Facts about fraud from the FTC – and what it means for your business

The FTC just issued its 2023 Consumer Sentinel Network Data Book jam-packed with facts about the kind of scams consumers have reported to us. Has the reported dollar amount lost to fraud gone up or down this year? And what are the most frequently reported scams? At this point you may ask, “I run a lawful business. Why should it matter to me?” Two reasons. First, scammers have you, your company, and your community in their sights and the Data Book can help you defend against emerging fraud trends. Second, scammers often try to mask their illegal intent by hiding behind legitimate businesses. For companies that work hard to maintain their good reputation, it’s not enough not to be a scammer. You also don’t want to be “scam-adjacent.”

According to the Data Book, people reported losing $10 billion to scams in 2023. That’s $1 billion more than 2022 and the highest ever in losses reported to the FTC, even though the number of fraud reports (2.6 million) was about the same as last year.

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Ranked by number of reports, imposter scams were at the top of the list – and by “top of the list,” we mean the bottom of the barrel – with reported losses of $2.7 billion. The most frequently reported form of this scam is the business imposter – scammers who falsely claim to be affiliated with a well-known company or a financial institution. Consumers reported $752 million lost in 2023 to business imposters. An all-too-common variation on that scheme are government imposters – fraudsters who impersonate local, state, or federal agencies and usually demand immediate payment for some phony tax or fee.

The unenviable silver medalist on the list is the online shopping and negative reviews category with the tarnished bronze going to prizes, sweepstakes, and lotteries. Dishonorable mention goes to investment scams. Consumers reported losing more money – $4.6 billion – to that form of fraud than any other category in 2023. Next on the list: bogus business opportunities and job scams.

You’ll want to read the Data Book for details, but here are some take-aways that businesses can glean from the reports we’ve received.

• Educate your staff about imposter scams. That legit-looking email, phone call, or text that appears to come from a bank fraud department, a tech support helpdesk, a national name like Amazon or Geek Squad, or even a colleague at your company could be from an imposter. Take time at your next staff meeting to alert your employees to imposter scams and encourage them to pump the brakes when they get messages that urge them to send money, provide personal information, click on a link, or download software. We also hope you’ll support the FTC’s ongoing efforts to combat criminals who impersonate real businesses and government offices. And if you get word that a scammer is misusing your company name, report it to the FTC.

• Understand how scammers are using the same marketing methods your company may use. For the first time ever, email is now scammers’ #1 contact method, although phone scams account for the highest per-person fraud loss. Scams starting on social media account for the highest total losses at $1.4 billion – a big increase from 2022. And how did scammers prefer that people pay? Bank transfers and payments accounted for the highest reported losses at $1.86 billion, with cryptocurrency a close second at $1.41 billion. So when you consider how you communicate with potential customers and how you ask them to pay, bear in mind who else is trying to attract their attention and their dollars.
• Who are scammers targeting? It could be you. Legend has it that when Depression Era criminal Willie Sutton was asked why he robbed banks, he responded, “Because that’s where the money is.” When you look at Data Book details about investment schemes, business opportunity fraud, romance scams, and similar forms of illegal conduct, remember that business executives have what scammers are looking for: cash. As sophisticated and skeptical as business people are, know that even in-the-know professionals have lost thousands to an out-of-the-blue approach from an attractive person who claims to be looking for love, a big-money be-your-own-boss business opportunity, or a “can’t miss” crypto offer. These guys are good, which means that business people have to be even better.
• Spread the word throughout your community.  Family members and friends respect your business acumen. That’s why a word of warning from you can help alert them to what scammers are up to. It could come in the form of a family emergency scam, a bogus job offer targeting a college student, or a pernicious “We are calling from the bank fraud department (or a well-known company, a government agency, or even the FTC) and need your help” phone call to an older relative. Share trusted consumer resources with people you care about and encourage them to report fraud to the FTC.