What is Consumer Fraud and How is Your Company Vulnerable?
Fraud comes in many forms. There are schemes and scams of all sorts. Surely you’ve noticed consumer fraud is in the news a lot lately. Both the public and the business sector are more vulnerable than ever.
Ken Collis, Founder and CEO of TLK Fusion Marketing of Los Angeles, CA says responsible business owners will save themselves a lot of trouble, and possibly a lot of money, by being aware of consumer fraud. “Knowing how to recognize it before you become a victim is wise business practice.”
TLK Fusion Marketing represents companies all over the country and they say it doesn’t matter what kind of business you are in when it comes to being ensnared in a fraudulent scam.
Here are a few examples of schemes and scams in the category of consumer fraud:
Telemarketing fraud is persuasive and has sadly become a regular occurrence in today’s world. The FTC (Federal Trade Commission) calls it one of the most persuasive deceptions. What makes it so scary is that victims often provide their private information over the phone to someone they don’t know. They give their trust to either a swift-talking scammer or they do so out of fear of some sort of retribution.
The saddest part of this is that people are shamed into keeping silent about their experiences and are often embarrassment prevents them from reporting being victimized.
Older people are the most highly targeted group by telemarketers—both legitimate and bogus, according to TLK Fusion Marketing. That’s very sad that these people take advantage of the most vulnerable among us.
“Older people make up about 80% of victims affected by telephone fraud,” says Ken Collis. “They are often more trusting, too polite to hang up on the scammer, and usually they have discretionary funds.”
Ah, the age-old Ponzi Scheme. It looks great on the surface, but it can and has destroyed many lives.
“Some Ponzi Schemes bait people with double-or-more of their money back following an investment,” Ken Collis says. “They never see it and they lose their original investment as well. Remember this: if it looks or sounds to good to be true, it probably is.”
A Ponzi Scheme is an investing scam that promises high rates of return with little risk over a short period of time. Oftentimes, scammers build trust by accepting a lesser amount first and turning it around quickly to build trust.
The investor, who you can imagine is thrilled, either lets the scammer keep the money for another go or they invest even more money on the second run. They can lose hundreds of thousands of dollars.
Phishing is becoming more widespread. Where it used to be an email scam, it is now being perpetrated by robocalls, recordings urging people to “press one” to speak to someone who can help protect them from the consequences of some form of compromised information.
This fraudulent attempt to obtain sensitive information such as usernames, passwords, and credit card details, is often done with malicious intent. The scammers get this information by disguising themselves as a trustworthy entity. Recently scammers have been reaching out to customers saying they are from companies such as Microsoft and Apple.
When the victim hears that their information might be in the hands of a criminal, they immediately trust the person saying they will help them and give them access to computers and other electronic accounts.
Warns Ken Collis, “Companies can be victims of a form of email phishing called spear phishing. This involves sending targeted disguised emails containing malicious links.”
Spear Phishing uses techniques that will ensure that the attacks are successful. For example, an attacker might develop their target list, and then check social media pages like Facebook for interests and other available information. They gather detailed intelligence that they can use in a targeted email. You may not automatically respond to an email from your tax preparer, but would an email from a pharmaceutical company about recently discovered side effects of a prescription drug you are taking get your attention? How about an email about your son’s financial aid at college? These targeted emails are usually highly effective.
Understanding how and where your company might be vulnerable is the first step. The second is using that information to take steps to protect against those vulnerabilities.
ID theft is also a form of consumer fraud that can affect both the public and business community. Whether it’s a system breach or filing bogus tax returns and then stealing the large refund checks, consumer fraud is on the rise. It can impact your business or organization in many ways, and not all of them are financial.
TLK Fusion Marketing says here’s what you can do:
• Be aware of the types of scams out there and don’t give information over the phone without verifying its legitimacy.
• Don’t give anyone access to your computer. Don’t give passwords or user names to anyone, even if they tell you the matter is urgent and they need the information to help you.
• Guard your social security number. Don’t give it to anyone.
The Department of Justice and other entities are working hard to break up scamming rings, but it’s still your personal responsibility to do what you can to protect yourself.