Impostor Scams Rise to the Top

By Dorothy Riggs, CFE

Reportedly, the Federal Trade Commission’s Consumer Sentinel project tallied 3 million consumer complaints received in 2016.  Regarding consumer fraud, identity theft has lost its #1 position.  Impostor fraud has taken the lead.  Last year victims lost $744.5 million collectively to impostor fraud schemes.

What is Impostor Fraud?

Impostor fraud involves fraudsters impersonating someone else in order to carry out a fraud scheme.  They often contact consumers pretending to be family members, law enforcement, representatives of government agencies, bill collectors and so on.

Common Impostor Fraud Schemes

As technology and prevention measures change, so do fraudsters.  Their tactics are constantly evolving and becoming more sophisticated.  However, these are some common impostor fraud schemes that are currently affecting consumers:

• IRS scam – Crooks contact consumers claiming to be IRS agents.  Contact is made by phone, email or text message indicating that the consumer owes money and threatens legal action or arrest if the money isn’t paid immediately via prepaid card, money order or cashier’s check.
• Computer Repair scam – Fraudsters phone consumers pretending to be Microsoft technicians.  They claim to have detected an issue with a computer, which requires the consumer to allow the phony technician remote access to their computer.  Once remote access is granted the crook steals data and/or loads ransomware on the computer, which locks or makes the computer inactive. In order to fix the problem the consumer is instructed to pay money via prepaid card or providing bank account data to the fraudster.
• Grandparent scam – Bad actors contact family members, usually grandparents, pretending to be a grandchild or another family member who is in trouble.  The stories vary from one emergency to another…perhaps they’ve been in an accident, were robbed or were arrested.  The family member needing assistance is usually out of town traveling and requests that the victim wire money or load funds on prepaid cards.
• Bill Collection scam – Thieves phone consumers pretending to be from local utility companies and threaten to discontinue utility services if past due accounts aren’t paid immediately via prepaid card, wire transfer or they ask for account data in order to conduct ACH or Account-to-Account payments.
• Law Enforcement scam – Fraudsters phone consumers pretending to be specific law enforcement agents and demand payment for unpaid tickets or citations.  Immediate payment is requested via prepaid card or wire transfer.
• Romance scam – Tricksters contact victims through social media accounts like Facebook, Twitter, dating sites and the like pretending to be a specific individual who actually exists or someone who is completely fictitious.  They say all of the right things in order to quickly spark up a cyber romance.  Once the victim takes the bait and is hooked, the impostor shares a made-up situation which requires the victim’s financial assistance.
• Business Email Compromise (BEC) - fraudsters hack or spoof business administrator's personal or company email accounts and send messages to business subordinates or colleagues requesting that they issue funds to a specific company or individual.

Things you should know to help avoid becoming a victim

• Initial contact from the IRS is made by mail. They accept payment via check or credit card.  Always contact the IRS using a contact number obtained from a reliable source to verify data before making payment.  Don’t ever use a number provided by an unverified person who has contacted you via phone, email or text.
• Don’t ever allow an unverified person remote access to your computer.  Contact Microsoft or Apple to verify data using a contact number obtained from a reliable source.  Never use a contact number provided by an unknown person who has contacted you via phone, email or text.  Do not provide your bank account data or make any type of payment to unverified persons.
• Before sending money in any situation, no matter how urgent it seems, you should:

1. Slow down.  (Beware of situations requiring immediate action.)
2. Think it through.  (Does this situation or request really make sense?)
3. Verify information. (Contact a reliable source to verify the situation.  Consult a trusted professional, friend or family member.)