When Better Business Bureau (BBB) launched BBB Scam Tracker earlier this year, it was expected that tax scams would be high on the list. What was surprising was how high; more than the next three categories put together. In the first 10,000-scam reports processed by BBB, a whopping 24 percent were about imposters pretending to be either the Internal Revenue Service (IRS) or the Canadian Revenue Agency (CRA).
The rest of the top 10 scams were some form of imposter scam: debt collection, sweepstakes, tech support, government grant, etc. About 85 percent of those reporting scams recognized them as fraud before any money was stolen, but the top 10 scams still account for more than $1 million dollars taken from those who reported to BBB.
Scam Type
Scam Reports
Tax Scams (IRS and CRA)
2,413
Debt Collection
835
Sweepstakes/Prizes/Gifts
811
Tech Support
608
Government Grant
574
Advanced Fee Loan
388
Credit Cards
308
Work From Home
261
Fake Check/Money Order
242
Lottery
241
“Scammers are basically imposters,” notes Mary E. Power, president and CEO of the Council of Better Business Bureaus, the umbrella organization for 113 local, independent BBBs across the United States, Canada and Mexico. “Three of the top four scams reported are those that scare people with threats of arrest, lawsuits or other frightening actions. Scammers are pretending to be government agents, lawyers, debt collectors, and police officers. They engage directly with you, so your best bet to avoid being scammed is to stop engaging. Hang up the phone, delete the email, or close the door.”
How the Scams Work:
1. Tax Scam: You receive a phone call from someone who claims to be with the IRS (U.S.) or CRA (Canada). The caller claims you owe money in back taxes and will be arrested or face legal consequences if you do not pay immediately – usually by wire or prepaid debit card. The caller ID is spoofed to appear to be a government agency or the police.
2. Debt Collection Scam: You receive a phone call from someone claiming you have an unpaid debt and threatening garnishments, lawsuits, even jail time if you do not pay right away. The scammer will often use caller ID spoofing and pretend to be a government or law enforcement agency to invoke fear.
3. Sweepstakes/Prizes/Gifts Scam: You receive a call, letter, or email claiming you have won a prize in a sweepstakes. In order to receive the prize, you are instructed to send a fee to cover expenses associated with delivery, processing, or insurance. The prize is not real. Never pay money to claim a prize.
4. Tech Support Scam: “Technicians” claiming to have detected a virus or security threat on your computer call and, for a fee, offer to log in and correct the problem remotely. The callers are actually hackers trying to steal money or sensitive computer passwords and/or damage computers with malicious software.
5. Government Grant Scam: You receive a phone call, email, or letter informing that you qualify for a government grant. However, in order to receive the grant, you are instructed to send money as a processing or delivery fee, usually by wire transfer or prepaid debit card. A real government agency won’t ask you to pay a processing fee for a grant you have already been awarded.
6. Advance Fee Loan Scam: While searching for loan information, you see an enticing ad and click through to the website. You fill out an application and soon receive an email or phone call advising you are approved for the loan, but must first send a processing fee, security deposit or insurance. You pay the “fee,” but never receive the loan.
7. Credit Card Scam: The scammer pretends to be from your bank or credit card issuer and claims you are eligible for a lower interest rate, or that they need to verify a recent transaction. The consumer provides the scammer their credit card number and security code to “verify” their identity.
8. Work-From-Home Scam: While looking for a job online, you answer an ad for making big bucks working from home. The job may be stuffing envelopes or shipping packages where you may even end up handling stolen merchandise. Some may offer payment for advertising on your car or promise you’ll make thousands by paying to have a website created to sell products. Keep in mind scammers may also use information on an employment application to steal your identity.
9. Fake Check/Money Order Scam: Any time someone is paying you for goods or services (even when you are selling something online), you may receive a fake check or money order. You receive a check in the mail that is larger than the amount owed and are asked to deposit the check and wire the difference. The check is a fake and when it bounces, you are out the money.
10. Lottery Scam: You receive a call, letter, or email advising you have won a large amount of money in a foreign lottery, but you have to pay upfront for taxes and fees. Such lotteries are illegal. Sometimes, you may be sent a check as partial payment, but the check will be counterfeit.
Why Scams Work:
There is a science to scams and it may surprise you to know that scammers use many of the same techniques as legitimate sales professionals. The difference, of course, is their “product” is illegal and could cost you a fortune.
The three major techniques scammers use to draw victims:
1. Establish a connection: Scammers build rapport and a relationship, usually face-to-face, as in home improvement scams and many investment scams, but also online, as is the case with romance scams.
2. Build source credibility: Scammers use techniques to make themselves look legitimate, such as fake websites, social media posts, or hacked emails that come from a friend’s account. Most email phishing scams spoof real companies, and many scammers pretend to be a trusted business or government agency in order to build credibility.
3. Play on emotions: Scammers rely on emotion to get victims to make a quick decision before they have time to think. An emergency or a limited time offer is usually their methodology, and they count on emotional, rather than rational, decision-making.
What You Can Do:
Do not be pressured into making quick decisions.
Take time to research the organization. Check them out on bbb.org, search online, etc.
Never provide personal information to people you do not know.
Do not click on links from unsolicited emails or text messages.
If unsure about a call or email that claims to be from your bank, utility company, etc., call the business directly at the number on your bill or credit card.
Never send money by wire transfer or prepaid debit card to someone you don’t know or haven’t met in person.
Never send money for an emergency unless you can verify the emergency.
Resources:
For scam information, go to BBB Scam Stopper (bbb.org/scam).
To report scams, go to BBB Scam Tracker (bbb.org/scamtracker).
For information on investment scams, go to BBB Smart Investing (bbb.org/council/smart-investing).
To search a business, go to BBB.org.
For information on charities, go to BBB Wise Giving Alliance (Give.org).
For information on U.S. government services, go to USA.gov.
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For more information, or to schedule an interview with a BBB spokesperson, please contact Marilyn Huffman at 928-772-3410 or mhuffman@arizonabbb.org.
About Better Business Bureau Serving Central, Northern & Western Arizona
BBB is an unbiased organization that sets and upholds high standards for fair and honest business behavior. In 2014, people turned to BBB more than 165 million times for BBB Business Reviews® on more than 4.7 million businesses and 11,000 charities, all available free at bbb.org. Incorporated locally in 1938, BBB Serving Central, Northern and Western Arizona is supported by over 11,400 BBB Accredited Businesses. Businesses that earn BBB Accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. BBB provides objective advice, free business reviews and charity reports, and educational information on topics affecting marketplace trust.
ABOUT BBB: For more than 100 years, Better Business Bureau has been helping people find businesses, brands and charities they can trust. In 2014, people turned to BBB more than 165 million times for BBB Business Reviews on more than 5.4 million businesses and Charity Reports on 11,000 charities, available free at bbb.org. The Council of Better Business Bureaus is the umbrella organization for 112 local, independent BBBs across North America, as well as home to its national programs on dispute resolution, advertising review, and industry self-regulation.
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