Baker Fraud Report

Top Stories

 Appeals court finds that Amazon is strictly liable for defective products from third party sellers; would cover counterfeits; different outcome from other courts; may end up with Supreme Court

Supreme Court rules SEC can get disgorgement in fraud cases; ruling may affect pending issue of that tool for the FTC

• Opinion suggests FTC may be able to use equitable powers of court
• Limits disgorgement to net profits, after deducting expenses
• Disgorgement must go to victims; but FTC always tries that first; left over money goes to Treasury
• Joint and several liability of defendants also considered

Supreme Court finds CFPB unconstitutional; but saves agency by allowing President to replace head at will like other executive branch heads

My new BBB study on crooked moving companies was just released

• Thousands of complaints to BBB
• Crooks give very low estimate; double or triple the price AFTER loading goods; illegal to raise price after loading
• Goods arrive weeks late, often serious damage
• Crooks often born in Israel; located in South Florida
• It is critical to check movers out carefully in advance; go to BBB.org

Virus benefit theft

• Austin, Texas: Man arrested who filed fraudulent claims for small business loans and just invented business names; took in $2 million
• Texas: Man from Zambia indicted for stolen identity refund fraud; fake returns meant he also received virus stimulus payments
• Virginia: Couple arrested at the airport fleeing to Poland over bogus claims for small business loans
• Boston: Man arrested over fraudulent small business loans; sought over $13 million
• GAO issues report on fraud risks in virus benefit programs
• Hawaii loses $16 million to unemployment fraud

Coronavirus

FTC saw huge spike in complaints about online shopping during shut down; half of them about products never delivered

• Face masks, PPE, puppies and many other products
• Number of people that got nothing at all quadrupled since 2015
• Losses $420 million reported since 2015

Phone recording of scam sale of nonexistent PPE

Happy Fourth of July!  We’re all Americans together, and will get through these times.  No major country in history has been so tolerant and offered such freedom and opportunity. For those with an interest in US History I heartily recommend the Oxford History of the United States.  It is eight volumes now, and perhaps my favorite is Battle Cry of Freedom by James MacPherson, perhaps the best one volume history of the Civil War you can find.

Full report here

Top Stories

Australia issues fraud report for 2019

• Top three:  BEC, investments, romance scams
• $634 million lost;   30 % increase from 2018

BBB issues new report on employment scam; younger more likely to be scammed; fake check and reshippers common

Kentucky: 15 defendants have pleaded guilty, most of them Romanians, and scheme selling nonexistent cars on Craigslist and eBay.  

Virus benefit theft

• Identities of 150 Syracuse, New York teachers used to apply for unemployment benefits
• IRS warns crooks are sending people counterfeit stimulus checks; claim an error and you need to send them “overpayment”
• Boston: man arrested for trying to get $13 million in virus relief loans
• Illinois also seeing ID theft being used to get unemployment benefits

Coronavirus

• UK warns public is getting text messages that a virus testing unit will visit their homes; you must stay in a separate room; fear that this is a dodge to burglarize  
• China sentences head of pharmacy chain to 15 years for selling counterfeit 3M face masks there
• New Orleans:  US customs seizes 2000 counterfeit face masks with designer logos
• Victims who bought fake virus vaccine to get refunds after lawsuit by Washington state AG

Ransomware in Canada poses as government virus tracing app

Full report here

Top Stories

FTC now has live data online about virus and stimulus complaints

Robocalls dropped sharply this year says FTC; April 2020 complaints down 68% from April 2019

Report finds lax internet security – at the CIA

Virus benefit theft

• Theft of unemployment benefits by fraudsters may cost $26 billion
• Scam stealing unemployment now also hitting Wyoming
• Organized crime stealing Canadian Emergency Response Benefits
• Feds warned Washington State about dangers of unemployment scams weeks before the State acted
• Wisconsin has blocked $10 million in unemployment benefit fraud, but $1.2 million has been lost
• Chicago: criminal charges against Indian American business owner who got $400,000 in small business loans
• Boston: Two Nigerians arrested for stealing virus unemployment benefits, romance fraud, other scams

Coronavirus FBI’s Internet Crime Complaint Center warns scammers are now seeking extra fees supposedly related to the virus; e.g. shipping, insurance

Full report here

Top Stories

EU launches new Financial and Economic Crime Center; not clear where it will be located or if it will take complaints from vicims

Criminals got 5 billion records in data breaches and hacks in 2019, costing U.S. organizations more than $1.2 trillion

• Healthcare most targeted
• Social Security numbers most common type of data stolen

FCC sues two robocalls companies that made over 1 billion calls about health insurance; seeks largest ever $225 million fine; 7 State AG’s also sue the companies

Phishing attacks seeking log in information for corporate computer systems traced to operation in India; owner wanted by the FBI

Virus benefit theft

• Secret Service has stopped $1 billion in fraud in virus relief efforts
• FBI testimony on efforts to stop virus related fraud; note that IC3 has already had as many fraud complaints so far this year as all of last
• Washington state has lost roughly $600 million to Nigerians in unemployment fraud; about $300 million recovered so far
• West Virginia loses millions to fraud unemployment claims
• Nevada is having major problems with theft in its virus assistance efforts
• Michigan reviewing 15% of unemployment claim for possible fraud

Coronavirus

• Over 10% of people in the UK have been victims of a virus scam
• Canadian woman learns scammers received Canadian Emergency Response benefits using her name
• UK arrests man selling fake virus test kits to UK and US
• FBI statement on efforts to fight virus frauds
• 3M sues Amazon seller over counterfeit N95 masks

Full report here

Virus benefit theft

• Virginia man indicted for fraud in applying for disaster loan; got $190,000
• DOJ makes arrests in New York and Texas over fraudulent paycheck protection program fraud
• Maine Department of Labor puts hold on unemployment cases over concerns scammers engaging in ID theft to steal benefits
• Massachusetts also worried about Nigerians stealing unemployment money
• 2/3 decrease in unemployment applications filed in Washington State suspected to be result of scammers
• Massachusetts reviews 150,000 unemployment applications in effort to avoid fraud
• Pennsylvania has 53,000 to 58,000 bogus claims for virus payments; now sending paper checks instead of direct deposit
• Washington state has recovered $300 million in unemployment benefits stolen by scammers
• Agari study of Nigerian fraud gang Scattered Canary, now believed to be behind theft of massive amount of unemployment benefits
• Unemployment benefit scam also hits Michigan; local people not getting payments
• National Consumers League warns of theft of unemployment benefits, how to check to see if they are and where to complain
• FTC explains what to do if scammers apply for benefits with your name

Coronavirus

• Google warns that scams in India are sending emails that seem to be from the World Health Organization to get victim google login info
• Ransomware hitting Italians claims to be contact tracing app
• Hollywood executive arrested for fraud in getting PPP small business loan that he kept for himself
• US Customs seizes half a million counterfeit masks, testing kits, drugs that were virus-related in March and April
• UK seizes millions of  counterfeit face masks at Heathrow
• Kenya arrests two for theft of virus relief funds
• Scotland:  People getting calls from someone impersonating police and demanding fines for violating lockdown regulations

UK victims receiving a flood of text messages, over 11,000 claiming to be notifying people of virus contact tracing; designed to get people to enter personal information

Read the full report

IRS is mailing at least 4 million prepaid debit cards with stimulus money on them

Coronavirus

• Washington State adopts new verification steps to help stop theft of unemployment benefits by Nigerian scammers; $120 million recovered last week
• Dept of Transportation issues enforcement notice telling airlines they must grant refunds
• FTC sends 50 more warning letters to companies over virus claims
• Wired: More on Nigerian gangs stealing unemployment benefits
• Bank of America discloses that it may have lost data in uploading paycheck protection plan applications
• Seattle:  software engineer charged after fraudulent attempts to get virus small business loan of $1.5 million; criminal complaint here
• UK: scammers are calling families of those killed by virus, claim they need money for funeral director to get credit card info
• Australian hospital workers end up with counterfeit masks
• Canada warns of text messages asking people to click a link to get their Canada relief fund money
• Canada finds 1500 fake websites impersonating government agencies about virus issues

Full report here

Top Stories

Secret Service warns Nigerian gangs are running massive fraud to steal state  unemployment benefits; losses may be hundreds of millions

• Use stolen identities of law enforcement, teachers, others to apply
• Money goes into money mule accounts, often in other states
• Many of the accounts opened by romance fraud victims
• Biggest problems found so far are Washington State, North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming and Florida

ID theft victims can’t get benefits
Nigerian fraud gang Scattered Canary involved
Here is my study on how romance fraud victims are used as mules

Three big US credit report agencies now let people get one free every week for the rest of the year

FTC launches new dashboard that allows searches of international scam transaction;

• Data from e-consumer.gov web site
• Data search page here

Coronavirus

• Do you remember the Hong Kong Flu in 1969 that killed 83,000 in the US when the population was much smaller? I don’t either
• India investigating corruption in purchases of masks
• Australia sees 2000 complaints about stimulus payment fraud; $700,000 in losses
• U.S. healthcare workers are finding many masks are counterfeit
• SEC sues two companies for claims in press releases that their testing products combat the virus
• FTC: nursing homes can NOT take stimulus checks from people on Medicare
• India sees big increase in virus scams
• ACCC in Australia seeing five times more pet scams complaints during shut down
• Group finds 24 mask sellers on eBay claiming to be FDA certified when they are not
• UK arrests man that was sending text messages claiming to be from the UK government and claiming that victims could get tax refunds due to virus; trying to get their bank account info
• FTC and Small business agency send warning letters to two “lead generators” that offer loans during virus
• Scammers are sending emails that look like they are from a cruise line offering a refund; want your credit card number
• FinCEN issues advisory on virus scams; bogus products, undelivered goods etc.

Full report here

Virus Data

People are totally freaked out by the virus, and it is reshaping lives and the future in often unpleasant ways.  We know that there is a risk, but we also want to know just how big that risk is. We all want accurate scientific data, but despite a flood of information out there, it is difficult to find really reliable information that is not colored by politics.  So here is one piece of information people may find useful.

How do we know if we’re making good progress against the virus?  It turn out it is hard to find out.  Several of the public metrics that are almost always used are less than useful. 

New virus tests:  Testing is expanding rapidly, and most of those tested turn out negative.  But of course if you test more people you are going to find more that test positive.  So it is hard to see trends from that data.

Total hospitalizations: This is also a common feature for graphs, but since those hospitalized may be there for a long period, they are a poor way to show trends.

Deaths:  Again, those who die may be hospitalized for a long period.  Thus even if the virus magically disappeared tomorrow there would still be deaths in the days to come.

New daily virus hospitalizations:  In my view, this is a great indicator for trends. It shows those people that have the virus and are really sick, and it can readily be tracked over time.  Unfortunately, many states don’t seem to report this rate, so I was only able to find it for New York City. But that is the hardest hit place in the U.S.

The graph below is from Monday, May 11.  But it clearly shows that new virus hospitalizations have gone down rapidly, suggesting that the worst of the problem may be gone. https://www1.nyc.gov/site/doh/covid/covid-19-data.page

Top Stories

YouTube filmmakers reach out to IRS impersonator in India; interview him; raise money to help him get an honest job; scammer says they know when police are going to raid them

New York AG settles with Zoom over privacy issues during shut down

Coronavirus

• Worldwide problem with antibody tests that come from Chinese and other murky sellers and often don’t work
• US Customs partners with major companies to fight counterfeit virus supplies like PPE
• Nigerian business email compromise gangs now targeting healthcare agencies and organizations with virus-themed phishing emails
• Hackers very active in seeking people’s information to file bogus tax returns or apply for virus relief; even dumpster diving at tax prep companies
• RCMP in Canada seizes 1500 fake virus kits; make arrest
• France seizes 440,000 face masks from smugglers
• Huge spike in pet scams during shut down
• 25% of people in the US are late in paying mortgage or rent
• ACCC in Australia has received over 6000 complaints about travel

Full report here

Thought of the week:  Why is it so hard to get accurate information about Covid19?  At the FTC the philosophy is that given good information people overall make good decisions. They will do OK.

Coronavirus

• Rhode Island: Criminal charges against two that fraudulently applied for $500,000 small business loan
• Arizona: 900 of bottles of totally diluted bleach seized, along with fake virus test kits
• Virus making it harder for scammers to get their money mules to go out and do tasks for them
• Canada has taken down over 1500 virus scam websites
• Canadian PPE suppliers being targeted with orders impersonating other companies; ship equipment to London, where it is forwarded to Nigeria
• Brooklyn: Man arrested for stealing stimulus checks from mail boxes
• Counterfeit PPE coming out of China and Taiwan
• Chicago college student ripped off hundreds by selling toilet paper he never delivered; used ads on Facebook
• Online mask order said it was from the US, but really shipped from China; how scammers manipulate postal tracking numbers
• Ad monitoring group tells FTC that Herbalife is making virus claims
• Postal Inspectors set up web site for virus scams
• Fake Pizza hut websites being set up to steal credit card info

Virus shutdown fuels pet scams (My BBB study on pet scams here)

• Pet scams up 42% during shut down warns National Consumers League
• Petscams.com also reports a big jump in this fraud
• So  does Buzzfeed
• Big spike in pet scams in the UK

Tip of the week: Online shopping, counterfeits and fraud. With so many stores closed people are increasingly shopping online for common goods.  But a large part of those are actually counterfeit.  In fact, over half the goods sold on Amazon are by “third party sellers” that ship directly to victims and not from Amazon; usually from China. Huge numbers of complaints to the FTC and BBB are from people who shopped online, paid with a credit card, and never received anything at all.  So make sure goods you receive are authentic, and call your credit card company and dispute the charge if they are counterfeit or never arrive.  And see my BBB study on counterfeit goods fraud

Prediction:  Bankruptcy! We are almost certainly coming up on a flood of individuals and businesses that can’t pay rent, mortgages, credit card bills, etc.  So expect a large wave of people in financial distress.  And the scammers will be out there to take advantage. Watch for scam debt collectors, mortgage, student loan and credit card debt and other financial relief frauds.

BBB studies: They can all be found here. There are links below to several topic areas, and there are also studies on puppy fraud,  tech support fraud, romance fraud money mules, and rental fraud

full report here