Better Business Bureau
The Better Business Bureau’s 2018 Scam Tracker Risk Report named Employment Scams as the riskiest form of consumer fraud, according to a new report. The study, Tech-Savvy Scammers Work to Con More Victims: 2018 BBB Scam Tracker Risk Report, recorded more than 50,000 scam reports to BBB Scam Tracker (BBB.org/ScamTracker). BBB analyzed this information using its unique BBB Scam Risk Index to determine the riskiest scams based on exposure, susceptibility, and monetary loss. BBB timed the release of the report to coincide with National Consumer Protection Week and found some significant changes from 2017:
- Although online purchase scams slipped to the number 2 riskiest spot, the number of online purchase scams submitted to BBB Scam Tracker in 2018 rose dramatically to 10,450 reports, up 124% from 4,655 in 2017
- 2018 was the first time websites eclipsed phones as the top means of contact for scams reporting a monetary loss
- The susceptibility (the percentage of consumers who lost money when exposed to a scam) of being scammed increased by 86% from 2017 to 2018, which is likely due to scammers constantly adapting their techniques
- Romance scams jumped from the 11th riskiest scam in 2017 to the 6th riskiest last year, leading to a new BBB report: Fall in Love – Go to Jail
Young people continue to be at higher risk for scams, and susceptibility decreases with age, although dollars lost increases when victims are older. This may be a function of the types of scams different age groups are most susceptible to or are targeted by, or it may be related to differences in access to financial resources with increasing age.
There was good news in the Tech-Savvy Scammers Work to Con More Victims: 2018 BBB Scam Tracker Risk Report from the BBB Institute for Marketplace Trust (BBB Institute).
The overall median dollar loss fell 33.3%, from $228 in 2017 to $152 in 2018. This decrease continued the drop we reported in the 2017 report, which had fallen from a median dollar loss of $274 in 2016. This decrease could be connected to the large number of online purchase scams reported in 2018, which tend to result in a lower median dollar loss.
In 2018, BBB added a new scam category in correspondence with the rise of cryptocurrencies. Most of the BBB Scam Tracker reports regarding cryptocurrency fraud were submitted as investment scams and BBB also added cryptocurrency as a payment type. These scams often involve fraudulent Initial Coin Offerings (ICOs), a type of fundraising mechanism in which a company issues its own cryptocurrency to raise capital. Investors are scammed into paying money or trading their own digital assets when the scammer has no intention of building a company. Cryptocurrency scams also involve scenarios in which investors store their cryptocurrencies with fraudulent exchanges.
For the second year in a row, the most common online purchase scam in 2018 were related to pets, with consumers losing an average of $600. The online sale of pets, including puppies, kittens, birds, and other animals, made up 26.2% of the products reported as online purchase scams to BBB Scam Tracker. Automobiles, clothing, cosmetics and electronics rounded out the rest of the top five online purchase scams.
Another significant increase was in the category of fake checks and money orders, rising from the 5th riskiest scam in 2017 to number 3 in 2018. Fake checks and money orders ranked as the riskiest scam for ages 18-24 and consumers lost an average of $1,500. This increase reports led to the BBB’s report: Don’t Cash That Check: BBB Study Shows How Fake Check Scams Bait Consumers.
The top 10 riskiest scams in 2018 were:
- Employment scam (up from #3 in 2017)
- Online Purchase scam (down from #1 in 2017)
- Fake Check/Money Order scam (up from #5 in 2017)
- Home Improvement (up from #6 in 2017)
- Advance Fee Loan scam (down from #4 in 2017)
- Romance scam (up from #11 in 2017)
- Tech Support scam (no change)
- Investment scam (down from #2 in 2017)
- Travel/Vacation scam (down from #8 in 2017)
- Government Grant scam (no change)
Employment scams took over the number 1 spot this year as the riskiest scam in 2018, up from number 3 in 2017. Although susceptibility to employment scams remained about the same, the number of employment scams increased from 5.1% of scams reported in 2017 to 9.1% of reported scams in 2018. This was not only the riskiest scam for three different age ranges (18-24, 25-34, 45-54), but it was also the riskiest scam for military families and veterans.
Romance scams were the only new scam for the top 10 list of 2018 after finishing 11th in 2017. Romance scams ranked as the riskiest scam for ages 55-64 and had by far the highest median amount of money lost in the top 10 at $2,500. Family/friend emergency scams dropped out of the top 10 to number 13 in 2018, but reported the most median amount of money lost of any scam last year at $3,000.
One of the most common tactics of scammers is impersonation, where the scammer pretends to be a legitimate business that is well known and trusted by the consumer. The top legitimate organizations that were used by scammers in 2018 were: U.S. Internal Revenue Service; U.S. Government (Treasury, Reserve, Medicare,
Social Security, Grants); Publishers Clearing House; Better Business Bureau; and Microsoft.
Even though a phone call is the primary means of contact for all the reports, in the last year, websites took over as the top mean of contact for scams with monetary loss, which means that the susceptibility on the web is higher than phone calls overall. Credit cards have remained the top method of payment from 2016 to 2018 as well, making up 40% of the payment methods used by victims.
Regardless of the scam, scammers often rely on 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”)
- Isolation, which aims to force a decision without others’ opinions
Scammers can also be very nice and personable, which can defy “bad guy” stereotypes and make targets more at risk.
Scammers are clever and are always adjusting their tactics, so everyone is vulnerable. BBB Scam Tracker is helping us identify higher risks and debunk long-standing myths, but no one should let down their guard. 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.