New FTC Data Spotlight Provides Illuminating Insights into Impersonation Scams

Is the person contacting your employee really from the IRS or Social Security Administration? What about those phone calls and text messages from consumers claiming to be from your company? The Federal Trade Commission’s new trade regulatory rule on impersonation of governments and businesses takes effect today, and a just-released data spotlight highlights the rule’s critical importance to consumers and businesses.

According to Data Spotlight, the statistics are shocking. In 2023, the FTC received more than 330,000 reports of commercial impersonation scams and nearly 160,000 reports of government impersonation scams. This accounts for almost half of all fraud reported directly to us. The financial losses are also staggering, with cash being taken away, with reports that losses from counterfeit scams will exceed $1.1 billion in 2023. That’s more than three times what Consumer Reports reported in 2020.

Read the Data Spotlight for specifics, but here are some other notable findings.

Scammers still use the phone, but their attention is increasingly turning to text messages or emails as a way to get their foot in the virtual door. Their preferred payment methods are reportedly shifting towards bank transfers and cryptocurrencies. Even their pitches have become more complex. For example, a person contacting a consumer may say they work for a reputable company, but then claim to “route” the consumer to a fake bank, fake FBI agent, or even fake FTC employee.

Data Spotlight also lists the top five forms of imposter scams—and when we say “top,” we mean below the belly of a snake in the canyon:

• Mimic security alerts. The messages claimed to be related to suspicious activity on consumer accounts. When consumers responded, they were told to “move” their funds to protect themselves. But the only “diversion” that occurs is directly into the scammer’s pocket, which is usually untraceable.
• Fake subscription renewals. Scammers send fake “renewal” notifications via email, informing consumers of unsubscribed subscription services. When consumers call to report the error, scammers promise “refunds” but inadvertently claim too much money was processed. Next is asking the consumer to refund the “overcharge,” usually by purchasing a gift card and providing the scammer with the number on the back.
• False gifts, discounts or requests for money. Scammers are claiming “free money” or raffle prizes. All the consumer has to do is provide some cash advance or gift card to claim a non-existent jackpot.
• False question in law. Scammers contact consumers pretending to be government agents, claiming their identities have been used to commit crimes. Fake agent’s “question”? They often tell people to transfer funds to a Bitcoin ATM, which they may call a “safe locker.” This is outright fraud and, as Data Focus warns, “the money you move is the money they steal.”
• Fictional package delivery problem. Consumers receive a message that looks like a delivery attempt notification from the U.S. Postal Service, UPS, or FedEx, instructing them to click on a website link. The next step may be to pay a small “re-delivery fee” by entering your credit card information. The message, “package” and website are all fake. But one thing is true: Consumers are harmed when their credit card numbers fall into the hands of scammers.

Spotlight identifies three strategies scammers use to gain an advantage: 1) Their messages replicate the appearance of real communications from well-known companies or government offices; 2) They create an alarming situation that requires immediate attention or Playing on people’s emotions through pending benefits (such as prizes); 3) They “reframe their need for funds to avoid ringing alarm bells” – for example, claiming they are helping people “protect” their funds.

The FTC has recommendations for your employees, family, friends, and, of course, you:

Don’t click on links or reply to unexpected messages. If you’re not sure whether a story is true, contact the company or organization at a phone number or URL that you know is legitimate. Never use contact information in suspicious messages.

Don’t believe anyone who says you need to buy gift cards, use a Bitcoin ATM, or transfer funds to solve a problem. This is not how real businesses and government agencies operate. Anyone who asks you to do this is a liar.

slow down. Scammers are trying to rush you. Instead, take the time to check in and talk to someone you trust. Anyone who pressures you to act quickly is almost certainly a liar.

Why should business leaders care about what the latest data spotlight tells us? As the FTC’s new impersonation rule shows, stealing the name of a well-known business (perhaps yours) can be the key to their scam’s success. You don’t want your company to be even remotely associated with scammers and fakes. What’s more, scammers can be so convincing that even experienced businesspeople need to be wary.

The Federal Trade Commission (FTC) has more resources about imposter scams. If you see a questionable promotion – whether or not you lose money – please tell us at ReportFraud.ftc.gov. If you know someone who did lose cash or had their personal information stolen to a scammer, please share what you should do if you were scammed.