Avoid crowdfunding scams
May 6, 2019 by Lisa Lake, Consumer Education Specialist, FTC

Crowdfunding is one way to support a project you believe in and get rewards for that support. But the project you’re backing is only as good as the people behind it. Some dishonest people can take your money but produce nothing – no product, no project, and no reward.


Here’s how crowdfunding works: People called "creators" ask for small amounts of money from lots of people to fund projects through websites like Kickstarter or Indiegogo. In exchange, creators offer rewards to contributors, like a product that the creators are trying to make. Sounds great…unless the creators don’t create anything but profit for themselves.


In its lawsuit against iBackPack, the FTC says people shelled out over $800,000 via crowdfunding campaigns. The company said those funds would help it provide consumers with backpacks and shoulder bags with built-in batteries for charging mobile devices. But, according to the FTC, iBackPack’s claims that bags would soon be going out to consumers were lies. What’s more, the FTC’s investigation found that the money the creators took in from their campaigns generally didn’t go toward what they said it would. Instead, the FTC says, iBackPack’s CEO pocketed a large part of the funds for his own personal use. And when people began to complain, the CEO allegedly threatened some of them – adding that he knew their addresses and other personal information.


If you’re thinking about contributing to a crowdfunding campaign, take a minute to research the creator’s background and reviews before you pay. For example, has the creator engaged in previous campaigns? How did those campaigns turn out?

If you learn about a crowdfunding scam:

• 
  
• Report it to the Federal Trade Commission.
  
• 
  
• Report it to your state Attorney General.
  
• 
  
• Warn other people by commenting on the creator’s profile on the crowdfunding site.
  

FDIC Consumer News: Protecting Seniors from Financial Abuse
Federal Deposit Insurance Corporation -- FDIC Consumer News - April 2019

Click here for printable pdf version - April 2019 - PDF

Be organized, proactive, and aware to protect yourself, family and friends from financial abuseIt’s easier than ever to handle our finances without setting foot inside a bank with so many advances in technology, but these changes have also made fraud and financial abuse a prevalent problem for older adults. Most elder financial abuse involves scams, forgery, identity theft, or undue pressure to give someone access to property or funds by simply providing information over the phone. Older adults are often targeted for such exploitation because they may be perceived as trusting, they may be cognitively impaired, they may have more funds available after a lifetime of saving, and potentially less exposure to technological advances.


Tips for Protecting Finances

Seniors can protect themselves from financial abuse by making sure financial records are organized and being aware of how much money is in all accounts. In addition, you can protect your assets by talking to someone at your bank, an attorney, or a financial advisor to discuss your options for ensuring your wishes for managing your money and property are followed in the event you become incapacitated. Other activities to help protect yourself include:

• Carefully choosing a trustworthy person to share your financial planning matters with so they can assist you with tracking your finances if you are unable to do so yourself.


• Locking up your checkbook, account statements, and other sensitive information.


• Ordering copies of your credit report to review for suspicious activity. (You are entitled to a free copy of your credit report from each of the three major credit bureaus once every twelve months. To order your free annual reports, go to AnnualCreditReport.com or call toll- free 1-877-322-8228.)

• Never providing personal information, including your Social Security number, account numbers, or other financial information to anyone over the phone unless you initiated the call.


• Asking for details in writing and getting a second opinion from a financial advisor or attorney before signing any document you don’t understand.


• Paying with checks and credit cards instead of cash to have records of transactions.

Tips for Family and Friends

Family and friends can also help by being aware of the many ways in which an older person may be financially exploited. There are many scams and frauds that attempt to get bank account information or Social Security numbers from the elderly to steal their identity or money. Be on the lookout for signs of possible financial abuse, including:

• Unexplained account withdrawals.


• Another individual unexpectedly making financial decisions on the older person’s behalf.


• Disappearance of funds or valuable possessions.


• Unanticipated transfer of assets to another individual.


• Sudden changes to a will or other important financial documents.


• Suspicious signatures on checks.

If you suspect elder financial abuse, talk to the victim to determine what is happening and who is involved. For instance, you’ll want to know whether a new person in their life is helping them manage their money or a relative is using their credit card without permission. If financial abuse seems likely, you may want to contact your state’s adult protective services and the local police for assistance.

You should also contact any bank or other financial institution involved to notify them of the potential abuse, and they may be able to assist you. They may not be able to provide you with specific information about accounts or transactions due to privacy laws, but they have the ability to review information for potential abuse as well as the resources to report abuse.

Also be aware of consumer financial protection regulations that help protect funds withdrawn from an account without authorization. For example, most cases of fraud and identity theft are committed using an access device, such as when an individual steals an older person’s debit card and pin number to withdraw money from a checking account.

The Electronic Fund Transfer Act, which is implemented through Regulation E, protects consumers from losses that may occur as a result of certain unauthorized electronic financial transactions, such as unauthorized ATM withdrawals and point-of-sale terminal transfers in stores. If a debit card or the card number is used to make an unauthorized withdrawal from a checking or savings account, you can minimize your losses by contacting your bank as soon as possible. Your maximum liability under Regulation E is $50 if you notify your bank within two business days after learning of the loss. Additionally, many credit card issuers have zero-liability policies, meaning that customers typically do not pay for unauthorized transactions, so contact your credit card issuer as soon as you discover any.

For more information on elder financial abuse, visit:

https://www.consumer.ftc.gov/blog/2015/08/spotting-elder-financial-abuse

https://www.consumerfinance.gov/practitioner-resources/resources-for-older-adults/protecting-against-fraud/

For more help or information, go to FDIC.gov or call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342).

Growing wave of Social Security imposters overtakes IRS scam
By Emma Fletcher
April 12, 2019

Claiming to be a government authority is a tried and true way that scammers trick people into sending money. Among the most common government imposters have been scammers pretending to be the IRS – until now. In the past few months, the FTC’s Consumer Sentinel Network database has seen Social Security Administration (SSA) imposter reports skyrocket while reports of IRS imposters have declined sharply. In the shady world of government imposters, the SSA scam may be the new IRS scam.


SSA imposters tell you your Social Security number has been suspended because of suspicious activity, or because it’s been involved in a crime. They ask you to confirm your Social Security number, or they may say you need to withdraw money from the bank and to store it on gift cards or in other unusual ways for “safekeeping.” You may be told your accounts will be seized or frozen if you don’t act quickly.


These scammers often use robocalls to reach people, and the message can be hard to ignore. You may be told to “press 1” to speak to a government “support representative” for help reactivating your Social Security number. They also use caller ID spoofing to make it look like the Social Security Administration really is calling. With such trickery, these scammers are good at convincing people to give up their Social Security numbers and other personal information.


As the graphic shows (top), people reported the IRS scam (in blue) in huge numbers for many years, but the new SSA scam (in orange) is trending in the same direction – with a vengeance. People filed over 76,000 reports about Social Security imposters in the past 12 months, with reported losses of $19 million.1Compare that to the $17 million in reported losses to the IRS scam in its peak year.2 About 36,000 reports and $6.7 million in reported losses are from the past two months alone.


Just 3.4% of people who report the Social Security scam tell us they lost money.3 Most people we hear from are just worried because they believe a scammer has their Social Security number. But when people do lose money, they lose a lot: the median individual reported loss last year was $1,500, four times higher than the median individual loss for all frauds.4 All age groups are reporting this scam in high numbers, with older and younger adults filing loss reports at similar rates.5


People report sending money in unconventional ways. Most often, people say they gave the scammer the PIN numbers on the back of gift cards. Virtual currencies like Bitcoin come in a distant second to gift cards: people say they withdrew money and fed cash into Bitcoin ATMs. With both methods, the scammer gets quick cash while staying anonymous, and the money people thought they were keeping safe is simply gone.

Here are some tips to deal with these imposters:

• Do not trust caller ID. Scam calls may show up on caller ID as the Social Security Administration and look like the agency’s real number.


• Don’t give the caller your Social Security number or other personal information. If you already did, visit IdentityTheft.gov/SSA to find out what steps you can take to protect your credit and your identity.


• Check with the real Social Security Administration. The SSA will not contact you out of the blue. But you can call them directly at 1-800-772-1213 to find out if SSA is really trying to reach you and why.


• Talk about it. People recognize the IRS scam, but many are getting caught off guard by these new imposters. You can help by telling people that the SSA scam is a new version of the IRS scam.
  

Report government imposter scams to the FTC at FTC.gov/complaint.
To learn more, visit ftc.gov/imposters.

FN1 FTC was unable to collect reports directly from the public during the government shutdown. Reports collected during that period were provided by Sentinel data contributors.

FN2 From October 1, 2015 to September 30, 2016, about 140,000 reports of IRS imposter scams were filed and collectively indicated $17 million of loss.

FN3 For comparison, 2.8% of IRS scam reports filed from January 2014 through March 2019 indicated a loss. In 2018, 25% of all fraud reports indicated a loss.

FN4 Median loss calculations are based on reports submitted in 2018 that indicated a monetary loss ($1 - $999,999). The median reported individual loss to all frauds was $371 in 2018.

FN5 Age comparison based on the number of Social Security imposter reports that indicated a monetary loss per million population by age. People who said they were 20 – 59 filed loss reports at a rate of 8.9 reports per million people in this age group, while people who said they were 60 and over filed 10.0 loss reports per million people in this age group. Population numbers obtained from the U.S. Census Bureau: U.S. Census Bureau, Annual Estimates of the Resident Population for Selected Age Groups by Sex for the United States, States, Counties and Puerto Rico Commonwealth and Municipios (June 2018). Not all reports include usable age information.

BHPH dealers are usually their own bank for holding the notes and collecting, and skirt the financial disclosure regulations in the process and in the re-titling of repos. (Assuming the title is ever placed in the buyer's name.) Often, their floor plan is private or through major auctions, and the finance arm is a wholly-owned subsidiary of the dealership.  

This particular predatory practice is not limited to the sketchy downscale boulevard dealers, but is often found in the flashy franchised used car groups, doing high volume sales with extremely detailed buyer qualification handbooks. They've been with us for years, but the increase in the mass of low income workers who need mobility 
now make the problem more visible. 

Often, the condition of the vehicles are blamed for the repo, but it's more likely to be the burden of repayment that triggers. It's a better business model to sell the best cars the particular market will bear, setting the markup aside. These dealers are selling money, and the car is just a mechanism that recognizes a need and opens the door to a payment process. It's a lot more profitable to repo a decent vehicle if you're going to resell it. 

See more at https://public.tableau.com/profile/federal.trade.commission#!/

For the first time, imposter scams topped the list of consumer complaints submitted in 2018 to the Federal Trade Commission’s nationwide Consumer Sentinel database, driven in part by a jump in reports about government imposter scams.


Fraudsters operating government imposter scams falsely claim to be from the Internal Revenue Service, Social Security Administration, or another government agency to get people to turn over money or personal information. Government imposter scams made up nearly half of the 535,417 imposter scam reports to the FTC in 2018. Consumers reported losing a total of nearly $488 million to all types of imposter scams in 2018—more than any other type of fraud—and reported a median loss of $500.


Many government imposter scam reports involved fraudsters who falsely claimed to be from the Social Security Administration. These scammers typically tell people their Social Security number has been suspended, or that there is some other problem, in an effort to get them to reveal their Social Security number or pay money to “reactivate” it. In reality, Social Security numbers are never suspended and the Social Security Administration will never require you to pay to obtain one.


“If you get a call out of the blue from someone claiming to be from a government agency like the Social Security Administration or IRS asking you for personal information or money, it’s a scam,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “You should hang up immediately and report it to the FTC at ftc.gov/complaint.”


Increase in Reports, Fraud Losses

In all, the FTC received nearly three million complaints from consumers in 2018. Consumers reported losing nearly $1.48 billion to fraud in 2018—38 percent more than the year before. Debt collection complaints dropped to the number two spot after topping the FTC’s list of consumer complaints for the previous three years.


Identity theft was the third most common complaint, and consistently ranks among the top consumer complaints made to the FTC. There was a 24 percent increase last year in identity theft reports that involved credit card fraud on new accounts. At the same time, there was a large drop (38 percent) in reports involving tax identity theft.


As in previous years, wire transfers and credit cards were the first and second most widely reported form of payment for fraud. In 2018, however, a growing number of consumers reported that scammers demanded to be paid with gift and reload cards. The number of consumers who said they paid with a gift or reload card grew from over 28,000 in 2017 to more than 41,000 in 2018, while the total amount paid using a gift or reload card to scammers nearly doubled to $78 million.


As in 2017, more consumers in their twenties who reported fraud said they lost money (43 percent) compared with those in their seventies (15 percent). Yet when those in their seventies reported losing money to fraud, the median amount they lost was much larger ($750), compared with those in their twenties ($400).


The data book includes national statistics, as well as a state-by-state listing of top report categories in each state, and a listing of metropolitan areas that generated the most complaints per 100,000 population. The top states in 2018 reporting fraud and other consumer issues were Florida, Georgia, and Nevada, while Georgia, Nevada, and California had the most reports about identity theft, per 100,000 population.


The FTC produces the Consumer Sentinel Network Data Book annually using reports received by the Consumer Sentinel Network. These include reports made directly by consumers to the FTC, as well as reports received by state and federal law enforcement agencies, national consumer protection organizations, and non-governmental organizations. In October 2018, the FTC began releasing consumer complaint data on a quarterly basis through a new interactive online format.


The Consumer Sentinel Network’s secure online database is currently available to more than 2,500 individual users in civil and criminal law enforcement agencies across the country and abroad. Agencies use the data to research cases, identify victims and track possible targets. Although non-governmental organizations may contribute data to the database, only law enforcement agencies can access the database. Law enforcement personnel can join Sentinel at Register.ConsumerSentinel.gov.


The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.

CONTACT FOR CONSUMERS:  Consumer Response Center   877-382-4357

Hon. Ellen Rosenblum
Attorney General

The transition to an all-digital world is bad for elders — very bad.
Here is just today's plea for help for an elder, the latest edition of something I’m seeing more and more. An astonishing amount more in just the last few years.

A friend of mine has come to me because her elderly aunt has been scammed. Essentially, as I understand it, someone hit her with ransom ware. Then somehow got her on the phone. They said they were ransoming her computer and could use it to drain her bank account. She ultimately was taken for 38k. She is 71 and not particularly savvy. She wants Bank of America to review the charges and reverse or refund them as fraudulent. My guess is the actual scammers are out of reach.   

As I understand it, this has been reported to the police and an initial request has been submitted to the bank and denied. She is currently considering submitting a letter to appeal that decision and request reconsideration.

Our laws are inadequate for this. If someone knocked Grandma on the head, she could get some help from the Crime Victims Compensation Fund. But because they used her computer and her phone to scam her, Crime Victims Fund won’t even talk to her. 

Global internet and phone means every criminal in the world is just as close to and just as able to scam Grandma as the criminals in her town.

We need to devise means by which elders can be protected from these scams, which are proliferating wildly (exponentially).

The cost of running these scams is in the pennies range and the rewards are often in the tens of thousands of dollars.

And the risk to the scammers is zero. Absolutely zero.

We need a huge public education campaign, funded by the banks and credit unions that make this sort of thing possible and that profit greatly by elimination of human staff and moving all account management functions into the Wild Wild West of the lawless internet.

More importantly, we need to require depositary institutions to offer special higher-protection accounts, where consumers can get the main benefits of online accounts but without having to bear all the risk of being able to transfer their nest-egg to the scammers with a mouse-click or phone-check.

These higher-protection accounts would have guardrails built into their settings so that an elder would be unable to make payments to a new payee above a nominal amount without getting the bank’s security personnel involved, so that Grandma is not able to send off her nest egg in the middle of the night to the voice on the phone.

Please work with the legislature to devise laws to help protect Oregon’s seniors from the dark side of the technological wonderland they’ve found themselves in.

Latest Consumer Protection Data Spotlight Finds Seniors Sending Thousands in Cash to Scammers Claiming to be their Grandchildren

Older consumers who report losing money to fraud are reporting a disturbing trend: Scammers claiming to be a loved one in trouble are getting people 70 and over to send thousands of dollars in cash.

In the second Consumer Protection Data Spotlight, the Federal Trade Commission examined complaints about family and friend imposter scams. These scammers often call seniors claiming to be a grandchild. The FTC is seeing an increase in the number of people ages 70 and over who say they sent cash in response to this particular scam – one in four said they mailed cash in 2018, compared to one in fourteen the prior year. In about half of these types of complaints, the scammer said they were in jail or some other legal trouble and in need of money to get out of trouble.


All age groups reported losing more money over the last 12 months to family and friend imposter scams – a total of $41 million, compared to $26 million the previous year. The most striking concern is individual losses by older Americans. The median loss for this scam was $2,000, but when seniors ages 70 and over said they put cash in the mail, their median loss was $9,000.

The FTC urges those who might get such a call to not act right away. Instead, the FTC recommends calling the family member or friend using a known number, or checking out the request with someone else in their family or a mutual friend.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). 

Contact Information
CONTACT FOR CONSUMERS:
Consumer Response Center
877-382-4357


Related Resources

• Consumer Protection Data Spotlight: New twist to grandparent scam: mail cash

For Consumers

• Blog: Putting cash in the mail