A Disclaimer:
Despite the title, this “View is not about politics. Rather, I am responding to the report from the Federal Trade Commission (FTC) that, “Nationwide, cases of consumer fraud are skyrocketing;” and review the magnitude of the problem. I also discuss some of the most common and recent forms of consumer attacks, and add a few personal cyber-war stories, which—in trying to recount them for this essay—compelled me again to ask myself, “Just how dumb do they think we are?”
Access:
Americans are hyper-connected via email, phone(s), texting, social media, and even old-fashioned USPS “snail mail.” Regrettably, our hyper-connectivity provides abundant opportunity for scammer attacks.
The Data:
The total dollars lost to fraud in the United States are daunting and growing.
In 2023, American consumers reported losing more than $10 billion to fraud, an unprecedented benchmark—and of that, $4.6 billion was from investment scams. Looking farther back, the FTC reported consumer losses of only $1.9 billion in 2019, increasing to $3.3 billion the following year, and still growing.
Americans were scammed of $5.9 billion in 2021, and $8.8 billion in 2022. “… and pretty soon you’re talking about real money.” (usually attributed to Senator Everett Dirksen (R-IL).
The FTC received fraud reports from more than 2.8 million consumers in 2023, with the most reported category being imposter scams, e.g., you receive an urgent call from someone masquerading as a business official, a government agency, or even “on behalf” of a family member, requiring immediate payment of a bill, maybe bail.
Online shopping followed “imposters” as the second most frequent scam. I have included an example of an imposter scam below.
Connecticut residents reported about $41 million in losses over more than 21,000 reports to the FTC, with about 1 in 5 Connecticut fraud reports involving “imposter scams.”
Somewhat reassuring, Connecticut currently ranks 27th nationwide in fraud and other reports per capita—“other reports” include deceptive claims related to new and used cars and predatory lending.
Gallup reports, “Financial scams were among the most common crimes affecting U.S. adults in 2023, with 15 percent saying at least one member of their household has fallen prey; including 8 percent reporting that it has happened to themselves … No subgroup of Americans is exempt from being scammed, but the rate is higher among non-college-educated adults and those in lower-income households.” Editor’s Note: The elderly are also susceptible. “In 2022, there were 88,262 complaints of fraud resulting in $3.1 billion in losses from people age 60+.”
The Classics:
- Waiting packages” was an early pandemic-era scam, often targeting college students displaced by shutdowns and traveling away from school, e.g., “Thomas: we came across a package in our warehouse from January, still pending delivery to you; but it cannot be conveyed due to incomplete address information. Please follow the attached link or contact us at our customer service number to prove ownership and confirm your address.” In December, 2022, FedEx issued a warning regarding this sort of email and/or or texting scam.
- “Mister Mxyzptlk-type Scams”: “Mxy” is a character who appeared in comic books published by DC Comics. He is described as a “mythical trickster from the fifth dimension, possessing reality-warping powers, with which he enjoys tormenting Superman or making his life difficult.
You can recognize this type of email scam from its strange email address, awkward grammar, and misspellings. I kept a few of these. One came from: “[email protected];” and another from: “[email protected].” Both told me, “You have won an Ninja Neverstick cookware.” Open the email and the offer increased to include, “You have been chosen to participate in our Loyalty Program for Free.” Of course, all one had to do to claim these valuable free prizes was to “Follow the link or contact us at our customer service number.”
Note that these emails are included only to illustrate the issue and are totally bogus. This week, another came from: “[email protected]”, notifying me that “You have won an Rachel Ray Cucina Cookware Set.”
Phishing:
The above examples are known as “phishing” scams, which are attempts to steal personal information or break into online accounts using deceptive emails or sites that appear like sites you may already use. The scammers’ objective is to trick you into clicking on a link or opening an attachment. The term was coined in the mid-1990s by hackers stealing AOL accounts and passwords, i.e., “scammers were using ‘e-mail lures’ and setting out ‘hooks’ to fish for passwords and financial data from the sea of internet users.”
Note, a good rule of thumb is never click on links or make any calls to a “customer service” line in emails if you are unfamiliar with the source.
Our Imposter Experience:
My wife Christina answered a call in February from a woman, who identified herself as a social worker affiliated with the Old Saybrook Police Department; and signaled me to get on the extension. The caller informed her that our son had rear-ended a car driven by a pregnant woman while on his way to work in Old Saybrook. She said that the officer at the scene suspected that our son was distracted because he was texting.
The woman was rushed to “the infirmary” and her prognosis was unknown.
The caller expressed concern that the woman will lose the baby, which “would be really bad for your son.”
She informed us that OSPD had impounded his car and transported him to Hartford. She provided a dollar figure estimate of what we would need to bring, in cash, to a Capitol Avenue address in Hartford by 3 p.m. that afternoon to free our son.
Having been sensitized by a scam attack in January (see below), I called his work phone number at the beginning of what was the ersatz social worker’s fake story, and confirmed that he had reached work on time and without incident. We ended the call with two words.
If you receive this type of threat, and they are common, call the individual, who is supposedly in trouble or try to confirm independently whether the business, utility or agency is indeed trying to reach you before taking any action.
It is not impolite to hang up.
Paypal User Scams:
PayPal is generally considered to be a safe and secure system for online transactions. I have been an occasional user of Pay Pal for several years and without problem. It has a huge presence, and as of the third quarter of 2023 reported 431 million active users worldwide, processing an average of 41 million transactions every day.
However, on Jan.18, 2023, PayPal reported that a data breach had occurred between Dec. 6 and 8, 2022, during which the attackers had access to the accounts of tens of thousands of users and were able to access transaction histories, credit and debit card details, invoicing data, and account holders’ full names, dates of birth, addresses, and social security numbers.
PayPal took action to mitigate the breach, but unfortunately, in 2024, scams targeting PayPal users have become prevalent. I do not know whether users whose accounts were compromised were the most likely targets, or it was just because of the sheer number of users.
The most common type of scam employs fake emails that appear to have been sent by PayPal. Many state that you need to verify your information or dispute a questionable transaction; or may claim that they have noticed unusual activity on the credit card that is linked to the PayPal account.
Note that the Bluvshtein article in “Sources” provides a good review of the different PayPal scams that occurred in 2024.
My PayPal Scam Experience:
I received an email from PayPal this past January that asked me to verify what appeared to be an unusual charge on my account. The email had the look and feel of PayPal. I called the phone number included in the email and reached a member of their “support team,” who indicated that they had already made payment, but their audit system had kicked it out as potentially fraudulent, based on my purchase history. It then got bizarre.
The caller said that my account had already been reimbursed, but the reimbursement amount was wrong, and much greater than what was contested. The conversation then became aggressive and urgent. They asked me to log into my bank account to verify that it showed a $20,000 deposit from the World Bank into my checking account; and informed me that I needed to return the money; and if I did not, they were prepared to take action.
They gave me instructions on how to avoid international wire transfer fees, which, as I recall, were to wire the money to an individual on their team in Hong Kong (really!). “Just tell your banker that the money is going to a friend and you are assisting him with his relocation to the United States.” I asked them to email the instructions to me because they were so complicated. and they refused. I did not log into my account while on that call.
I met with the branch manager at Liberty Bank in Old Saybrook within an hour of the call and described the incident. She told me that over the past few months, the Bank had already been working with customers, who had fallen prey to one of these scams—at one point, almost one per day.
She reviewed my accounts and there was no deposit from World Bank. However, there was evidence that they had gotten access because of one suspicious transfer of $20,000 within my accounts. We “froze” the checking account and set up new accounts with the existing assets.
I arranged for a thorough scrubbing of my hard drive. Afterwards, I had to make certain that I did not bounce any recent checks written on the frozen account, arranged for deposits and any monthly billing “draws” be routed to/from the new account.
I also consulted with my youngest daughter, who is in the business—i.e., cyber security, not consumer scamming. She said that “attackers are getting smarter and more sophisticated and everything is easier with AI (Artificial Intelligence). This problem will only get worse. At the minimum, immediately set up “two-step verification,” aka “two-factor authentication,” which will add a second layer of protection to your account, alongside your usual method of logging in.
I set it up on all my accounts.
Reporting A Scam:
In 2020, the FTC introduced “ReportFraud.ftc.gov,” a platform for filing reports with the agency. They use that as the starting point for many of its law enforcement investigations and shares the reports with about 2,800 law enforcement users across the United States. Although the FTC does not itself intervene in individual complaints, the reports are an important part of the agency’s law enforcement mission.
The FTC has tracked fraud through its Consumer Sentinel Network since.1997.
Some Thoughts and Disclosures:
I am a Baby Boomer and a digital immigrant. I hardly ever do social media; and as far as I am concerned, “tik tok” was the last sound that Captain Hook heard before being swallowed by the crocodile in Walt Disney’s 1953 animated adaptation of J.M. Barrie’s “Peter Pan; the Boy Who Wouldn’t Grow Up.”
I think of the “Wayback Machine” as the time-travel device that Mr. Peabody and Sherman used to transport themselves back through time in the 1960s on “The Rocky and Bullwinkle Show.”
However, I now also acknowledge the Internet Archive, which was created in 1996 to provide “universal access to all knowledge,” and launched to the public in 2001 with a nod to Peabody and Sherman as the “Wayback Machine.” As of January 3, 2024, the new “Wayback Machine” has archived more than 860 billion web pages and over 99 petabytes of data
In closing, my essay on consumer fraud in the digital age, I will pass on the advice that Sergeant Phil Esterhaus provided to the assembled law enforcement officers each morning at the end of roll call at Hill Street Station: “Let’s be careful out there.” Note that “Hill Street Blues ran on NBC from 1981 through 1987.
Editor’s Note: This is the opinion of Thomas D. Gotowka.
About the Author: Tom Gotowka is a resident of Old Lyme, whose entire adult career has been in healthcare. He will sit on the Navy side at the Army/Navy football game. He always sit on the crimson side at any Harvard/Yale contest. He enjoys reading historic speeches and considers himself a scholar of the period from FDR through JFK. A child of AM Radio, he probably knows the lyrics of every rock and roll or folk song published since 1960. He hopes these experiences give readers a sense of what he believes “qualify” him to write this column.
Sources:
American Association of Retired Persons. “Impostor Scams.” AARP Bulletin. 03/30/2022.
Barrie, J.M. (1911) “Peter Pan and Wendy.” London: Hodder and Stoughton
Benton, J. “ After 25 years, Brewster Kahle and the Internet Archive are still working to democratize knowledge.” Harvard University. Nieman Lab.02/02/2021.
Bluvshtein, C. “15 PayPal Scams in 2024 and How to Avoid Them.” VPN Overview. 12/30/2023.
Byrne, J. “The Name Game: Mister Mxyzptlk meets Superman.” Superman Vol. 2 (11). 11/1987.
Dautovic, G. “How Many People Use PayPal? 20+ PayPal Statistics for 2024.” Fortunly.com.10/23/2023.
Federal Trade Commission. “New Data Shows FTC Received 2.8 million Fraud Reports from Consumers in 2021.” 02/22/2022.
Federal Trade Commission. “Consumer Sentinel Network Data Book” 2019 – 2023.
Lazarus, A. “Heard about the “waiting package” phishing scam?” FTC Consumer Alert. 09/21/2020.
Geronimi, C. Jackson, W. & Lusk, H. (1953) “Peter Pan.” [Animated Film]. Walt Disney Productions.
Kay. R. “Sidebar: The Origins of Phishing.” ComputerWorld. 01/19/2004.
Mc Gurran, B. “Is It Safe to Use PayPal?” Experian.com. 02/09/2022.
Saad, L. “Scams: Relatively Common and Anxiety-Inducing for Americans.” Gallup.com. 11/21/2023.
Skayhill, P. “Victim of fraud in Connecticut? New data show average consumer lost $460.” CT Public Radio. Morning Edition. 02/22/2022.
Federal Trade Commission. (Thur. 02/23/ 2023). “New FTC Data Show Consumers Reported Losing Nearly $8.8 Billion to Scams in 2022.” [Press Release.]
Federal Trade Commission. (Fri., 02/09/2024). “As Nationwide Fraud Losses Top $10 Billion in 2023, FTC Steps Up Efforts to Protect the Public.” [Press Release.]
Winder, D. “Thousands of PayPal Accounts Breached— Is Yours One Of Them?” Forbes. 01/19/2023.