Fraudulent schemes directed at consumers, known popularly as “scams,” seem to increase every year.
In the first half of 2022 the Federal Trade Commission (FTC) received 793,000 complaints about scams, with about 27% resulting in financial losses of $3.56 billion.
Trying to warn consumers about every scam is like playing Whack-A-Mole. No sooner that you spread the word about one scam two or three others pop up. Scammers are nothing if not creative.
Fortunately, these crimes all must follow certain identifiable patterns. For criminals to be successful they must manipulate and persuade their victims to do certain things. If enough consumers are aware of these red flags, instantly identifying a scam for what it is, then scammers will be less successful.
The first thing that should set off alarm bells is an unexpected contact. To get a victim’s money the scammer almost always must contact the individual. It may be a phone call, email, or text.
In making contact, the scammer may say there is a problem and he can help resolve. Sometimes the problem is scary – such as someone masquerading as Microsoft tech support saying your computer is infected and they can fix it.
It can also be a message that says it is from Netflix, warning your account is about to be suspended. To fix it you must click on a link and input all sorts of personal information.
Falling under the umbrella of “imposter scams,” a victim may be told they are about to be arrested for missing jury duty, have their electricity shut off for non-payment, or information is needed to deliver a package.
Consumers should remember that large organizations, such as the IRS, never call individuals on the phone.
Unexpected contact, followed by a call to action is the hallmark of a scam. To stay safe, be highly skeptical of any unsolicited and unexpected contact from someone you don’t know. Instead of immediately acting on the instructions, independently find the contact information from the organization the scammer claims to represent and contact it directly.
Sense of urgency
If a stranger unexpectedly makes contact, the next red flag is a sense of urgency. The victim is told they must take some action immediately to avoid unpleasant consequences. That action always involves money.
For example, you’re told you must make an immediate payment to prevent your electricity from being disconnected or sheriff’s deputies showing up at your workplace to arrest you.
If the scammer is pretending to be from tech support, you are told you must take immediate action to prevent your bank account from being breached. The point is, the scammer doesn’t want the victim to have time to think, but to act impulsively.
When there is a real problem, legitimate businesses and government organizations always give people a reasonable time to act. When a stranger demands immediate action, it is a scam.
Weird payment method
If a scammer has made progress with an intended victim and gets to the point of requesting payment, they can’t take money in a normal way. They can’t take a check. They can’t even take a credit card because that can be easily reversed.
Until recently scammers’ preferred method of payment was a Western Union Moneygram. That was like handing over cash and was untraceable. In the last decade, however, regulators forced Moneygram to train its staff on how to recognize that someone was being scammed and to intervene, preventing them from sending the money.
Scammers have switched to a new form of money transfer – gift cards. Imagine your utility company telling you it needed a payment of several hundred dollars but it would only accept it in the form of Target gift cards.
No matter how persuasive someone might be in citing the need for payment using any kind of gift card, consumers should instantly realize that it is a scam. The same goes for any kind of cryptocurrency.
Too good to be true
Not all scam scenarios are scary or threatening. Some might present the victim with unbelieveable good fortune.
To this day, one of the most common scams is the phony sweepstakes scam. The schemer tells the potential victim they have won several hundred thousand dollars in an international sweepstakes.
But wait. Can you win a sweepstakes you didn’t enter? No you cannot. But the victim may be so excited they immediately start thinking about how they will spend the money.
The scammer then says there is the matter of taxes due on the money and a couple of processing fees, but that’s only about $2,000. Oddly, the money can’t be deducted from the “winnings” so the “winner” must transfer the money – maybe through gift cards – to the scammer.
Consumers should always be suspicious when good fortune shows up on their doorstep out of the blue.
When it’s too good to be true, it’s probably a scam.
Signs of a scam
So here are the red flags to look for:
- Unexpected contact from someone claiming to represent a large company or organization
- A sense of urgency for immediate action
- A weird method of payment
- It’s too good to be true