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BBB top 10 scams of 2015: Tax scam is No. 1

Submitted Editorial

Tue, Dec 29th 2015 05:15 pm

IRS scam in U.S., CRA scam in Canada account for nearly a quarter of all reports by consumers to new BBB Scam Tracker

When Better Business Bureau launched Scam Tracker earlier this year, tax scams were projected to be high on the list. What was surprising was how high: More than the next three categories put together.

In the first 10,000 scam reports processed by BBB, a whopping 24 percent were about imposters pretending to be either the Internal Revenue Service (2,363 reports) or the Canadian Revenue Agency (50 reports).

The rest of the top 10 were all some form of imposter scam: debt collection scam, sweepstakes scam, tech support scam, government grant scam, etc. About 85 percent of those reporting scams to BBB recognized them as frauds before any money was stolen. However, the top ten scams still account for more than $1 million lost from those who filed with BBB.

National statistics reveal billions more lost annually to scams of all types. In a survey by Truecaller/Harris, it was reported approximately 17.6 million Americans were victims of phone scams alone last year, losing $8.6 billion with an average loss of $488.80.

"BBB's Scam Tracker not only reveals current scam activity, it serves to educate the public about these constant threats," said Warren Clark, president of Better Business Bureau of Upstate New York. "Scammers come directly to you. Your best bet to avoid being scammed is to stop engaging with the scammers. Hang up the phone, delete the email or shut the door.

"We know people want to report scammers pretending to be government agents, lawyers, debt collectors or police officers. Scam Tracker gives them the opportunity and it shows them that they are not alone. BBB will continue to investigate and work with authorities to expose scams and other threats."

How the scams work

1. Tax scam. You receive a phone call from someone who claims to be with the IRS (U.S.) or CRA (Canada). They claim you owe money in back taxes and will be arrested or face legal consequences if you do not pay (usually by wire or prepaid debit card). The caller ID is spoofed to appear to be a government agency or the police.

2. Debt collection scam. You receive a phone call from someone claiming you have an unpaid debt. You are threatened with garnishments, lawsuits - even jail time - if you don't pay right now. The scammer will often use caller ID spoofing and pretend to be a government agency or law enforcement member in order to further invoke fear.

3. Sweepstakes/prizes/gifts scam. You receive a call, letter or email claiming you've won a prize in a sweepstakes. In order to receive the prize, you are instructed to send a fee to cover expenses associated with delivery, processing or insurance. The prize is not real; you should never have to pay money to claim a prize you have won.

4. Tech support scam. You are contacted by "technicians" claiming to have detected a virus or security threat on your computer. For a fee, they can login and correct the problem remotely. These callers are actually hackers trying to steal money or sensitive computer passwords and/or damage computers with malicious software.

5. Government grants scam. You receive a phone call, email or letter informing you that you've qualified for a government grant. In order to receive the grant, however, you are instructed to send money as a processing or delivery fee, usually by wire transfer or prepaid debit card.

6. Advance fee loan scam. While searching for loan information, you see an enticing ad and click through to the website. You fill out an application and soon receive an email or phone call advising that you are approved for the loan, but you must first send a processing fee, security deposit or insurance. You pay the "fee," but never see the loan.

7. Credit cards scam. The scammer pretends to be from your bank or credit card issuer, and claims you are now eligible for a lower interest rate, or need to verify a recent transaction. The consumer provides the scammer with a credit card number and security code to "verify" an identity.

8. Work from home scam. While looking for a job online, you answer an ad for making big bucks while working from home. The job may be stuffing envelopes, posting advertisements or shipping packages. You could have your identity stolen when you fill out the employment forms, or even end up handling stolen merchandise.

9. Fake check/money order scam. This can happen any time someone is paying you for goods or services (even when you are selling something online). You receive a check in the mail that is larger than the amount owed, and you are asked to deposit the check and wire the difference. The check is a fake and, when it bounces, you're out the money.

10. Lottery scam. You receive a call, letter or email advising you have won a large amount of money in a foreign lottery, but you have to pay upfront for taxes and fees. Such lotteries are illegal. Sometimes you may be sent a check as partial payment, but the check will be counterfeit.

Why scams work

There is a science to scams, and it may surprise you to know that scammers use many of the same techniques as legitimate sales professionals. The difference, of course, is that their "product" is illegal and could cost you a fortune. Here are the major techniques they use to draw you in:

•Establish a connection. The scammer builds rapport and a relationship with you. This is usually used face-to-face, as in home improvement scams and many investment scams, but also online romance scams.

•Establish source credibility. Scammers use several techniques to make themselves appear legitimate, such as fake websites, social media posts or hacked emails that come from a friend's account. Most email phishing scams spoof real companies, and many scammers pretend to be a trusted business or government agency in order to add credibility.

•They play on emotions. Scammers rely on emotion to get you to make a quick decision before you have time to think about it. An emergency situation or a limited time offer is usually their methodology. They count on emotional rather than rational decision-making.

What you can do:

  • Don't be pressured into making fast decisions.
  • Take time to research the organization. Check bbb.org, search online, etc.
  • Never provide your personal information (address, date of birth, banking information, ID numbers) to people you do not know.
  • Don't click on links from unsolicited email or text messages.
  • If you are unsure about a call or email that claims to be from your bank, utility company, etc., call the business directly using the number on your bill or credit card.
  • Never send money by wire transfer or prepaid debit card to someone you don't know or haven't met in person.
  • Never send money for an emergency situation unless you can verify the emergency.

For more information:

  • For scam information from BBB Scam Stopper: (bbb.org/scam).
  • Report scams (whether or not you've lost money) to BBB Scam Tracker.
  • For information on investment scams, go to BBB Smart Investing.
  • To search for a business in the U.S. or Canada, or to find your local BBB, go to BBB.org.
  • For information on charities, go to Give.org (BBB Wise Giving Alliance).
  • For information on U.S. government services, go to: USA.gov.
  • For information you can trust, follow BBB on Twitter and Facebook.

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