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NCL’s Fraud Center: recession-linked scams on the rise in 2009

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Release Date: February 16, 2010 
Contact: (202) 835-3323,  This email address is being protected from spambots. You need JavaScript enabled to view it.

Washington, DC — The recession is helping at least some people prosper despite tough economic times – scammers preying on consumers who are looking for ways to earn money. The National Consumers League’s (NCL) annual Top Ten Scams report, released today, found that while fake check schemes continued to be the most frequently-reported scams, frauds targeting consumers hard hit by the down economy soared in 2009. The report, which is compiled from consumer complaints submitted to NCL’s Fraud Center, examined trends in Internet and telemarketing fraud in 2009.

“Consumers are looking for ways to supplement their income or learn new skills,” said NCL Executive Director Sally Greenberg. “Unfortunately, fraudsters know this all too well and they target vulnerable consumers with business opportunity or scholarship-related scams.”

Fake check scams—in which fraudsters lure in their victims with phony mystery shopper jobs or sweepstakes “winnings,” asking their victims to cash realistic-looking checks and wire a portion of the proceeds back to the scammer before the check bounces—continued to be the most frequently-reported scam to NCL’s Fraud Center, making up 42 percent of all complaints. Internet merchandise scams, fake sweepstakes, phishing, and Nigerian money offers remaining unchanged as second through fourth most-reported scams, respectively. Business opportunity scams and scholarships and educational grant scams, which were not top ten in 2008, became the sixth and tenth most-reported scam in 2009, respectively.

“This year, we saw a spike in complaints related to bogus business opportunities and scholarship grants,” said John Breyault, vice president of public policy, telecommunications and fraud at the League. Clearly, scammers know how the economic environment is affecting consumers, and they are profiting from it.

In a typical business opportunity scam, the victim is promised unrealistic or “guaranteed” profits in return for a significant up-front investment in a business – such as magazine stands, vending machines, or Internet kiosks. Though the profits almost never materialize, the victim still loses their initial fee and the scammer disappears.  In a scholarship or educational grant scam, the victim pays a fee to the scammer in return for promises of a “guaranteed” scholarship award or generous financial aid package, which never come to fruition.

“It is especially heinous that scammers would seek to capitalize on the weak job market to make a buck off economically vulnerable consumers,” said Breyault. “Scammers offering bogus scholarships prey on people’s efforts to improve their education level or skills, efforts aimed at making themselves more marketable in a tough economy. With state and local consumer protection budgets cut to the bone by the recession, it’s even more important for consumers to stay vigilant to avoid falling victims to these frauds.”

A second notable trend in the NCL report was the link between age and vulnerability to fraud. In 2009, consumers in the top age groups—56-65 and those over 65—made up a larger portion of fraud reports than in the previous year, increasing by about 2 percent versus 2008.

“Older consumers may not be as quick to check out a company’s bogus claims on the Internet, where a lot of these scams are exposed,” said Breyault. “We urge relatives and caregivers to pay special attention to older family members who suddenly start exhibiting the signs of having fallen victim to a fraudster.” These signs include a sudden inability to pay monthly bills, unusually heavy volumes of junk mail or telemarketing calls, or a reluctance to discuss repeated large payments to “a friend.“ Consumers concerned that an elderly friend or relative is a fraud victim should contact their local consumer protection office or state attorney general.

For more information on NCL’s 2009 Top Ten Scams report, click here.

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About the National Consumers League

Founded in 1899, the National Consumers League is America’s pioneer consumer organization. Its mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org.