Imposter scams are on the rise, with new, more sophisticated tactics leading to alarming increases in reported cases. The Federal Trade Commission (FTC) receives millions of reports annually, and the most common by far are imposter scams. These scams involve criminals impersonating trusted entities such as businesses or government agencies to deceive people into handing over their money or personal information.

In a media briefing on September 20, hosted by Ethnic Media Services, a panel of experts discussed the rise in imposter scams. People with first-hand experience of these also came to speak at the briefing. 

Speakers

  • Kati Daffan, Assistant Director, Division of Marketing Practices, Federal Trade Commission, Washington, District of Columbia
  • Emma Fletcher, Senior Data Researcher, Federal Trade Commission, Washington DC-Baltimore Area
  • Testimonials

In 2023 alone, the FTC received 2.6 million scam reports. The first half of 2024 saw 360,000 impersonation scam reports, amounting to $1.3 billion in losses, with a median loss of $800 per victim. Yet, despite these staggering numbers, it’s estimated that less than 5% of scam victims ever report their experiences to the authorities.

“This is just the tip of the iceberg,” said Emma Fletcher. “Behind those numbers are people who’ve lost tens and hundreds of thousands of dollars. We’re really concerned about the volume of reports we’re getting on scams that take it all. People have emptied their bank accounts, even their retirement accounts.”

The rise in losses from business and government impersonation scams has been steep. In 2020, losses to government impersonators totaled $175 million, but by 2023, that figure had skyrocketed to $618 million. Business impersonation scams followed a similar trajectory, with losses jumping from $195 million in 2020 to $751 million in 2023.

Evolving Scam Tactics

The surge in reports is linked to increasingly deceptive tactics that scammers employ. These fraudsters often request payment through methods like Zelle, bank transfers, or even Bitcoin ATMs. The latter are particularly concerning as scammers have begun calling them “federal safety lockers,” a ploy to add legitimacy to their schemes.

“With the endless daily time-sensitive messages, emails, deliveries, due dates and service invoices we already get, especially in the media, there are so many you have to resist and double-check nowadays,” said Elena Kuznetsova.

Financial institutions have come under scrutiny in recent months regarding their role in fraud prevention, especially concerning Zelle transfers. Congressional hearings have discussed the obligations of banks in addressing fraudulent transactions. The FTC encourages scam victims to report the incidents both to their banks and to the Consumer Financial Protection Bureau (CFPB) if they feel their cases were mishandled.

The FTC has implemented a new Impersonation Rule, which took effect in April 2024, specifically targeting fraudsters who impersonate government or business entities. This rule gives the FTC the power to file lawsuits seeking to recover funds for victims and impose civil penalties on scammers.

Kati Daffan shared details about one of the agency’s first cases under this new rule. “Somebody pretending to be affiliated with the U.S. Department of Education would tell people: ‘This is a time sensitive notice, and you can get tax-free loan forgiveness,’ to entice consumers to call them,” said Daffan. “Then the telemarketers, claiming to be affiliated with the government, would convince people to sign up for a debt relief program and collect hundreds of dollars in illegal upfront fees,”

Warning Signs of Scams

Scammers typically create a sense of urgency and pressure their victims to act quickly. They may urge victims to lie to bank employees, threaten them with arrest or deportation, and instruct them not to hang up before money is transferred. Another red flag is when scammers tell victims their accounts are at risk and escalate the situation by connecting them to a supposed government agency.

A new trend in impersonation scams involves victims believing they are protecting their money from theft. This false sense of security leads people to empty their bank accounts and transfer the funds to scammers, thinking they are safeguarding their savings. “But if you believe you’re protecting your money, you’re more likely to empty your account, and these scammers will position themselves as someone informing you of this problem and helping you resolve it,” Fletcher continued. “They’re not necessarily posing as the aggressor anymore.”

Fletcher added that there are widespread misconceptions about the types of people who fall victim to these new tactics. “They’re not, say, less intelligent or greedy.” she said. “It’s really important to put those ideas to rest, because they’re barriers to people being receptive to messages about how to avoid scams … It’s people of all ages, people you know in your community.”

Who’s at Risk?

Research from the FTC found that adults between the ages of 18 and 59 are 34% more likely to report losing money to fraud compared to older adults, with a median loss of $500. However, older individuals tend to report higher median losses. For those in their 70s, the median loss is $800, while individuals 80 and over report a median loss of $1,500.

Even experienced professionals can fall victim to these scams. “I’m always telling my audience: please be aware. Don’t do this. I’m 69 with 43 years of experience in journalism, and I fell in their hands completely,” said Celina Rodríguez, a journalist who fell for a Bank of America impersonation scheme two years ago. 

“They said I bought an iPhone, and was it really me? It was so embarrassing having to explain ‘No,’” she said. “I was in a rush, I had to do a radio program, and I was panicking. I let them into my computer and sent money to them … Fortunately, Bank of America helped me shut my computer down, had IT come turn it on in a safe way and I changed my passwords.”

Rodríguez emphasized how convincing these scammers can be. “We are human beings and any of us can become psychological targets” she said.

Protect Yourself

To protect against impersonation scams, experts recommend slowing down and verifying any suspicious requests. Be wary of unsolicited messages, emails, or calls, especially those asking for immediate action or payment through unconventional methods like cryptocurrency or wire transfers. If something feels off, take a moment to double-check with trusted sources.

Those who have experienced fraud or suspect they’ve been targeted can report the scam and get guidance on next steps by visiting the FTC’s fraud-reporting website at reportfraud.ftc.gov.

 

Image provided by EMS