In 2020, the Federal Trade Commission (FTC) received over 2.1 million fraud complaints and reports. This figure gives a grim picture of the scam landscape that Americans dealt with during the heat of the COVID-19 pandemic. During the same period, the unemployment level peaked at an outrageous rate of 14.7% in April 2020.
At the same time, the country was battling with the fatal pangs of the pandemic, which claimed 345,000 American lives, accounting for 91% of the total mortality rate. It's not a surprise that the circumstances surrounding 2020 plunged the nation into a dark time, leading to a rise in the scams that made lives more difficult for citizens.
In the last year, one of the more common scams was the promise of COVID-19 stimulus packages that would bring relief to many and even save lives. Scammers capitalized on this to defraud people and take advantage of their desperation. This article outlines the top 5 scam trends that took the central stage in 2020.
The number one scam trend of 2020 relies on the turmoil created by the COVID-19 pandemic.
Apart from ravaging the world, the US was the pandemic's epicenter for a good part of 2020. As the number of cases increased, the impact was felt heavily in the health sector and the nation's overall economy. This gave rise to the following COVID-19 scams:
Medicare is a government health insurance plan for seniors (65+ elderly). According to the Center for Disease Control (CDC), seniors are more susceptible to COVID-19 hospitalizations. More so, they have the highest mortality rate compared to other age brackets.
In precise figures, senior vulnerabilities can be summarized as follows:
This alarming data increased the dependence of seniors on Medicare. A total of one million seniors enrolled for one Medicare plan or the other in 2020, which accounts for a 9% increase from 2019.
The spike in interest caught the attention of scammers, who prey on the vulnerabilities of seniors to steal their money and personal data. Typically, Medicare scammers call seniors pretending to be Medicare officials. The scammers often come prepared by putting on a convincing demeanor and collecting the information needed to persuade their victims.
Eventually, they offer the victims "coronavirus packages" or stimulus checks but first require them to pay specific fees. The scammers may ask the victims for their bank details, Medicare numbers, or Social Security Numbers in more everyday instances.
Medicare officials cannot and will not make requests for that information over the phone. As such, everyone is advised to ignore these calls at all costs.
Ventilator scams may not out rightly be called a trend because there seems to be only one instance of its occurrence in the US. However, its impact was tremendous and costed the country millions.
The ventilator "scam," as dubbed by New York's Gov. Andrew Cuomo, was a failed delivery that Yaron Oren-Pines pulled against the State of New York in April 2020 during the COVID-19 pandemic. Oren-Pines, who is an engineer, offered to supply the State of New York with 1,450 ventilators at $86 million. Although the figure was three times the actual cost of a ventilator, the New York State government went ahead with the deal and paid $69 million of the $86 million to the engineer.
Worries arose when the supplier allegedly failed to deliver the consignment to the state within the first three days. According to Cuomo, Oren-Pines complicated issues when he raised "delivery complications."
The State of New York eventually called off the contract and began an active process to recover its funds. As of October 2020, the state had recovered $59 million and is working to recover the remaining balance of $10 million.
Another type of COVID-19 scam is the relief payment from various "government agencies." Unlike Medicare scams, this scam targets adults of varying age brackets as well as corporate organizations.
In this case, scammers impersonate legitimate government agencies such as the Internal Revenue Service (IRS), Social Security Administration (SSA), Federal Deposit Insurance Corporation (FDIC), and so on. In IRS scam calls, the scammers manipulate consumers into sending them money or giving away their tax information.
These scammers contact their targets through emails and text messages, announcing that the recipient has been approved for coronavirus relief payments, cash grants, or small business loans.
At times, they may send phishing links to complete the process of claiming the relief packages. When the targets enter their private information through these links, the scammers will have access to the information. Some of these scammers may out rightly request personal details through phone calls or ask their targets to pay specific fees to claim the offers.
Everyone should beware of these gimmicks, as legitimate government agencies will never ask residents for their private information or money.
The year 2020 saw a major trend in frauds facilitated through identity theft. In all, the FTC received 1.4 million reports of identity thefts across the country. Compared to 2019's report, that's an increase of over 100%. Most of this private information was stolen through phishing sites and scams perpetrated over phones.
Out of the 1.4 million reports, 406,375 were from victims whose identities were used to claim various benefits such as unemployment insurance.
In 2019, only 23,213 instances of this were reported. Compared to 2020, the increase is 1,650%. This calls for further vigilance and sensitization from Americans, as the trend might pitch deep into 2021.
A recent survey showed that the number of scam calls that Americans reported in 2020 did not increase significantly. However, the increased impact of those crimes was astonishing.
It's fair to say that the COVID-19 pandemic made Americans more vulnerable in many ways. First Orion, a communications company, shared a mobile phone scam survey revealing that the success rate of many popular scams rose by 270% compared to the previous year. Out of all scam calls that the targets received, 44% were related to auto warranties. The calls that produced the most victims were COVID-19 related.
Out of all the scam reports on eConsumer.gov during the first six months of 2020, 56% were through online shopping. This doesn't come as a surprise as almost all states in the US enforced partial or total lockdown orders to curb the spread of the coronavirus. Many residents resorted to almost exclusively shopping online for both essential and non-essential items.
Sometimes, shoppers order goods but never receive them. In other cases, the fraudulent e-commerce sites served as phishing sites that stole victims' credit and debit card information.
More worrisome yet, reports showed that most people used these sites because they saw ads on reputable social media platforms such as Instagram and Facebook.
Another major trend in 2020 was the surge in Social media scams. Apart from scams, social media generally gained the most patronization by major industries across the globe.
It was the year when video conferencing giant Zoom had its revenue spike by almost 400%. This surge in interest was also seen in other social media platforms. As expected, scams increased commensurately. According to the FTC, people lost over $117 million to social media-related scams within the first half of 2020. 2019 saw $134 million in losses throughout the entire year.
The social media trend doesn't seem to be ending anytime soon, so all users must exercise caution when exploring their timelines.
For many, staying under lockdown for months led to loneliness and boredom. The increased need for companionship fueled online romance scams. Romance scams often begin with a seemingly innocent comment or direct message from an attractive stranger and end with losing money or personal information.
Facebook and Instagram, having billions upon billions of users, remained the major platforms for romance scams. The FTC reported that 94% of all social media scams in 2020 started on these two platforms.
You can employ the following measures to prevent falling victims to scams:
Since there was a rise in social media-related phone scams, it's advisable to use stronger passwords on all social media handles. At the same time, avoid registering on every platform with private details. Many of them could be phishing sites.
If someone sees an offer that's too good to be true, it's most likely not true. Scams always come with bogus offers and opportunities that may not sound realistic. Parties should stay vigilant and take every precaution available. If you're receiving calls from a number you don't recognize, perform an online reverse phone lookup
Residents are advised to report every form of scam and fraud to relevant authorities, including the FTC, the state's Attorney General's Office, and local law enforcement agencies.
Whether the it was successful or not, parties should report scams so that the authorities can help prevent anyone else from falling victim.
2020 was both a year of economic and health crisis. It showed the vulnerabilities in the nation's health sectors and how susceptible residents can be to scams and fraud. Seeing that social media was a significant instrument in facilitating such scams, residents should prioritize their internet and phone security.
Everyone should be on the lookout for every form of fraudulent activity and familiarize themselves with the tools they can use to catch fraudsters and scammers.