Impostor scams are on an alarming rise, resulting in losses of almost $2 billion last year, reported the Federal Trade Commission in a Feb. 28 briefing.
Monica Vaca, associate director of the division of consumer response at the FTC, noted that social security scams — in which a con artist pretends to be affiliated with the Social Security Administration — have seen a 52 percent increase, with more than 389,000 reports coming in over the past year.
In a typical social security scam, the sham agent will call the victim — often asking to verify the last four digits of their social security number — to say he or she is in arrears, and that police or federal agents will be knocking at the door within an hour for a non-bailable arrest.
“You get a call saying your social security number has been associated with criminal activity. The person will tell you you’re in big trouble,” said Vaca.
The victim is then offered an opportunity to make amends by purchasing a gift card. The scammer then receives the information from the card.
“They use fear,” said Vaca at the briefing, organized by Ethnic Media Services. She noted that the average victim of a social security impostor scam loses about $1,000.
Vaca advised people to immediately hang up if they feel the call is fraudulent. She advised people to talk to others about the call, and — most importantly — to never pay anyone who asks for a gift card.
“Gift cards are for gifts, not for paying debts,” Vaca cautioned.
The social security scam is similar to the Internal Revenue Service scam, which Vaca said has played out, due to people becomingly increasingly aware of the sham activity. “The social security story line is lucrative,” she said.
One of the costliest scams is the so-called romance scams, in which a scammer targets his victim via online dating portals or through social media. Last year, victims lost more than $200 million in romance scams.
Vaca explained that the scammer will develop a relationship with his victim through phone calls or e-mails. “There is almost always a reason why they can’t be together: he works on an oil rig, or is stationed overseas on a military base,” said Vaca, describing the most-popular scenarios.
Over a period of time, the scammer will start asking his victim for money: small amounts at first, but then increasingly larger amounts, perhaps in the guise of buying a plane ticket to meet the victim.
“For the person who’s being strung along, it seems very, very real,” she said, noting that money is often transferred via a bank account or with cash via a money transfer service.
The FTC tries to get warnings out right around Valentine’s Day, said Vaca, adding: “If someone asks you for money, cut them off immediately. And never use a gift card for payment.”
Increasingly, young adults are being targeted, sometimes with offers of employment that require them to put down some money before accepting an offer of employment which does not exist. “These are very sad stories,” said Vaca.
The average loss for a person aged 20 to 29 is about $448. But when older victims are targeted, the loss is much higher, averaging about $1600.
Victims who have used credit cards may sometimes be able to get their money back by calling up the company issuing the card and letting them know about the fraudulent activity.
The FTC also has been able to recover money for victims. Last year, the agency recovered $232 million from fraudsters — including American Immigration Center, which posed as the federal government, and asked immigrants to pay fees related to immigration services directly to them. Almost 1.9 million victims cashed checks from the FTC last year.
Victims can make a report directly to the agency at ftc.gov/complaint.
The agency also has a searchable database allowing people to identify the types of crimes most prominent in their state. In California, for example, almost 63,000 impostor scams were reported last year. The total number of fraud reports for the state were 157, 640, with a value of over $187 million.
The site also lets viewers search data via metro areas within a state. In California, the Los Angeles/Long Beach/Anaheim region reported the highest number of scams — almost 81,000, with more than 18,000 reports of impostor scams.
EMS founder and executive director Sandy Close introduced Vaca, characterizing the FTC as “the top fraud busters in the country.”