Bank customers still on the hook
Consumer Reports (CR) recently reported on its investigative findings showing that sophisticated scams targeting bank customers are becoming more common. And—despite the frequent attention by SCAM GRAM and other pro-consumer sources—CR found that when customers make fraud reimbursement claims, large banks often deny them. CR recounted the story of a consumer who lost $25,000 when a fraudster pretending to be with Wells Fargo contacted her about supposedly suspicious out-of-state activity in her account. In order to help "protect" the bank customer, the fraudster extracted information from her, including the account password, and was able to get into her account. Working behind the scenes, a second scammer, pretending to be the customer, authorized a $25,000 wire transfer directly with the customer's bank. Even though caller ID initially displayed a recognized Wells Fargo number, the customer was wary. She asked the caller to prove who they were, and finally believed they were legitimate when they provided the last four digits of her Social Security number. CR details how, despite the consumer's precautions, she and others like her have been increasingly unable to recover lost funds. CR explains that the Electronic Fund Transfer Act (EFTA) does not require banks to reimburse funds to consumers who share their personal financial information, even if it's under false pretenses. "The law requires banks to make their customers financially whole only in limited circumstances—like when a cybercriminal gains unauthorized access to their accounts after finding or stealing someone’s phone," CR explained. A National Consumer Law Center (NCLC) attorney cited in the story pointed out that, even in a case where the customer is not the one who initiated the wire transfer, banks fight hard to hold the customer liable. CR mentioned a proposed amendment to the EFTA that would, among other things, require banks to share financial liability when a consumer is induced into sending money to scammers, and to slow down the wire transfer process in certain circumstances. The article discusses some of the arguments in favor of and in opposition to amending the EFTA. One new rule that we can all adopt today (with no congressional action required) is to not talk to anyone who calls us from our bank, and to only speak with bank representatives who we ourselves call at numbers we have independently verified.
Unwelcome advances
The Federal Trade Commission (FTC) announced last month that it is taking action against online cash advance app Dave for allegedly using misleading marketing to deceive consumers about the amount of its cash advances, charging consumers undisclosed fees, and charging so-called “tips” without customer consent. According to the FTC, Dave advertises that consumers can "instantly" receive “up to $500” in advance funds, yet $500 advances were offered to only a small percentage of customers. One consumer cited by the FTC said that, instead of $500, they were only able to receive a $25 advance, which they found to be "not very helpful.” In addition, the FTC notes, Dave requires users to pay an “Express Fee” to get the promised "instant access" to the advance, and the fee is not disclosed until after the sign-up process is complete and the user has given Dave access to their bank account. The fee ranges from $3 to $25, and consumers who do not pay the fee have to wait two to three business days to receive their advance. The complaint also alleges that Dave failed to disclose a directly debited $1 monthly "membership fee" that's difficult to cancel when consumers want to close their account. As if the above weren't bad enough, the FTC says that undisclosed charges often include a surprise fee of 15% of the advance, which Dave describes as a “tip.” Consumers are either unaware of the tip fee or unaware that there is a way to avoid it, says the FTC. In addition, consumers are led to believe that, for every percentage point of tip they give, Dave will donate a meal to a needy child. But, according to the FTC complaint, Dave donates just 10¢ for each "tip" percentage point and keeps the rest. And, to round out the list of allegations, the FTC says that Dave itself describes the consumers it targets as “financially vulnerable” or “financially coping,” including those whose spending exceeds their income, who have minimal savings, and who overdraft their bank accounts frequently. Anyone surprised?
Feds at your service
Fab Five. Five federal financial regulatory agencies (Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency), along with the Financial Crimes Enforcement Network (FinCEN) and state financial regulators, issued an interagency statement in early December to provide the banks, credit unions and other institutions they supervise examples of practices that may help combat elder financial exploitation. The stated goal—to raise awareness among institutions and provide strategies for combating exploitation—is more than timely, as SCAM GRAM readers know. Too often we feature stories that leave us wondering why a financial institution can't have more controls in place to protect customers. The statement cited a FinCEN financial trend analysis showing that, over a one-year period ending in June 2023, about $27 billion in reported suspicious activity was linked to elder financial exploitation. Although the statement does not establish new compliance standards or impose new regulatory requirements, it presents several seemingly commonsense steps that banks, credit unions, and other financial services providers can take to fight exploitation and support customers who experience it, including: training employees to recognize and respond to elder financial exploitation; using transaction holds and disbursement delays; establishing a "trusted contact" designation process for account holders; filing timely suspicious activity reports with FinCEN; reporting suspected exploitation to law enforcement, Adult Protective Services, and other appropriate entities; engaging with elder fraud prevention and response networks; and increasing awareness through consumer outreach. Though, unfortunately, these strategies aren't currently being handed down as requirements, we certainly think they need to be at the top of any institution's 2025 New Year's resolutions list. And, if an accountability partner would help them to adopt the recommendations, we'd be glad to oblige.
Keeping it real. Just in time for the holidays, U.S. Customs and Border Protection (CBP) and Homeland Security Investigations (HSI) officials are advising the public to avoid buying possibly copycat products or those of uncertain origin this season because they may pose consumer safety risks or undercut legitimate trademark holders. “As gift buying starts to ramp up this holiday season, we would like to advise the public to avoid buying counterfeit goods or goods of unknown or dubious origin either online, from brick and mortar stores, flea markets or elsewhere,” said the Laredo Port of Entry’s port director, Albert Flores. The agencies report that, nationwide, CBP and HSI seized 20,812 shipments containing goods that violated intellectual property rights in fiscal year 2022, which equates to nearly 25 million counterfeit items. The total estimated manufacturer’s suggested retail price of the seized goods, had they been genuine, was over $2.98 billion. And the musicians on your holiday gift list will be glad for this piece of news: Just before Thanksgiving, CBP and HSI agents in the Los Angeles area, in conjunction with local authorities, announced the seizure of more than 3,000 counterfeit Gibson guitars which, if genuine, would be worth $18.74 million. Among the consumer protection tips offered by CBP and HSI are to purchase goods directly from the trademark holder or from authorized retailers; when shopping online, read seller reviews and check for a working U.S. phone number and address; and review CBP’s Awareness of Counterfeits in E-Commerce guide. You may now commence shopping.
Tips
Holiday treat-sized tips. Great for consumers across the country, the new "Don't Click December" series of PSAs about common online fraud schemes was released jointly by the U.S. Attorney for the District of Idaho, the FBI, and several local police and sheriffs' departments and prosecuting attorneys' offices. The campaign advises the public to exercise skepticism and caution when they receive unsolicited online, email, pop-up, or text communications from unknown or unverified sources. If there is any doubt about a link, message or attachment, the law enforcement offices caution, “Don’t Click It.” As part of the campaign, a public service announcement will be released each week in December leading up to Christmas. The PSA videos can be viewed here. At press time, the two PSAs posted so far focused on the ways in which consumers can be targeted by scammers and on QR code scams. The two other planned PSAs will warn about cryptocurrency investment fraud and tech support scams. The campaign partners' press announcement reminded us that "we all must work to eliminate the stigma individuals may experience if they are victimized," and encouraged consumers to file complaints about cybercrimes with the Internet Crime Complaint Center.
Scams for all ages. California's Department of Financial Protection and Innovation (DFPI) offered its "Scams and frauds that target young adults" webinar in early December. Webinar speaker Faye Chen Barnouw, assistant director for the Federal Trade Commission’s Western Region Los Angeles office, discussed the top frauds reported to the FTC and said that younger people reported losing money to fraud more often than older people, though the amount of loss was higher for older consumers. One interesting scam discussed by Barnouw showed up in her own email inbox. It was a phony electronic party invitation, which, if clicked, redirects to a page that asks the recipient to select their email provider and to log in to view the invitation. Barnouw explained that, if you think about it for a moment, you realize you shouldn't need to log in to your email account, since you're already in it. The scammers want consumers’ usernames and passwords so they can get into their email accounts. The second webinar speaker, Sallie Kim, supervisory counsel with the San Francisco regional office of the U.S. Securities and Exchange Commission (SEC), included a discussion of consumer fears that investment scammers prey upon. These include the fear of running out of money, the fear of missing out on the "next big thing" investment, and the fear of looking unintelligent, which prevents consumers from asking questions they should be asking. Of key interest to many young adults might be Kim's discussion of meme stocks and celebrity and influencer endorsements. (A meme stock, as Investopedia explains, refers to the shares of a company that has gained viral popularity due to heightened social sentiment. Think: Gamestop.) Kim emphasized that celebrities and "finfluencers" don't know our personal financial situation, may be getting paid for their posts, and may be looking for clicks and followers so they can earn more money, among other problems. Check out the video here.
Turbulence-free travel. If you're traveling this holiday season, you won't want to miss Michigan Attorney General Dana Nessel's recently reissued Travel Tips alert. The AG wants to help consumers avoid falling victim to common travel scams. “Traveling should be a time of joy and relaxation, not stress and scams,” said Nessel. “Remaining informed and cautious can help you protect your trip and your wallet." Among the travel scams mentioned in the alert are: online hotel booking scams in which third-party sites may charge hidden fees, fail to honor special requests, or even fail to make a reservation altogether; the “Pizza Flyer” scam, in which fraudulent flyers are slipped under hotel room doors to entice guests to order delivery—and provide their credit card information as payment; calls to hotel guests claiming to be from the front desk and requesting credit card information due to a “computer glitch”; and bait-and-switch tactics in which offers with unrealistically low prices result in additional charges or pressure to buy more expensive services. The AG office offers tips for avoiding each of these scams. Check them out here. Your loved ones will be glad when money not lost to scammers can be used to buy more gifts and souvenirs for them.
Check this out. A recent story by ABC7 News in Chicago serves as a good reminder that checks in the wrong hands can be altered and cashed for larger amounts than originally written. In the story, a small business owner wrote checks to three vendors and mailed them directly from the post office. The original check amounts were $375, $25, and $300. The checks were stolen and the amounts altered to $9,375, $9,825 and $9,300—that's nine thousand dollars more per check! The bank where the fraudulent checks were successfully deposited via mobile app told the small business owner, back in September, that the scammers' accounts were already closed "with no funds remaining to return." After ABC7 intervened, the consumer received a message from the same bank telling her that a check had been ordered "to satisfy" her claim, though it's unclear if she is still waiting for the refund. ABC7 also contacted the American Bankers Association (ABA) to inquire about what the industry was doing to enhance security on mobile deposits. In addition to discussing banks' anti-fraud measures, the ABA told ABC7 about their recently launched national #PracticeSafeChecks campaign to raise awareness about check fraud and to provide tips and information to help consumers protect themselves. Learn about the risks and check out the ABA campaign's tips here. The campaign site is also available in Spanish here. More info and videos from the United States Postal Inspection Service can be found here (including a link to mail-related holiday scams).
On the twelfth day...more scams. To help ensure you're the recipient of more gifts than scams this holiday season, you'll want to review and share the Better Business Bureau's "The naughty list: BBB's 12 scams of the holidays." The organization reassures us that we can avoid most of the scams on the list by taking a few simple precautions, including exercising caution with social media ads that promote discounted items, holiday events, job opportunities, and donation requests, as well as direct messages from strangers. One creative scam you'll want to refamiliarize yourself with is the "social media gift exchange." BBB explains that this illegal pyramid scheme makes a return each holiday season and that an older version was referred to as "Secret Sister." Newer versions, says the BBB, revolve around exchanging bottles of wine or bourbon, or purchasing $10 gifts online, or submitting your email address to a list where participants get to pick a name and send money to strangers to "pay it forward." Another twist, the "Secret Santa Dog," involves buying a $10 gift for your "secret dog." BBB warns that in these schemes, participants unwittingly share personal information about themselves, their family members and their friends, and are tricked into buying and shipping gifts or money to unknown individuals. BBB's commonsense advice is to stick to buying gifts from trustworthy businesses, and to visit BBB.org before you buy. There are 11 more scams to read about. Find them here.
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