Scam Calls Are Getting More Extreme

Study finds fraud a top consumer complaint in 2019

Upset confused african woman holding cellphone having problem with mobile phone, frustrated angry mixed race girl reading bad news in message looking at smartphone annoyed by spam or missed call

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Scam calls can be more than just irritating. They can be downright terrifying.

A study from the Consumer Federation of America (CFA), released Monday, found that in 2019, scammers deployed new, extreme techniques to extract money from victims over the phone. 

These scammers used harrowing lies to force victims to stay on the line while retrieving money or gift cards. The scammers impersonate law enforcement or bank officials, then threaten to arrest the victims or seize their accounts if the victims hang up. 

Fraud was one of the fastest growing categories in consumer complaints in 2019, according to the study, which surveyed local and state consumer agencies across the U.S. Most of the leading consumer complaints remained similar to those in 2018; the top three categories included shady automotive, retail, and home improvement transactions. However, reports of these severe scamming tactics were new and alarming for the study’s authors, as they expressed during a phone news conference Monday.

The study outlined scam tactics that cropped up during 2019, such as the “Chinese embassy scam,” which targeted Mandarin speakers. The scammers would call victims and demand money or else, they said, the victims’ families in China would be arrested for fraud. Some victims in San Francisco emptied their savings accounts or mortgaged their homes after receiving this call, according to the study. 

Key Takeaways

  • The Consumer Federation of America found that in 2019, scam calls grew more involved and harrowing for victims.
  • Fraud was one of the fastest growing categories of consumer complaints, along with internet sales, and medical bills.
  • Americans of all ages lost nearly $667 million to imposters in 2019, according to the FTC. 
  • State consumer agency representatives said the pandemic seems to be making people more vulnerable to scams this year.

Scammers will attack anyone, not just the elderly or vulnerable, Susan Grant, CFA’s director of consumer protection and privacy, said during Monday’s news conference. The criminals only need a few successful bites to get a big payday. According to the Federal Trade Commission (FTC), Americans lost nearly $667 million to imposters last year. People in their 20s reported losing money to fraud more often than people in their 70s, though older victims lost larger quantities of money. 

The key for scammers is keeping the victims on the phone and not letting them hang up lest they decide to conduct outside research, said Grant. In the “Chinese embassy scam,” a robocall leads to a person who then leads the victim to another person posing as an investigator working on their family’s (fake) case. 

“By the time these people get off the phone, they’ve been thoroughly intimidated and manipulated into thinking they need to send money right away to forestall something terrible,” Grant said. “They don’t stop or think or check. If they did check the Better Business Bureau or any trusted advisor, they would find that it’s not plausible.”

Sheryl Harris, director of the Cuyahoga County, Ohio Department of Consumer Affairs, detailed a new scam tactic in which victims are ordered to take a drive and purchase a gift card at a store. The victims were told to read the gift card serial code or take pictures of the card for the scammers under threats of arrest or financial woes, Harris said. 

“In multiple kinds of these scams, we see people directed to get into a car,” Harris said during the news conference. “Finally, when you get to the place you’re supposed to get to, you’re invested … and people are relieved to do what they say because it finally ends this long drive.”

The study is based on 2019 scams and therefore does not encompass developments during COVID-19. However, Harris said that Americans are now extremely susceptible to get-rich-quick scams.

Lorelei Salas, commissioner of the NYC Department of Consumer and Worker Protection, said that scammers are asking people for money in exchange for COVID-19 federal aid benefits. However, exact data on these scams’ prevalence will not be available until next year. 

In the meantime, Salas recommended that consumers do their homework before giving money away.

“Don’t answer or hang up,” Salas said. “Do some research before you call them back.”

Article Sources

  1. Consumer Federation of America. "2019 Consumer Complaint Survey Report." Accessed July 28, 2020.

  2. Federal Trade Commission (FTC). "New FTC Data Shows that the FTC Received Nearly 1.7 Million Fraud Reports, and FTC Lawsuits Returned $232 Million to Consumers in 2019." Accessed July 28, 2020.