NCL Personal Finance Issues
A phone ringing at 3AM usually means one thing: bad news. That’s certainly the case with a Grandparent Scam, in which fraudsters play on the fear that a friend or relative is in danger by calling an elderly victim and posing as a grandchild or acquaintance.
The scammer then frantically tells a story of distress (they’ve been arrested, in an auto accident, are in need of lawyer, etc.) that requires money to be wired immediately. The “grandchild” begs the victim not to tell anybody about the call to avoid getting in trouble with their “parents.”
Scammers, always on the look-out for an easy mark, have been mercilessly targeting the elderly, according to the NCL’s Fraud Center and its recently released Top Ten Scams Report. The report, which is compiled annually from consumer complaints submitted to NCL’s Fraud Center, looks at trends in Internet and telemarketing fraud in the last year.
Consumers over the age of 55 make up nearly a third of all reports (32.8 percent), while baby boomers and older consumers total 54 percent of all complaints to the NCL’s Fraud Center in 2010.
“Fraudulent telemarketers and Web-based scammers aren't just pushy salespeople trying to make a living - they are hardened criminals out to take their victims’ life savings,” said NCL Executive Director Sally Greenberg. “Con artists know that older consumers may be particularly vulnerable to falling for a bogus pitch, using scare tactics, posing as legitimate outfits, or making the offer sound so sweet that it’s difficult for consumers to resist.”
Top ten scams of 2010
- Fake Checks: 29.67%
- Internet: General Merchandise: 27.24%
- Prizes/Sweepstakes/Free Gifts: 20.49%
- Phishing/Spoofing: 8.90%
- Advance Fee Loans, Credit Arrangers: 2.44%
- Timeshare Resales: 1.56%
- Nigerian Money Offers: 1.28%
- Internet: Auctions: 1.14%
- Friendship & Sweetheart Swindles: 0.99%
- Scholarship/Grants: 0.65%
Fake check scams—in which fraudsters lure 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 29 percent of all complaints.
“There is no legitimate reason for someone to give you money and then ask you to wire money back,” said John Breyault, NCL Vice President of Public Policy. “If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.”
Fraudsters on the line
Despite our increasingly digital society and the growing prevalence of Web-ready devices such as smartphones and tablet computers, scammers have not abandoned the telephone as a method of contact. Nearly a quarter - 23.67 percent - of victims reported being defrauded over the phone, up 7.62 percent from last year.
In 2010, NCL’s Fraud Center saw a spike in telemarketers focusing on bogus prize and sweepstake scams. Among scams where the con artist contacted the victim by phone, these scams increased by 19 percent and are this year’s most frequently reported telemarketing scam.
Wire transfers: Con artists’ preferred method of payment
Wire transfers are great for scammers. Unlike reversing a credit card charge or canceling a check, consumers have virtually no way of getting their money once a transfer has been made. Because it’s such an unsafe way for consumers to pay for transactions, wire transfer remains the payment of choice for scammers, with more than 2 in 5 (41.5 percent) of consumers who reported losses sending money via wire transfer.
For more information on the top scams of 2010, read NCL’s report.