Timely news for the shopping season
The PEW Research Center recently conducted research that asked respondents if they had experienced certain types of online shopping fraud, including fraudulent charges on a credit or debit card; the purchase of items that were either counterfeit, never delivered, or never refunded; unauthorized access to one of their personal online accounts; a communication that resulted in their giving away personal information; ransomware; or a fake investment opportunity to which they paid money. Overall, a full 73% of respondents experienced one of these online scams or attacks. The PEW article summarizing the research results also mentions that 85% of adults say online scams and attacks are a problem on shopping sites and apps. PEW's analysis also broke down instances of e-commerce scams by demographic group. For example, PEW said that Americans under 30 are much more likely than those age 65 and older to say they ever bought something online that was counterfeit, never delivered or never reimbursed. Hispanic, Black and Asian (representative of English speakers only) adults, PEW's article further explained, are more likely than white adults to say they’ve experienced online shopping scams. Interestingly, PEW's statistics show that the level of college education made little difference in how likely respondents were to say they've experienced an online shopping scam. And hear this, should there be any doubt in your mind: PEW found that men and women are about equally likely to say they have fallen victim to e-commerce scams. For details on how the numbers break down, check out the PEW piece. For tried-and-true online shopping tips, see the FTC's online shopping advice, here, and check out tips from National Consumers League in the “Creatures are stirring” story, toward the end of this newsletter. This research serves as a good "heads up" for online holiday shoppers.
One state's efforts to fight bitcoin scams
Boston's ABC affiliate, WCVB, ran a story earlier this month about an 85-year-old Chelmsford, Massachusetts, resident who was convinced by a bank impostor to deposit $18,000 in a Bitcoin ATM to resolve a supposed fraud issue. Of course, the fraudster told the victim not to tell anyone, with the creative excuse that there was no way to know if the underlying "fraud" was an inside job by someone at the bank, or even by someone that the victim might know. According to the WCVB story, Massachusetts residents lost at least $77 million to Bitcoin ATM scams this year. The news piece goes on to explain that state lawmakers are trying to prevent Bitcoin ATM scams with a bill, sponsored by AARP, that would offer several consumer protections. An article by AARP Massachusetts describes the organization's work in support of Senate Bill No. 707 and House Bill No. 1247, An Act Relative to Preventing Fraud and Establishing Regulations on Certain Virtual Currencies. The Massachusetts legislation is based on a model bill developed by AARP—one that the organization is working to pass across the country. Key provisions of the legislation include licensing kiosk operators as money transmitters, establishing a state registry of kiosk locations, requiring receipts with transaction hashes, fee disclosures, scam warnings, daily transaction limits, refunds for fraud victims, police access to software analytics, creation of a blockchain study commission, and public education on financial safety. Check out AARP's article for more on which provisions are considered especially critical and for details about the recent hearing on the Massachusetts bill. One piece of good news in the AARP article is that, so far, 18 states have enacted similar laws to protect consumers against crypto scams.
Cooking turkeys
Something to dwell on. The FBI has been busy cooking turkeys—arresting scammers, that is—in the past few weeks. The San Diego field office recently arrested Ethan Joseph Sanchez for his alleged role in an investment scheme impacting would-be investors across the country. The U.S. Attorney’s Office charged Sanchez with wire fraud and money laundering for allegedly running a scheme that took in at least $6 million from investors since 2022. An FBI press statement explained that Sanchez allegedly solicited loans to his company, BSC Equity Ventures, falsely representing that he would use the money to fund real estate transactions, including purchases and renovations, as well as to build accessory dwelling units. (Makes you wonder what sort of dwelling unit Sanchez may end up in if convicted, no?) Sanchez allegedly promised investors high rates of return, including interest of up to 25%, but returned to them less than $1.8 million of the $6 million invested. The FBI is asking anyone who may be a victim or who may have information about the case to contact the investigation team at [email protected].
Fazed scammers. On Nov. 5, the FBI announced that it had arrested 19 alleged fraudsters for conspiring to defraud over 500 senior citizens of more than $40 million as part of an "international call center scheme." Citing court documents, the FBI explained that their San Diego Elder Justice Task Force (EJTF) led the investigation into a call center scam that operates from foreign countries—namely India, Thailand and the United Arab Emirates. The fraud scheme is believed to be ongoing, the FBI press statement read, and operates in three distinct phases: 1) the "Opener Phase," which is a tech support scam; 2) the “Closer Phase,” or refund scam; and 3) the "Money Transmitter Phase," which involves laundering the refund scam proceeds and transmitting the funds to overseas actors. The FBI also explained that foreign leaders of the scheme offered San Diego-based money transmitters all-expenses-paid trips to Thailand in order for those money transmitters to take on more substantial roles in the organization by becoming closers. The FBI statement also explained that, if convicted of the charges in the criminal complaint, most of the federal defendants face a statutory maximum of 20 years in prison. Perhaps they could work something out where they'd get to serve time in phases?
Tips
Ghost story. ZDNET recently published a story with several tips for avoiding "ghost tapping" scams. The story explains that ghost tapping refers to scammer attempts to trigger unauthorized contactless credit card or mobile wallet payments by exploiting tap-to-pay, or Near Field Communication (NFC), transactions. Citing a chief information security officer for Keeper Security, ZDNET explains that a ghost tapping scam typically involves three steps: 1) obtaining an NFC reader and getting near the victim; 2) using the NFC reader to trigger a transaction; and 3) processing the charge, which may go unnoticed if it's a small amount. The article acknowledges (and describes) the strong security features built into both physical cards and mobile phones that are designed to prevent attackers from stealing sensitive payment information. These are hard to get around, ZDNET notes, especially for smartphones. However, consumers will also want to be wary of scammers who pose as legitimate vendors (think pop-up vending booth or street kiosk) and who, ZDNET points out, can convince victims to tap their card on a fraudulent reader. Check out the ZDNET piece for a roundup of tips from the Better Business Bureau for avoiding the ghost tapping scam.
No pal of yours. A recent ABC 15 Arizona story highlights how data breaches are making fraud schemes increasingly convincing. The story describes the case of a woman who received an email message, appearing to be from PayPal, asking her to call a particular number to verify a pending $669.90 transaction. When the consumer called the number regarding the unfamiliar transaction, the ABC 15 story explained, she was told that $400 had been taken from her account but that they could help her recover those funds. The consumer believed the person she was talking to was really with PayPal because, as the scammer pointed out, how else would he know her two previous transactions. (The news story suggests that the scammer learned the transaction information through a data breach.) While on the phone with the scammer, the consumer was told to "type her name and '$400' on her computer screen." It appears this request was just a ruse that allowed the scammer to then tell the consumer she had inadvertently typed $4,000 instead of $400, which meant she all of a sudden had to "return" $4,000 to PayPal. The consumer followed instructions to purchase gift cards in order to return the money and ended up losing thousands of dollars. The ABC 15 story offers two key tips for staying safe: 1) If you receive a communication claiming to be from your bank, PayPal or similar service, do not click any links or call numbers provided in the message—instead, call the phone number on the back of your card or visit the company's official website to find their contact information; and 2) Be suspicious of requests for payment with a gift card or cryptocurrency. Always good advice!
Full of it. Kurt "CyberGuy" Knuttson posted an article about the latest scam to hit consumers' smartphones. Knuttson explains that fraudsters are sending fake “Cloud Storage Full” or “photo deletion” alerts that claim that users' images and videos are about to disappear unless they upgrade their storage. "The warning looks urgent and real," Knuttson explains, "It even mimics major cloud services. But the moment you click the link, you enter a trap." Referencing research by Trend Micro, Knuttson goes on to explain that the fake messages include the target's name and a believable count of photos or videos. Clicking on the link will land consumers on a convincing fake website that looks like a cloud storage dashboard and asks consumers for a "tiny" $1.99 upgrade fee. Knuttson explains that instead of gaining any protection, you end up providing your credit card, PayPal login or other personal information to the scammers. Check out the CyberGuy article for screenshots of the actual scam, more details on how it works, and tips for staying safe.
Purr-fect consumer tips. NBC Connecticut ran a story related to a Better Business Bureau (BBB) warning about pet scams. The news piece relates the case of Chere Norris, a consumer who was hoping to get a Maine Coon cat after her previous one passed away. Norris found a breeder in Oklahoma who offered to sell her a cat for $950, including shipping fees, and promised to deliver it within a week of receiving payment. Norris paid the scammer but, instead of getting the cat, she learned that there were additional fees to pay, adding up to thousands of dollars, before the pet could be delivered. Norris decided she didn't want the cat anymore and asked for her money back. As NBC explains, Norris was then "hit with roadblocks and threats [and] ...started realizing it was [a] ruse." The story cites Kristen Johnson, director of communications for the BBB in Connecticut, who told NBC that, in the last three years, BBB received pet scam reports in which Connecticut consumers lost an average of $1,100. Some victims lost as much as $5,000, $8,000 and even $42,000. One key consumer protection tip offered by Johnson is for consumers to closely vet where they’re getting their pet from and insist on seeing the animal in person. If the seller's profile is new, that is also a red flag. Norris, the original victim in the story, who ultimately got her coveted kitty from a friend, told NBC that she urges people to think twice about buying a pet online and recommends looking for a pet in your own town or state. For more tips on this and other types of pet scams, visit the BBB here.
Creatures are stirring. The end-of-year holidays are here and, surely, scammers are looking for ways to sneak onto our holiday gift list this season. National Consumers League's (NCL) no-nonsense list of the top 10 holiday scams designed to cash in on the season of giving couldn't come at a better time. NCL's John Breyault, vice president of telecommunications and fraud policy, explains how the holidays create a perfect storm for scammers because we are busy and spending more time online looking for deals. "They count on you being distracted," Breyault says about scammers. "Before you click that link or grab that ‘flash deal,’ take a breath and verify it’s real. A few extra seconds of skepticism can save you hundreds—or even thousands—of dollars.” Whether it’s counterfeit products on social media, bogus “too good to be true” deals, or texts about fake delivery problems, scammers are working overtime to take your hard-earned dollars, NCL reminds us. Check out NCL's list of shopping scams to be wary of and heed its quick and handy advice for navigating tricky situations. Thanks for the tips, NCL!
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