DeMarrais: Identity theft tops, but other scams lurk

Even with the high-profile database security breeches, consumer complaints about identity theft fell by more than 20 percent last year, a new government survey shows.

But identity theft continues to rank first by a wide margin, generating 290,056 complaints, or 14 percent of the more than 2 million complaints made with state and federal regulators in 2013.

At the same time, filings about debt collectors, banks and lenders, impostor scams and telephone/mobile services soared, while complaints about shop-at-home and catalog sales, prizes and sweepstakes, Internet services, and credit cards fell sharply.

The numbers come from the annual report off the Consumer Sentinel Network, a database of consumer complaints logged by more than 2,000 civil and criminal law enforcement agencies and maintained by the Federal Trade Commission.

We’ve discussed identity theft often, so we won’t look into it today. Instead, I want to discuss some of the categories where complaints are growing, scams that don’t get the attention that identity theft does, but that can also be costly to their victims.

Impostor scams

Among the most troubling are the impostor scams, built around crooks pretending to be someone else in an attempt to con you out of your money. They are a successor to the Nigerian scams (which still account for almost 10,000 complaints), but tend to be more sophisticated. They were up nearly 47 percent last year, from more than 85,000 to almost 122,000.

While Nigerian schemes are generally based on sharing “found” money, impostor scams are usually linked to convincing the victim to wire money to help a friend or relative or to pay a hotel or hospital bill.

Best known is the grandparent scam, in which an elderly consumer gets a phone call from someone pretending to be a grandchild in need of immediate financial help because of (a) a drug arrest or (b) a mugging and stolen wallet in some foreign city.

The plea is to wire money immediately to (a) get out of jail or (b) pay a hotel bill.

Of course, there is no arrest or mugging, but once wired, the money is gone and untraceable.

Fortunately, this scam seems to be fading in popularity. However, it has been more than replaced by business impostors (up from 829 complaints in 2011 to 18,956 in 2012 and to 37,385 last year) and government impostors (from 44,130 in 2012 to 63,212 last year) scams.

Business scams

We’ve seen several variations on the business impostor scam around here, including demands that a consumer or small business pay a supposedly overdue utility bill immediately with prepaid gift cards or face termination of service.

A favorite government impostor scam involves calls supposedly from the Internal Revenue Service saying that the consumer — often an immigrant — owes taxes and must pay using a pre-paid debit card or wire transfer. Pay up or face arrest, deportation or loss of a business or driver’s license.

Another common practice is for scammers to impersonate a well-known software company such as Microsoft in order to convince victims that their computer has been “infected’’ by hackers and malware. They’ll show the victim some scary-looking error reports to illustrate just how infected the computer is, and then prompt the user to download a program that gives the scammers remote control of the victim’s personal computer, the Better Business Bureau warns.

Just last week, the BBB reported a new version of this scam, in which consumers are sent to a fake Netflix login page, where, upon entering their login information, they’ll be told their account has been suspended because of “Illegal Activity.’’ From there, victims are prompted to call a fake member-services phone number to resolve the issue, the BBB says.

The IRS issued a warning that said callers use common names and fake IRS badge numbers, know the last four digits of the victim’s Social Security number, make caller ID appear as if the IRS is calling, and send bogus IRS emails to support their scam.

While impostor scams ranked fourth overall, they were second only to identity theft among military people.

Economic woes likely led to debt collection ranking second and problems with banks and lenders third on the Consumer Sentinel Network Top 10.

Most complaints about debt collectors involve third-party companies that buy debt from a retailer or business that is owed the money and then go after consumers aggressively – too aggressively and illegally at times.

Last month, the FTC began mailing almost $800,000 to consumers who were deceived into paying unnecessary “convenience fees” by a Mississippi-based debt buyer and a debt collection law firm, and falsely threatened with lawsuits if they didn’t pay up.

In a similar case, the U.S. district court in California halted a debt collection operation that allegedly extorted payments from consumers by using false threats of lawsuits and calculated campaigns to embarrass consumers by unlawfully communicating with family members, friends and co-workers.

One common thread in each prosecution or suit is that they were filed in response to consumer complaints.

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The top categories from more than 2 million consumer complaints logged last year in the Consumer Sentinel Network, a database operated by the Federal Trade Commission for more than 2,000 civil and criminal law enforcement agencies.

Source: Federal Trade Commission

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