Published in: Banks | April 4, 2019
This Growing Scam Cost Americans a Reported $488 Million Last Year
By: Lyle Daly
That person asking you for money may not be who you think they are.
Image source: Getty Images.
You get a call from a number you don’t recognize. The caller says they’re with the IRS, that you owe taxes, and that they’re going to issue a warrant for your arrest if you don’t wire them money immediately.
If that sounds fishy to you, then you’re on the right track. It’s an example of a popular imposter scam, and these scams were the most common consumer complaint of 2018.
Plenty of people fall victim to imposter scams, so it’s critical that you understand how they work and how you can keep yourself safe.
What is an imposter scam?
An imposter scam is any sort of fraud where the perpetrator pretends to be someone else to convince you to either send them money or provide access to sensitive information that they can use to steal your money themselves.
There are several common ways criminals do this. Some of the parties that criminals impersonate the most include:
- The IRS -- A caller tells you that you owe taxes and will be arrested if you don’t pay them. This scam is especially popular around tax time.
- The Social Security Administration -- A caller tells you that there’s an issue with your Social Security number, such as it being suspended, and that you must pay to correct it.
- Computer tech support -- The scammer claims that your computer has viruses, but they can help you fix it. Then, they either want you to pay them for a software or give them remote access to your computer, which they can then use to steal your information.
- Love interests -- The scammer uses a fake dating profile to gain your trust, and then exploits that trust by asking for money.
- Grandchildren -- A caller claims to be your grandchild and says they need money for an emergency.
The one characteristic that all imposter fraud shares is a sense of urgency. The scammer will prey on your emotions to try to get you to comply with their requests right away.
For example, they’ll use the threat of arrest or computer viruses to make you think you must wire them money or face dire consequences. They do this because they know their best opportunity for success is when you haven’t had time to stop and think logically about the situation.
The costliest type of fraud
You may be surprised to learn just how many people end up victims of imposter fraud. According to the FTC’s 2018 Consumer Sentinel Report, imposter scams ranked No. 1 among all types of fraud, with:
- 535,417 reports, over three times more than any other type of fraud.
- 18% of those reports claiming monetary losses.
- $488 million in total losses -- over four times more than any other type of fraud.
- $500 as the median loss amount.
This marks the first year that imposter scams have topped the list when it comes to fraud.
How to protect yourself from imposter scams
A big part of protecting yourself from imposter scams is being aware of them and understanding how scammers like to operate. When you know what the most common imposter scams are, you’re much less likely to fall for one.
There are also a few rules to live by that will help you avoid getting scammed and keep your financial information safe:
Never let yourself get pressured into sending money -- When someone tries to get you to send money then and there without any time to think it over, it’s usually because they’re trying to scam you.
Don’t wire money to anyone you haven’t met in person -- Wire transfers are the payment method of choice for scammers, because once they pick up the transfer, it’s as good as gone. If someone you’ve never met wants you to wire them money, odds are that they’re pulling a fast one on you.
Call government organizations at their official numbers -- If a caller says they’re from the IRS or the Social Security Administration and you need to pay them immediately, they’re lying. But if you want to double-check, just look up the official number for the organization to call and ask.
Don’t give out personal information to callers -- Some scammers will try to get ahold of sensitive information that they can use to steal your identity or your money. They’ll ask about your Social Security number, your credit cards, banking info, and whatever else they can get. Never give out this information unless you’re 100% confident in the identity of the caller. Should a potential scammer get this information, consider freezing your credit to prevent identity theft.
If anything ever seems off to you and you think someone might be running a scam, go with your gut. Assume they are trying to scam you until proven otherwise. And if someone does try to scam you, you can report it to the FTC through the organization’s complaints page.
Staying safe from scams
It’s a dangerous world out there, as there is no shortage of crooks trying to steal people’s hard-earned savings. But if you’re careful about trusting strangers, especially those who seem to be very financially motivated, you’ll be much safer. When in doubt, search online to see if what someone’s telling you fits the description of a scam.
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