Timely transfer of knowledge
A Money Matters column by Dave Sather, appearing in The Seguin Gazette, discusses a type of fraud that's on the rise in which scammers steal from victims' investment accounts. Sather described the fraud, called ACAT or ACATS fraud (short for Automated Customer Account Transfer Service), as a "clever form of identity theft" in which a perpetrator gathers the victim's personal information to open new accounts in the victim's name at different brokerages and then transfers investments from the victim's existing brokerage account to the fraudulent ones. Sather referenced a recent New York Times story in which a scammer opened a Merrill Lynch account in the name of his victim and then transferred $120,000 from the victim's Vanguard account. The victim in that case was, fortunately, able to get the transfer reversed. An article by The Finance Buff earlier this year discussed a similar case in which an investor discovered that their taxable investment account at Vanguard "had been slowly pilfered of approximately $100,000 in stocks transferred by ACATS to two different brokerage accounts." In that case, there were three separate transfers over a period of time. To help prevent this type of fraud, The Finance Buff recommends safeguarding your account number from falling into the wrong hands, since it's "a critical piece of information" for ACATS transfers. Another recommendation is to use a transfer lockdown feature to prevent transfers, if it's available, and to use brokers that send ACATS transfer alerts to customers. Another key takeaway from Sather's article is to take steps to prevent fraudsters from accessing your brokerage account statements by hacking into email accounts or by taking them out of your mailbox or discarded trash. As to whether freezing your credit provides any protection against fraudulent brokerage account openings in your name, consumers report different experiences regarding credit check requirements at different brokerages, and even the Seguin Gazette and Finance Buff reporting differ. (We’d recommend following the many tips in these sources but not counting on a freeze as adequate protection.) Check out the above links for more tips on protecting the wealth you've worked so hard to build.
Out-strategizing fraudsters
The Aspen Institute Financial Security Program’s (Aspen FSP) National Task Force on Fraud and Scam Prevention, of which Consumer Action, along with more than 80 leaders from the public, private and nonprofit sectors, is a member, recently called for "a whole-of-government strategy to crack down on scams," as reported in a recent article by Axios. The article includes key highlights of the task force's recently released report, "United We Stand: A National Strategy to Prevent Scams." In a recent press release, Aspen FSP describes the national strategy as "the first coordinated plan to combat fraud and protect Americans from the $158 billion in scam losses we see each year." The release explains that scammers use stolen money to fund organized crime, human trafficking, and even foreign adversaries. Although scams rival illicit drug trade in scale and are growing at alarming speed, Aspen FSP explains, the U.S. has yet to devise a coordinated national plan to prevent scams. Kate Griffin, Aspen FSP director, pointed to the cross-sector collaboration needed to address the crisis. The task force proposes "a whole-of-society response...grounded in bold federal leadership and coordinated action from critical industries—including telecommunications, social media, financial services, digital platforms, and others—working alongside law enforcement and consumer advocates." Aspen FSP acknowledged that companies already invest millions of dollars to prevent fraud and scams, but emphasized that the problem cannot be solved by one institution alone. Check out the Axios piece for a rundown of the report's key recommendations, which include, for example, modernizing how law enforcement databases collect and share data; enacting liability protections for companies to share information related to scams; and encouraging the private sector to develop new consumer-facing tools and technologies that can stop scams as they happen. Can't wait for those consumer tools!
Showdown before shutdown
Scams-R-Us. Although the federal shutdown is ongoing, we were glad to see the Feds crack down on fraudsters before the current pause in regulatory work. In late September, the Federal Trade Commission (FTC) announced that, in collaboration with 22 agencies from 19 states, it stopped a deceptive charity fundraising scheme and its operators for making false or deceptive claims to U.S. donors. The FTC explained that Kars-R-Us-dot-com, Inc. (Kars) and its operators solicited charitable donations of vehicles nationwide on behalf of the United Breast Cancer Foundation, Inc. (UBCF). Although Kars claimed, in English and Spanish television, radio and online ads, that vehicle donations would allow UBCF to “save lives” by providing free and low-cost breast cancer screenings, only $126,815 or 0.28% of the more than $45 million raised was used for the screenings, the FTC alleged. Under a proposed settlement order reached with the FTC and its state partners, Kars and its operators face restrictions on future fundraising activities. In addition, Kars’s president and co-owner until 2022 will be permanently banned from fundraising. Coming through loud and clear is the FTC Bureau of Consumer Protection Director Christopher Mufarrige's message: The FTC will take action against fundraisers if they misrepresent the truth and exploit the kindness of generous donors for their own gain. Hope scammers are hearing it, too.
Prime example of regulatory might. Also in September, the FTC secured a historic settlement order with Amazon and two of its senior VPs, resolving allegations that the tech giant enrolled millions of consumers in Prime subscriptions without their consent and knowingly made it difficult for consumers to cancel. Amazon will be required to pay a $1 billion civil penalty, provide $1.5 billion in refunds to harmed consumers, and cease unlawful Prime enrollment and cancellation practices. In a press statement, the FTC detailed its allegations against Amazon, including that the company created confusing and deceptive interfaces that led consumers to unknowingly enroll in Prime. Compounding these practices, the FTC continued, Amazon allegedly created a complex and difficult Prime subscription cancellation process. The FTC cited company documents that showed that "Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues with comments like 'subscription driving is a bit of a shady world' and leading consumers to unwanted subscriptions is 'an unspoken cancer.'" The changes that Amazon will be required to make to the Prime enrollment and cancellation process under the settlement include: (1) providing a "clear and conspicuous" button for customers to decline Prime, and no longer having a button that says “No, I don’t want Free Shipping”; (2) disclosing all of Prime's material terms during the enrollment process, including cost, date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures; and (3) creating an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. FTC Chairman Andrew N. Ferguson emphasized the agency's commitment to "putting billions of dollars back into Americans’ pockets" and "fighting back when companies try to cheat ordinary Americans out of their hard-earned pay." We certainly look forward to the agency revving back up to full-force operations soon.
Tips
Wait a minute, Mr. Postman. The U.S. Postal Inspection Service (USPIS) is launching a public relations campaign to urge consumers to purchase stamps directly from the Postal Service or from retailers that have legitimate resale agreements with the organization. According to an article on the Postal Service website, USPIS is combating a growing number of counterfeit postage scams that are causing the Postal Service to lose millions of dollars in revenue. Scammers are selling fake stamps on social media marketplaces, e-commerce websites and other sites, the article explains. Fraudsters are also reselling stolen goods at a deep discount and then shipping them using counterfeit postage. Postal inspectors are working with online shopping platforms to identify sellers of counterfeit postage and seizing website domains related to the sale of counterfeit stamps. Along with the warning about fake postage, the campaign is also recommending that consumers be wary of work-from-home scams that traffic in counterfeit postage. These “jobs,” the Postal Service explains, involve reshipping packages of merchandise typically purchased with stolen credit cards. The person who takes the job will reship the packages using counterfeit shipping labels. These are good tips to keep in mind (and we're glad the generally self-funded Postal Service is not impacted by the federal government shutdown!).
Your "safety" is a scammer's priority. Separate from Amazon's recent settlement of FTC charges discussed above, Amazon is engaged in its own set of unrelated legal actions against bad actors to protect its customers. Earlier this month, Amazon reported on its Trustworthy Shopping website that there has been an increase in Amazon impersonators sending messages in which they claim that a recently purchased item needs to be immediately returned due to “safety concerns.” These bad actors, Amazon explains in its Oct. 6 post, promise a full refund but direct customers to unofficial websites or messaging channels where they attempt to collect their target's personal information. To protect customers, Amazon has filed lawsuits in the U.S. and UK against several organized "refund fraud" groups that operate on messaging platforms and have attempted refund schemes worth millions of dollars. Check out Amazon's post for handy guidance on spotting and avoiding this type of fraud, including ways to verify whether an order-related communication is legitimate, how to handle requests for sensitive information or immediate action, and instructions for reporting suspicious communications through Amazon’s scams help page. If you missed any of Amazon's monthly scam updates, you can find previous alerts here.
Power of peers. Consumer Action's new educational publication "Peer-to-Peer Payment Apps: What to know before sending money" explains how peer-to-peer (P2P) payment apps work, how to use them wisely, and—importantly—what fraud-related rights consumers have (and don't have). The guide explains that P2P apps (like Apple Cash, Cash App, PayPal, Venmo and Zelle) have become the tool of choice for a growing number of consumers who value the ability to quickly transfer money. One key recommendation offered in the fact sheet is to use these apps to send money only to people you know personally—not to strangers. Peer-to-peer transfers are instant, the guide explains, and once the transaction is initiated, it’s virtually impossible to reverse, and it’s difficult or impossible to get a refund. When a user initiates a transaction, it is considered authorized, and the app generally won’t intervene to recover funds if a user makes a mistake (such as accidentally sending money to the wrong person or, unwittingly, to a scammer). In the case of a payment that is “fraudulently induced" by a scammer, the P2P apps generally have a hands-off policy, the guide details. Although there have been efforts to make P2P providers legally required to reimburse scammed consumers, generally speaking, we cannot count on the P2P provider reimbursing us. The new guide mentions a recent voluntary policy update by Zelle to offer reimbursement for certain types of imposter scams (where the scammer makes us believe we are talking to our bank’s fraud department) and an update by Cash App regarding providing reimbursement for some “confirmed” imposter scam transactions. The consumer guide, available in English, Spanish and Chinese, can be downloaded in a printer-friendly PDF format for use in educational workshops or distribution at community events. It includes a list of steps consumers can take if they realize they’ve sent money to a scammer, and practical tips for choosing and using payment apps wisely. Take a look here.
Insupportable fraudsters. A recent FBI press release reminds us to steer clear of the evergreen tech support scam and related fraud in which perpetrators promise to help resolve "problems" with our online financial accounts. The FBI announced in late September that it successfully prosecuted five people who admitted participating in a tech support scheme that stole some $9.3 million dollars from elderly victims in 10 states. The FBI described the case of an 82-year-old St. Louis woman who was contacted by the fraudsters as they pretended to be part of a computer software support team. The victim was told that her financial accounts had been compromised. Imposters also asked her for payment to prevent theft of the funds, and told her to transfer money into newly opened accounts. The victim was also instructed to buy $250,000 worth of gold bars, which one of the perpetrators attempted to pick up at her home before being intercepted by law enforcement. The perpetrators, who pleaded guilty to wire fraud conspiracy, face a penalty of up to 30 years in prison, a $1 million fine, or both prison and a fine. The FBI reminded the public to report cyber scams to the FBI's Internet Crime Complaint Center at www.ic3.gov or by calling 1-800-CALL-FBI. The press statement also included a link to the FBI's "Tech Support Scams" webpage, which includes information on preventing fraud and tips for victims.
Human targets. In a blog post released this month for Cybersecurity Awareness Month, the nonprofit FightCybercrime.org noted some interesting stats: Despite the increased awareness of technical defenses against cybercrime (like strong passwords and multi-factor authentication [MFA]), U.S. financial losses to cybercrime have skyrocketed from $800 million in 2014 to $16.6 billion in 2024. The blog post acknowledged that strong passwords and MFA can protect our accounts, devices and systems. However, FightCybercrime.org continued, technical defenses won’t stop scams that target our humanity, regardless of how tech savvy we may be. The post explained that scammers aren't relying on code, but instead on psychology. They are taking advantage of the "loneliness crisis," leveraging loneliness, hope and fear—even in people who aren't socially isolated but who lack a fulfilling, caring, intimate partner relationship. If your community education work involves scam prevention education, you'll appreciate the blog post's insightful points, including, for example, that preventing cyber scams requires more than just another toolkit; it requires a holistic approach that actually teaches people how to think critically online. Check out the many practical tips offered to help you teach internet literacy, normalize conversations about scams, build trauma-informed support systems for victims, and more. Do you want to learn more from FightCybercrime.org's experts? If you'll be in the Phoenix area on Nov. 6, you're in luck! Dr. Jennifer Lawrence of FightCybercrime.org will teach a session on how community advocates can talk with victims of severe cybercrime (such as romance or crypto fraud); better understand the shame, isolation and stigma experienced by victims; and recognize and respond if someone is currently being scammed. You can register here for the free training in Phoenix.
Tell us how we're doing!
We'd love your feedback on how we've been doing and which of our services have been most important to you. Please fill out our (very) brief three-question survey here!
