Baker Fraud Report

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An extended look at the Maria DuVal psychic scam, which took in at one point $23 million every year from direct mailings and small money returns

Spain arrests 101 over text message scams that pretended to be the victim’s bank telling them of security problem and then crooks transferred money from victim accounts into mule accounts going to Malta

Full report here

Federal Reserve launches instant payment system FedNow

Scammers will surely exploit it. Consumer fraud issues were posed by NCLC.

Identity Theft Resource Center report; more data breaches in the first half of this year than all of last year

Video by rapper Punchmade Dev explains how to commit bank fraud by hacking; now removed from Youtube

Want to see Taylor Swift? BBB warns that it got 21,000 complaints about ticket fraud last year, a big increase.   Be VERY careful about where you buy tickets

Full report here

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FTC announces major collective effort against telemarketing scams

• Over 100 state and federal enforcement actions; including criminal cases; includes five new FTC cases
• One against Fluent filed by DOJ involves tricking people into consenting to receive calls, including robocalls; settles for $2.5 million
• Another FTC complaint alleges California company tricked job seekers into “agreeing” to get robocalls
• Third FTC settlement with Florida company that made illegal robocalls; 1.4 billion calls made
• Fourth with Arizona AG settlement over robocalls trying to sell solar panels
• Fifth FTC complaint against Florida company that helped overseas robocallers pretending to be Amazon
• Here is a list of all cases in this effort

India: Police bust call center targeting Canadians asking them to pay for nonexistent online purchases; 23 arrested

Europol issues threat assessment finding that Cybercrime is big business; report itself here

Podcast by Int’l Ass’n of Financial Investigators on pet scams featuring Steve Baker

Does consumer consumer education about fraud work, and do we know if it is effective? By Anthony Pratkanis

Along with law enforcement and policy interventions, consumer education is one of the primary ways to prevent fraud crimes.  Fraud fighters create a steady stream of warnings, fliers, handouts, videos, mailers, web pages, and seminars.  If we are honest, we really don’t know if these interventions are working. More research in this area would be really helpful.

Considerable research finds that information campaigns are generally ineffective.  As Elliot Aronson and I describe in Age of Propaganda, information campaigns fail because it is difficult to break through a message-dense environment and recipients often find information uninteresting and telling them something they may not want to hear.  Education about fraud faces additional obstacles:  the target may have an illusion of invulnerability, be in a rationalize trap, is experiencing warning fatigue, and may perceive the prevention measures as too difficult to implement.  In addition, the con criminal is morphing and changing the scam, and, most importantly, con grifters’ mimicry is purposefully difficult to detect.

For the researcher, the challenge is developing research paradigms that provide efficient, timely evaluations of fraud prevention messages to accumulate knowledge of what works.  This requires being able to “trap the dependent variable” of victimization, which can be difficult to measure in the wild especially using self-reports. I developed the sting methodology (discussed in response to Myth #8) to address this issue.  Other potentially fruitful approaches include the development of proxy, intervening, and mediational measures.

Another valuable source for consumer education is the science of social influence (which I used to develop an investment seminar that reduced victimization by 50%) and fields such as social marketing, public health, drug and tobacco prevention, risk warnings, and public communication.  The knowledge base of these fields can provide guidance on creating and testing effective social influence campaigns to prevent fraud.  

 Editors Note:  My best judgment is that generalized advice such as “if it sounds too good to be true, it probably is” is worthless, and providing education with no context on how common a scam is little better.  A piece that provides a few details on how a scam works, somewhat like the detail to explain a magic trick, is far more effective.  But we could all benefit from more research on what works – and what does not.

Full report here

Canada’s RCMP announces that complaint data from the Canadian Anti-Fraud Centre will now appear online and be updated quarterly

Full report here

The UK arrests head of a fraud group that called victims in Germany and Poland, impersonated police, and claimed that a relative had been in an accident; partners screamed in pretended pain; asked for money to help; 70 involved in scam; took in €1.4 million

FTC warns that scammers are in business claiming to help people with student loans

Australia forms new joint law enforcement effort to tackle online investment fraud

Full report here

Full report here

New York: Jury convicts Canadian man behind tens of millions of mailings claiming to be from psychic, including Mara Duvall; collected $175 million from elderly victims; defendant was extradited from Spain

FCC fines robocall operation $5 million over political robocalls; first time this has been done; political calls have generally been exempt

New AARP study concludes that those over 60 lose $28.3 billion to fraud every year

• Estimate $8.1 billion lost to strangers; $20.3 billion to caregivers; family members
• But assume that 2/3 of fraud victims report to enforcers, which is unlikely to be the case

India: FBI, Dehli police, and Interpol bust room in India calling impersonating the IRS and Drug Enforcement Agency (DEA); claim victim responsible for child porn, and requiring victims pay a fine; 6 arrested, including Canadian; group took in $20 million from the US; group also had rooms in Uganda

Want to see Taylor Swift? BBB warns that it got 21,000 complaints about ticket fraud last year, a big increase.   Be VERY careful about where you buy tickets

Full Report here

FTC releases spotlight on the top ten text message scams

• Fake bank security texts top the list
• Fraud complaints doubled in 2022

FBI warns scammers are taking photos and videos from the Internet, using technology to make them sexually explicit, and then demanding money unless victims send either money or more explicit videos

FBI IC3 gives updated report on Business Email Compromise (BEC) fraud

• For December 2021 and December 2022 losses increased 17%
• 277,918 incidents reported
• Losses of $50,871,501
• 27% increase in reports of  BEC involving real estate; losses up 72%
• Also seeing increase where funds sent directly to a crypto exchange

Listen to Steve on the OneRep podcast talking fraud

Diplomat charges that North Korea gets 50% of foreign currency from cyber attacks

FTC information about the new Inform Act; online sellers need to provide contact information about online sellers, and ways to report suspicious activity like counterfeit goods

Interpol warns of worldwide increase in scam call centers kidnapping workers after luring them in with fake jobs

Full report here

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Two Nigerian men extradited to the US from the UK plead guilty to inheritance fraud scheme; sent letters to older victims in the US that claimed to be from a bank in Spain; got at least $6 million from over 400

20 percent of all applications to California community colleges are fakes; scammers use ID theft to get financial aid; get federal Pell grants which no longer verify income; Dept of Education says it has 48 investigations of scam gangs doing this  

FBI warns scammers are taking photos and videos, using technology to make them sexually explicit, and then demanding money unless victims send either money or more explicit videos

Spain and Greece lead European effort against counterfeit clothes, shoes, and accessories

• 378 people arrested
• Nearly 2 million items seized
• 278 brands infringed
• €87 million seized

SEC sues Binance and its founder for selling unregistered securities, other violations; separately moves for injunction and to freeze company assets

Eight who tried to quit their job in Mexican call center offering to “buy” timeshares are murdered; run by cartels;  body parts found buried in plastic bags

FCC taking additional steps to require phone companies to identify and  cut off illegal robocalls

Myth #8:  Consumer education can do little to prevent fraud. By Anthony Pratkanis

At the beginning of this century, I devised a methodology for testing the effectiveness of fraud prevention interventions.  In this “sting” approach, the potential target of a fraud is randomly assigned to either an intervention or a control and then, a few days later, receives a fraudulent pitch.  

Doug Shadel and I used this sting methodology to test various interventions (the results published by AARP).  We found the following:  Reverse boiler room call centers (which warn victims) are an effective intervention tool.  A forewarning message (your phone number is on a list used by fraudulent telemarketers plus information about how to respond to fraud) reduced investment fraud victimization by 50%.  A forewarning message with the addition of questions to ask and think about, in this case asking for a charity’s registration number and how much goes to charity, reduced charity fraud victimization by over two-thirds.  In contrast, a message that increased fear and defensiveness (imagine the con as a stranger with a ski mask coming to your door; would you let them in?) actually increased victimization.  

In addition, Shadel and I developed an investment seminar which taught about the nature of investment fraud, at-risk behaviors, how con criminals persuade, and best practices for preventing victimization.  This was also shown to reduce victimization by 50%.

This research provides a guide to developing effective interventions:  (a) do not raise fear and defensiveness, (b) warn about the crime, (c) provide information about fraud schemes and tools to respond to fraud, and (d) encourage a critical and questioning approach to potential fraud pitches.  Please let the Fraud Report know if you are aware of any additional research on the value of consumer education.

All myths collected here

Full Report here

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60 Minutes US looks at grandparent scams and other online scams, especially those aimed at  older victims

BBB updates study on employment/job scams; complaints increased 250% over last year

49 State AG’s sue Avid Telecom, allege it is responsible for billions of illegal robocalls

Consumer Federation of America list of top ten fraud in 2022; complaints to State and local consumer agencies; auto repair tops the list

Myth #7:  One of the best ways to prevent fraud crimes is to teach financial literacy.  By Anthony Pratkanis

Financial literacy refers to fundamental concepts of finance and is typically measured with quizzes about compound interest, asset diversification, bond pricing, etc.  An oft-heard claim is that financial literacy is a protective factor in fraud victimization and thus an important intervention tactic.  There is no scientifically-valid evidence for this claim.

Knowing that bond prices fall as interest rates go up is of little relevance in recognizing and responding to romance fraud, lottery scams, government impostors, grandparent schemes, and the like.

However, what about investment fraud?  In a 2006 study, my colleagues and I found that verified investment fraud victims had significantly higher financial literacy than non-victim investors. This finding was replicated in 2014 by Graham of UK’s FCA and again in 2017 by Kieffer and Mottola of FINRA.  Some of the most sophisticated investors have been fraud victims:  Jay Gould, CalPERS, JPMorgan Chase, Sequoia Capital, Rupert Murdoch, Blackrock, Y Combinator, Andreessen Horowitz, and Wells Fargo former CEO Richard Kovacevich, to name a few. 

Why this finding?  Knowing the value of a diversified portfolio is of little use in recognizing pump and dumps, Ponzi schemes, and entrepreneurial fraud. It is like knowing the rank of poker hands without knowledge of coolers, seconds, mucks, and other forms of cheating.  Active investors will gain financial literacy through their activities and will also be more likely to encounter con grifters who infiltrate the financial system.  And, as always, a con criminal will use the target’s knowledge (and lack of knowledge) to tailor the pitch for best effect.

The good news:  While financial literacy is of little value in fraud prevention, teaching about fraud schemes, as my colleagues and I first showed, effectively reduces victimization.

All myths collected here