Online purchase scams are now the riskiest form of consumer fraud in North America, according to a new report from Better Business Bureau. In 2017, consumers reported more than 47,000 scams to BBB’s Scam Tracker (BBB.org/ScamTracker). BBB analyzed this information using its unique BBB Scam Risk Index to determine the riskiest scams based on consumers’ exposure, susceptibility, and monetary loss. The findings, released during National Consumer Protection Week (U.S.) and Fraud Prevention Month (Canada), reveal some significant changes since 2016:
- Tax collection scams decreased in volume by 60%, most likely due to the 2016 arrest of the ringleader of a network of scam call centers. Based in India, these centers were primarily responsible for IRS-related scams.
- Online purchase scams jumped from the 4th riskiest scam to the top spot, likely due to an increase in consumer awareness.
- Home improvement scams dropped from the 1st to 6th riskiest, despite a number of natural disasters that traditionally bring out “stormchasers.”
Contrary to many people’s belief, young people continue to be at a higher risk for scams than their older counterparts, and susceptibility to scams decreases with age. Conversely, “dollars lost” for individuals who lose money to scams increases with age.
There was good news found in the 2017 BBB Scam Tracker Annual Risk Report: New Trends in Scam Risk from the BBB Institute for Marketplace Trust (BBB Institute):
“Although we saw an increase in total scam reports, the good news is that susceptibility was down,” said Melissa Trumpower, director of programs and operations with the BBB Institute and co-author of 2017 BBB Scam Tracker Annual Risk Report: New Trends in Scam Risk. “The percentage of those reporting who actually lost money to a scam fell from 18.8 percent in 2016 to 15.8 percent in 2017. We also saw a 17% decrease in the median monetary loss, down to $228.”
The most common online purchase scams in 2017—deemed the riskiest scam category—were related to pets, clothing, cosmetics, electronics, and automobiles. The offer of free trials was a common tactic for online purchase scams as well: 67% of scams involving cosmetics and 60% involving nutrition products mentioned a free trial opportunity.
This trend is especially relevant to Denver consumers. Last month, BBB serving Denver/Boulder released the findings of a months-long analysis of the local health and diet industry, prompted by a pattern of consumer complaints. The study addressed misleading advertising practices such as negative-option “free trial” periods among online skin cream, vitamin and supplement, and diet product companies.
Travel and vacation scams jumped from the 12th to the 8th spot, with the top destinations mentioned in the scams being Orlando/Florida, Disney, Mexico/Cancun, and the Bahamas. Unfortunately, this finding is also a familiar one for Denver consumers, who have been reporting timeshare resale scams to BBB at an ever-increasing volume this year. Through these scams, criminals solicit timeshare owners and offer to facilitate fake sales of their properties for up-front fees. The scams overwhelmingly affect consumers who own property at resort destinations in Mexico, and often operate by stealing the license information of retired Colorado real estate brokers.
However, in 2017, BBB serving Denver/Boulder also experienced some area-specific trends that differed from the overall Scam Tracker numbers for North America. For example, roughly 44% of the scams reported locally were categorized as “phishing”—a catch-all category used to describe scams in which criminals solicit personal information from victims through electronic communication.
In Denver, the most costly type of scams for consumers were romance scams, which cost the median victim who reported losing money a whopping $26,000. (Recently, BBB released a study addressing the scope and impact of these scams.) This year, romance scams dropped off the North American top 10 list.
The 3rd-most reported scam category in Denver, debt collections, did not make the North American top 10 list either.
Overall, though, many of the scams deemed riskiest to North Americans were extremely prevalent in Denver and Boulder this past year. Online purchase, employment, and tech support scams—three of the top scam categories overall—were the 2nd and 4th (a tie between employment and tech support) most reported scam types in Denver.
In North America, the top ten riskiest scams in 2017 were:
- Online purchase scam (up from #4 in 2016)
- Investment scam (up from #6 in 2016)
- Employment scam (no change)
- Advance fee loan scam (up from #5 in 2016)
- Fake check scam (down from #2 in 2016)
- Home improvement scam (down from #1 in 2016)
- Tech support scam (up from #8 in 2016)
- Travel/vacation scam (new to top 10, #12 in 2016)
- Family/friend emergency scam (no change)
- Government grant scam (new to top 10, #11 in 2016)
BBB’s 2017 report addresses some of the scam tactics frequently reported to BBB serving Denver/Boulder.
One of the most common tactics scammers use is impersonation, meaning the scammer pretends to represent a legitimate business that is well-known and trusted by the victim. The top legitimate organizations scammers impersonated in 2017 were: U.S. Internal Revenue Service; U.S. Government (Grant/Treasury/Reserve/Medicare); Better Business Bureau; Publishers Clearing House; and Microsoft.
In August and again in September of 2017, BBB serving Denver/Boulder responded to reports of scammers sending out emails that mimicked those BBB sends to its local businesses.
Scammers can also be very nice and personable, which defies “bad guy“ stereotypes and leaved targets at higher risk.
Regardless of the scam type, BBB urges consumers to be wary of the following tactics:
- The promise of getting a “great deal” (which is often too good to be true);
- Pressure to respond immediately with offers that are time sensitive and prices that “can’t be guaranteed;”
- Intimidation (for example, “You are under federal investigation”; “You will be arrested within one hour unless you call this number”); and
- Isolation, which aims to force a decision without others’ opinions.
Scammers are clever and constantly adjust their tactics, meaning anyone is vulnerable to fall victim. BBB’s Scam Tracker helps identify risks and debunk long-standing myths regarding scams. For more information on specific scams and tips on how to avoid them, go to BBB.org/ScamTips. To report a scam, go to BBB.org/ScamTracker.