If there's a drawback to the many communication options we enjoy in the Internet age, it's the proliferation of scams. Having more ways to communicate with each other gives fraudsters more lines of access to us as well. The Federal Trade Commission, which does its best to monitor consumer fraud and catch fraudsters, has shared the three most common types of fraud reported to the agency in 2016.
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Debt collection fraud
Posing as a debt collection agent gives a fraudster a plausible opportunity to demand money from you. The FTC received over 850,000 debt collection scam complaints in 2016, which adds up to 28% of all fraud complaints for the year and makes it the most commonly reported type of fraud. These frauds can be particularly tricky for victims to spot because debt collection scammers often already have some of your personal information from credit reports and other sources. However, scammers are typically far more abusive and threatening than real debt collection agents, who are limited by federal law as to how badly they can treat you. Fraudsters will typically ask you to make a payment at once, often threatening to sue you if they don't get a payment by the end of the day. And they will often insist that you pay by one particular method, such as providing a credit card number over the phone, rather than offering multiple payment options. Another way to tell if a debt collection agent is legit is by asking for basic information about the debt: for example, the account number or the interest rate. Finally, you can ask for a phone number for the debt collector and call back a few minutes later. If a human being picks up the phone immediately or if you end up talking to the same person, your likely dealing with a fraudster. Real debt collection agencies have automated phone answering services and multiple collections agents.
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An imposter fraud or imposter scam occurs when a fraudster pretends to be someone trustworthy or a person in authority, such as a government agent. For example, you might get a phone call from someone claiming to work for the IRS who has questions about your tax return. The FTC received over 400,000 complaints of imposter frauds in 2016, making up roughly 13% of all fraud complaints for the year. The best way to avoid falling for an imposter fraud is to think twice before responding. These fraudsters often take one of two approaches: either they claim that something good has happened to you, such as a cash windfall, or they claim you're in trouble of some kind, such as the aforementioned pseudo-IRS agent. In the first case, remind yourself that if something sounds too good to be true, it probably is. Any time someone tells you that you've got money or something else valuable coming to you but you need to pay a fee or make an advance payment to receive it, insist on some kind of verification before you give away any of your money. In the second case, the pseudo-IRS agent will probably try to use your fears to get you to reveal personal information such as your Social Security number, date of birth, and other details that the fraudster can use to steal your identity. Never reveal such sensitive information to someone who calls or emails you. For example, if the caller claims to be from the IRS (and it's almost unheard of for IRS agents to call taxpayers out of the blue), tell him you'll call him back and then use the contact information from the phone book or the IRS website to try to reach him.
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For the first time, identity theft has fallen slightly below imposter fraud in number of complaints for the year. However, it's still a significant issue -- the FTC received nearly 400,000 complaints of identity theft in 2016, placing it at around 13% of all fraud complaints for the year. Identity theft refers to a fraud in which someone steals your personal information and uses it for his own purposes. For example, a fraudster might use your Social Security number to file a bogus tax return in your name, claiming a refund and putting the money in his own bank account. Because identity theft is based on using your personal information, keeping such information safe is the key to preventing this type of fraud. Keep important financial documents such as your Social Security card in a secure location (NOT your wallet), and be extremely careful about sharing personal details online. Even something as innocuous as your birth date can give a fraudster enough information about you to cause you real problems. Shred or black out documents containing your personal information before discarding them; that includes not only bills and bank statements but things like labels from prescription bottles and expired insurance cards.
What to do if you are a victim of fraud
If someone targets you for any kind of fraud or scam, report the details to the FTC as soon as possible -- you can call 1-877-FTC-HELP or fill out a complaint form on the FTC website. You can also reach out to state and local consumer agencies for help. Depending on the type of fraud you experienced, you may want to contact the police as well. Identity theft victims or anyone who inadvertently gave away critical personal information should consider freezing their credit to prevent further losses. Some agencies can help protect you from similar frauds in the future; for example, the IRS can issue you a special PIN that makes it much harder for a fraudster to file a fake tax return in your name. But if you take some basic precautions, you can keep from ever being victimized -- and preventing the problem from happening is much easier than trying to deal with the aftermath.
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