BBB Study Reveals the Riskiest Types of Scams in 2017

Online Purchasing Tops the List

Online purchase scams are now the riskiest form of consumer fraud, according to a new Better Business Bureau analysis called the BBB Scam Risk Index.

The BBB Scam Risk Index is based on 47,000 scams reported by consumers to the BBB Scam Tracker program at bbb.org. The information helped determine the riskiest schemes based on exposure, susceptibility, and monetary loss.  “Exposure” represents the likelihood of being targeted by a scam, “susceptibility” represents the odds of being targeted by swindlers, and “monetary loss” takes into account financial losses as a result of fraud.

The 2017 Scam Tracker Annual Risk Report reveals some significant changes when compared with statistics from 2016:

  •       Tax collection scams decreased 60% in volume of reports, likely due to the arrest in India in 2016 of the ringleader of a network of call centers primarily responsible for the IRS scam.
  •       Online purchase scams jumped from the 4th riskiest scam to the top spot, likely due to an increase in exposure.
  •       Home improvement scams dropped from 1st to 6th riskiest, despite a number of natural disasters that traditionally bring out “stormchasers.”

Young people continue to be at highest risk for scams, and susceptibility decreases with age, although dollar losses increase with older victims.

The report offers some positive developments. Although the total number of scam reports was up, the overall susceptibility was down. The percentage of consumers who actually lost money to a scam fell from 18.8 percent in 2016 to 15.8 percent in 2017. The report also notes a 17% decrease in the median monetary loss, down to $228 from the previous year.

The most common online purchase scams in 2017 were related to pets, clothing, cosmetics, electronics, and automobiles. The offer of free trials was a common tactic for these online purchases: 67% of scams involving cosmetics and 60% involving nutrition products mentioned a free trial opportunity.

Another significant increase was in the category of investment scams, which tend to target older age groups and result in higher monetary losses. This scam type jumped from the 6th riskiest in 2016 to the 2nd riskiest in 2017.

The top ten riskiest scams in 2017 were:

1.       Online purchase scam (up from #4 in 2016)
2.       Investment scam (up from #6 in 2016)
3.       Employment scam (no change)
4.       Advance fee loan scam (up from #5 in 2016)
5.       Fake check scam (down from #2 in 2016)
6.       Home improvement scam (down from #1 in 2016)
7.       Tech support scam (up from #8 in 2016)
8.       Travel/vacation scam (new to top 10, #12 in 2016)
9.       Family/friend emergency scam (no change)
10.     Government grant scam (new to top 10, #11 in 2016)

Travel and vacation scams joined the list, and identifies top destinations reported by consumers: Orlando/Florida, Disney, Mexico/Cancun, and the Bahamas.  A new addition to the top ten is the government grant scam. Even though two scams are no longer considered to be risky enough to make the top 10 list, consumers should still be wary of romance scams and sweepstakes/lottery/prize scams.

One of the most common tactics used by con artists is impersonation, where the scammer pretends to be a legitimate business that is well known and trusted by the consumer. The top organizations whose names were used by scammers in 2017 were the U.S. Internal Revenue Service; U.S. Government Grant/Treasury/Reserve/Medicare); Better Business Bureau; Publishers Clearing House; and Microsoft.

The perpetrators attract victims with the promise of getting a “great deal,” pressure to respond immediately to offers that are supposedly time-sensitive and prices that are unrealistically low.  Another common method is intimidation (for example, “You are under federal investigation”; “You will be arrested within one hour unless you call this number”).

The report concludes nobody is immune to these tactics, and provides a potent reminder to never let your guard down.  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


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