As concern around COVID-19 has grown, scammers have been quick to take advantage of the uncertainty and limited information surrounding the situation. As a result, they’ve been able to generate a number of coronavirus frauds targeting vulnerable populations around the world.
From January through June 22, 2020, the Federal Trade Commission (FTC) received 54,292 coronavirus fraud reports. The FTC estimates that these financial scams have cost Americans $69 million with a $288 median loss.
With the rise of financial scams during the COVID-19 shutdown, we want to help you learn more about COVID-19 and your finances, and how you can protect your investments. We’ve gathered the top scam formats being used during the pandemic, how to spot a financial scam, and tips to stay safe and maintain your credit.
Coronavirus Fraud Formats
According to the FTC reports, Americans aged 40–59 have lost the most money — accounting for 42 percent of the total loss to coronavirus fraud. There were far fewer reported cases from people over 80, but this population reports the highest median loss of $450.
The most reported cases of coronavirus fraud involve product offers related to vacations and online shopping — making up over 25,000 reported cases. Vacation scams have accrued a loss of $24 million alone. Text messages, internet information services, and health care products round out the top five coronavirus scams but accrue significantly fewer financial losses. The following are other common coronavirus fraud tactics to watch out for.
The announcement that eligible Americans would be receiving $1,200 stimulus checks brought with it a new financial scam opportunity. Con artists pretending to be government officials are requesting fees or personal information to process stimulus checks.
How to avoid: You should only give information to the IRS directly via irs.gov/coronavirus. The IRS will never contact you by phone or request payment for your check.
Price gouging is the act of artificially inflating prices to make a profit in times of crisis. This was common at the beginning of the COVID-19 quarantine — most notably as individuals bought an abundance of paper products, water, and hand sanitizer with the hopes of re-selling.
How to avoid: Stores regularly re-stock necessities, so wait it out and don’t support someone price gouging. Report anyone you suspect of price gouging to your state’s attorney general.
People are looking for ways to help in this time of crisis, and scammers are quick to take advantage of this generosity. If you’ve been solicited to donate to a cause, do your research to ensure that your gift is going to a reputable charity.
How to avoid: It’s safest to make donations with your credit card, and you should never donate with gift cards or wire transfer.
Fake Test Kits
With tests in short supply, scammers saw an opportunity to market fake testing kits online and in person. This is not only a scam to get your personal information, but presents a real health hazard, too.
How to avoid: Contact your doctor for COVID-19 testing and vet pop-up testing sites through your local health department.
Scammers Posing as the CDC and WHO
Scammers have begun phishing for information by posing as the Center for Disease Control and World Health Organization.
How to avoid: Never click a link from a suspicious email, and check coronavirus.gov for the most up-to-date COVID-19 information.
Other Common Scam Formats
Financial scams are nothing new and Coronavirus fraud is the same game scammers have been playing for decades, just in a new package. Learn more about these common scam formats and report any suspicious requests to the FTC.
Thousands of phishing attacks are sent out each day through email and text messages, and they’re getting better every year. Most people think they would never fall for it, but the FBI reported that $57 million was lost to phishing scams in 2019. These messages are designed to look like they’re from a company or person you trust, so it’s important to read them carefully. They’re often pretty generic and claim there’s an urgent mistake with your accounts, encouraging you to send personal information, and use a suspicious email address.
Money Mule Scams
These scams are a way to transfer stolen money from one person to another. The gist is that the scammer sends you a check, you deposit it, then transfer money or send gift cards to someone else. The check often bounces and you’re on the hook for the money. Never send money to collect money and avoid job offers to transfer money.
Pyramid schemes are presented as a way for you to be your own boss and run your own business, but it’s all a scam to you to pay into the company. When you’re recruited to join, you’re asked to pay upfront to cover your business costs, then told to sell the product you bought for a profit. The money always funnels up the pyramid to benefit those at the top, and those at the bottom are encouraged to continue recruiting and generating start-up fees. Ponzi schemes and multi-level marketing operations are both examples of pyramid schemes.
Tips to Stay Safe
These scams are designed to be believable and anyone can fall victim to them. Here are some things you can do to stay safe.
Review Suspicious Emails Carefully
Phishing emails often use logos and similar addresses as people and companies you know. Watch out for tricky characters in email addresses and suspicious language encouraging you to send personal information, payments, or gift cards.
Don’t Click Links From Unknown Senders
If you receive a text or email from someone you don’t know and it seems at all suspicious, don’t click any links in their message. These links bring you to fake sites designed to look familiar to get you to share personal information. The link may also infect your computer with malware that can capture sensitive information.
Don’t Share Sensitive Information Over the Phone
Reputable businesses will not call you and ask for personal information over the phone. If you get a request from your bank saying there’s a problem with your account, it’s best to hang up and visit your bank in person or call them directly. These calls are usually robots and only offer vague details about your account.
Vet Any Charities You’re Interested In
If you’re solicited to donate to a charity and they request cash or gift cards, you can immediately flag that as a scam. If you’re unsure of a charity you want to donate to, there are plenty of resources online to help you give responsibly. Charity Navigator and Charity Watch are great ways to check a charity’s accountability, transparency, and use of funds.
Scammers are good at what they do — they’re always refining their scams and taking advantage of moments when people are most vulnerable. The best way to keep you and your money safe is to learn how to spot financial scams, monitor your accounts, and report suspicious behavior to the Federal Trade Commission.
Sources: FTC COVID-19 Report (5/12) | FTC Scams | FTC Scams 2 | FTC Test Kit | FTC Phishing Emails | FBI | FTC Money Mule | FTC Top Frauds of 2019 | Investopedia | Tip Top Security