility company will ever demand payment through a Bitcoin ATM, gift card, or wire transfer.” The chief recommends consumers hang up immediately if they get such a call, and verify the request through official channels. The common thread in these calls, the Hays Post explains, includes the demand for immediate payment via a Bitcoin ATM, being directed to specific locations, and being provided a QR code to facilitate the transfer of funds directly to the scammer's digital wallet. The transfers are generally irreversible, and as the story explains, scammers frequently disperse stolen cryptocurrency across numerous digital wallets to obscure their tracks. The article offers more advice on preventing the fraud and on where victims can complain. Find great tips from our country's heartland right here.
Crooks on campus. Just in time for the back-to-school season, the Chattanooga Times Free Press published what we think should be required reading for college students nationwide: a rundown of the most common financial scams that target college students and their families. Citing the Better Business Bureau (BBB), the news story warns about scams that range from fake apartment listings to too-good-to-be-true job offers. Practical tips for avoiding one scam mentioned in the news story include a very commonsense one: Avoid an apartment rental scam by seeing the apartment before transferring any money. The story also warns against phone calls from companies that guarantee they can help reduce student loan payments or from companies offering education grants. Readers are reminded that searching the company's name online could yield scam alerts or negative reviews from other consumers. One place to look for company reviews and complaints is BBB.org, where consumers can also find the BBB's Scam Tracker to look up a potential scam. We'd urge college students to read up on these common scams and earn themselves some serious extra credit in our book.
Short-distance love. Consumer advocates often warn about romance scams perpetrated by overseas fraudsters. A typical scenario involves the "romantic" connection beginning on a dating app and eventually leading to the "suitor" asking for money. Reasons for requesting money might include to help the new love get out of a difficult situation, or, in many cases, for the victim to take advantage of an "investment opportunity." A recent indictment by the U.S. Attorney's Office reminds us that the perpetrators of romance fraud aren't necessarily always based abroad. Love could be closer than you think. In a recent press release, the federal prosecutor announced an indictment in which Christopher Earl Lloyd, of Whittier, California, is accused of using dating apps to establish friendships and romances with his victims and making them believe that he was knowledgeable about investments. Lloyd allegedly induced victims to provide him with money for investments via wire transfers, Cash App, Zelle, and cash. And, providing one example of how the scammer allegedly used victims' money for his own benefit, Lloyd wrote a $40,000 check to a local Lexus car dealership using victim funds. How's that for true love! Check out some quick tips from the FBI for steering clear of romance scammers near and far.
AI does double-duty in FL. We recently came across a TV news story about a "family emergency" scam that seems like an ideal learning resource for community educators warning the public about the evergreen scheme. By the time we got around to discussing the story here, the same outlet had produced yet another story about a second would-be family emergency scam victim. WFLA News (8 On Your Side) first reported in mid-July about a woman who lost $15,000 to a family emergency scheme that was likely enhanced by AI. About a week later, WFLA ran a second story about a woman in the same area who almost lost the same amount, on the same day, to an almost identical scheme. In both cases, the women received calls from who they believed was their crying adult daughter, who told them she'd been in a car accident and had "hit a pregnant person." The daughters' voices in both cases are believed to have been generated—very convincingly—by AI. And, in both cases, another person (either a "police man" or an "attorney") got on the phone to demand $15,000 for bail. The victim in the first case paid, and lost, the $15 grand, while in the second case, the woman heeded a bank employee's warning and contacted family members before paying any money. Both women discovered they'd been the target of a scam. One of the videos includes some excellent tips from tech consultant Joey De Villa. He recommended watching out for red flags such as the sense of "urgency;" establishing family passphrases, or even an inside joke, to prove you're speaking to a family member; and, during a live video call, asking the person to put their hand in front of their face to interrupt the face-mapping and reveal who you're really talking to. Heads up, whether you're in Florida or on the other side of the country.
Watch your wallet. As you probably know, fraudsters regularly convince victims to hand over money in ways that can't be traced, canceled or reversed. Besides good old cash, gift cards, crypto and gold, scammers routinely ask victims to pay using peer-to-peer payment apps, like Venmo, Cash App and Zelle—something we routinely warn about in our educational materials. With mobile payments use growing so much in recent years, and with consumer protections for peer-to-peer payments not equaling those of traditional payment forms, there's never been a better time for a Consumer Action webinar on this very topic. On Sept. 4, we will take a closer look at consumer rights and ways to protect our pocketbook when using digital payment apps. The panelist line-up includes experts from Consumer Reports, National Consumers League, and the Federal Trade Commission. See you there!
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