Top ten scams of 2015

4_2015_top_ten_table.jpgInternet merchandise continues growth and remains at top of the list

Every year, Fraud.org compiles the top ten scams reported to us by consumers and publicly releases the list to help educate consumers and prevent future fraud. Based on an analysis of more than 10,000 consumer complaints submitted to Fraud.org in 2015, Fraud.org is warning consumers of the latest worst offenders: phony Internet merchandise sales.

Internet merchandise scams typically involve an online ad for goods, such as designer apparel, electronics, and similar high-end items, priced far below their retail value. When a consumer tries to purchase the item, it either never arrives, or a different, inferior, or counterfeit item arrives in its place. 2015 was the third year in a row that Internet merchandise scams topped the list of complaints.

Examples of Internet merchandise sales scams:

Anna, California. Paid $3,500 for a used Honda. The seller spoofed a third-party payment site and requested the funds in the form of iTunes gift cards. The car never showed up.

John, Indiana. Paid $600 for a Rottweiler puppy named Roscoe. Roscoe never arrived.

Dan, a farmer from Germany. Lost more than $22,000 being defrauded by a company posing as suppliers of animal feed. Goods were never shipped.

Jennifer, Texas. Bought nearly $400 worth of non-existent airline tickets through a fake site.

Irene, Chicago. Ordered NFL jerseys through a website claiming to be an official NFL gear vendor. What arrived were clearly low quality knock-offs.

“The convenience of online shopping is simply unbeatable for many consumers,” said John Breyault, who directs Fraud.org. “Obviously there are plenty of legitimate companies online, but there are also fraudulent sellers out to cheat consumers—and they are very good at what they do.”

Breyault offered the following advice for practicing safe online buying habits. (Even more tips available here.)

  • Do a price-check for similar merchandise before trusting an unknown online retailer, especially one advertising on Craigslist. If the price listed is far below traditional online retailers (think Amazon, Best Buy, Zappos) for a piece of popular merchandise (such as wireless phones, game consoles, sneakers, or designer clothing), the “deal” could easily be a scam.
  • Know who you’re dealing with. If the seller is unfamiliar, check with your state or local consumer protection agency and the Better Business Bureau. Some Web sites have feedback forums, which can provide useful information about other people’s experiences with particular sellers. Get the physical address and phone number in case there is a problem later.
  • Look for information about how complaints are handled. It can be difficult to resolve complaints, especially if the seller is located in another country. Look on the Web site for information about programs the company participates in that require it to meet standards for reliability and help to handle disputes.
  • Pay the safest way: Credit card. If a fraudulent transaction is disputed promptly, chances are the consumer won’t be on the hook for the fraud thanks to banks’ zero liability guarantees and federal consumer protections.

Other 2015 trends: Refund and recovery scams continue alarming growth

Ranked third overall in total number of complaints and first in phone-based complaints in 2015, refund and recovery scams were the fastest-growing type of scam reported last year. These scams involve a particularly frightening set-up. A consumer typically receives a call from someone claiming that the consumer owes on an unpaid debt. While the debt usually doesn’t exist, the caller may threaten the consumer with a negative credit report, jail, deportation, or other penalty—unless they pay up immediately. For far too many consumers, the threat is enough to get them to pay. The average loss reported from this scam in 2015 was nearly $1,200.

Refund and recovery scams first registered in 2014 and have risen at an alarming pace. Complaints about refund and recovery scams increased by more than 70% compared to that in 2014.

Telephone scams remain a top concern 

In an era when everyone seems to have a connected gadget at their fingertips, scammers are continuing to rely on one old-fashioned technology: the telephone. For the third year in a row, the most frequent way that scam artists reached their victims in 2015 was via phone (46.27% of complaints) followed by the Web (32.16%) and email (11.04%). In fact, not only was phone the top method of initial contact again, it continued to rise by nearly 8% compared to the previous year.

Wire transfer bumps credit card as top payment method

Once again, scammers returned to wire transfer as their preferred method of payment in 2015. In 2014, credit cards were used to send money to scammers in nearly half of the total complaints—news that was welcome to advocates and fraud fighters because of the better likelihood of recovering losses that comes with credit card protections. Last year, however, that number dropped significantly. Consumers reported paying scammers with a wire transfer in more than 41% of the complaints where a loss was reported—losses they will likely never get back due to the irreversibility of wire transfers.

Meet the scams: The rest of the worst of 2015

Prizes/Sweepstakes/Free Gifts
Requests for payment to claim fictitious prizes, lottery winnings, or gifts

Recovery/Refund Companies
Scammers contact victims and claim the consumer owes money on a fictitious debt or to help recover money lost in a previous scam

Fake Check Scams
Consumers paid with phony checks for work or for items they’re trying to sell, instructed to wire money back to buyer

Advance Fee Loans, Credit Arrangers
False promises of business or personal loans, even if credit is bad, for a fee upfront

Computers: Equipment and Software
Scammers claim to offer “technical support” for computer problems and charge a fee to fix a nonexistent problem

Phishing/Spoofing
Emails pretending to be from a well-known source ask consumers to enter or confirm personal information

Scholarships/Grants
For a fee, a “search company” offers to conduct customized search for scholarships or grants for students. Scammers take money and run or provide a worthless list

Friendship & Sweetheart Swindles
Con artist nurtures an online relationship, builds trust, and convinces victim to send money

Office: Ad Space/Directory Listings
Fake invoices sent in response to telemarketing calls asking for confirmation of business or organizational information. 

Regardless of the type of scam, many instances of fraud can be avoided by remembering the old rule of thumb: if something seems too good to be true, it probably is. 

If you ever do have questions about a potential fraud or think you might be a victim of a scam, report it immediately via Fraud.org’s secure online complaint form. Embarrassment or fear of friends and relatives finding out about the crime causes many victims of fraud to remain silent. Only by speaking out can we give law enforcement the tools they need to bring these criminals to justice.

Read the full 2015 report