The number of scams initiated by clever con artists to steal consumers' identities and money increased exponentially with the advent of the computer age. Each year, consumers lose billions of dollars due to fraud. Fraud comes in many forms: from the unscrupulous drive-way sealer who travels from house-to-house collecting deposits and never showing up to complete the job; to the elaborate prize, award and fake check schemes, all of which involve a deceptive pitch to encourage consumers to part with their hard-earned money and often their personally identifying information. Given the economic times, scam perpetrators continue to pursue creative approaches to take advantage of the vulnerabilities of consumers. Since the best defense against scams is knowledge, the New York State Consumer Protection Board (CPB) uses various delivery tools to advance awareness and prevention.
Seniors
Older New Yorkers are particularly vulnerable to scams. Further, for many reasons, including fear and anxiety, personal violation, impact on their family members, embarrassment, and other socially-connected reasons, older consumers are less likely to complain once victimized.
This past year, the CPB worked with the New York State Office for the Aging (SOFA), AARP, the Ecuadorian International Center, the Puerto Rican/Hispanic Institute for the Elderly, the Korean American Senior Citizens Society of Greater New York, Catholic Charities, and others to pinpoint scams perpetrated against seniors and provide advice on how to avoid becoming a victim. The CPB also became an active partner in Westchester County's Senior Crime Busters program, making presentations at various sites in the region.
Further, the CPB joined with SOFA at the State's Senior Citizens' Day and participated in the professional development conference of the Family Development Association of New York State highlighting scam prevention tips. Both events allowed the CPB to network with large numbers of organizations and distribute critical prevention information.
During this year, the Agency developed additional resources to raise awareness within this vulnerable population. By issuing press releases, updating information on its website, sending alerts over Twitter, and transmitting information to service providers throughout the State, the Agency utilized media and Internet-based tools to maximize the number of people with access to information explaining the methodology of how a scam is perpetrated and highlighting the latest trends.
Lottery Scams
As consumers struggle with hard times caused by the economic downturn, they may be greatly tempted to respond to lottery scams. Lottery scammers connect with potential victims via telephone, fax, e-mail, and cell phone (mobile) text message, using persuasive messages such as "you have won the lottery" to lure victims into responding and divulging personal information and/or paying advance fees.
According to the Federal Trade Commission (FTC), scam operators often tell U.S. consumers that they have won a high-stakes foreign lottery. The "winners" are advised that they must pay advance fees, often thousands of dollars, in order to collect. Any funds sent to the scammers are lost, and the winnings are never paid.
Lottery offer complaints were on the FTC's list of Top Complaints for 2009. Further, the U.S. Postal Inspection Service estimates that consumers spend approximately $120 million a year in responding to foreign lottery mailings.
Thus, the CPB and the New York State Lottery teamed up in 2009 to produce audio and video public service announcements (PSAs) in English and Spanish, warning about lottery scams. The PSAs, featuring Lottery personality Yolanda Vega, were issued to raise awareness among consumers of diverse backgrounds, and were distributed to radio and television stations statewide. The PSAs are also running at all the rest stops on the New York State Thruway.
Post-Disaster Scams
Sadly, scams associated with disasters are not uncommon. Scam artists prey on vulnerable disaster victims by offering bogus services and assistance - - for a fee. The scammers especially target non-English-speaking, elderly and other consumers who may let their guard down during a crisis.
In 2009, victims of flooding in Western New York were targeted by con artists who offered assistance - - for a fee - - in applying for aid from the Federal Emergency Management Agency (FEMA). The CPB joined with the State Emergency Management Office and FEMA to inform consumers that there is no fee for filing an application for FEMA assistance, that FEMA does not charge for services, and that consumers should not pay for services they can get for free. Media messages and posters were distributed in the region. The CPB also alerted consumers to be leery of contractors who seek to capitalize on flooding by offering waterproofing or other services to fix things that may not actually be in need of repair.
Additionally, in response to the early spring Noreaster in the Downstate area, the CPB and SEMO warned consumers to be on the lookout for storm chasers who show up after a storm to take advantage of homeowners seeking to clean up and repair damage.
Charities Scams
The CPB advises individuals to be extra vigilant when choosing to donate their hard-earned money to charitable organizations or to a worthy-sounding cause. Legitimate social service organizations, food pantries and other organizations count on the charitable nature of New Yorkers to help fund their services. It would be unfortunate for these causes to suffer as a result of scammers looking to exploit the good nature of others.
This was the case following the earthquakes in Haiti and Chile. The CPB warned consumers to beware of unfamiliar organizations soliciting funds for earthquake victims. Scammers attempted to gain access to credit card numbers and bank accounts in order to commit identity theft. Unscrupulous charities also sought donations, even though only a small percentage of the money- - if any - - was actually used to help earthquake victims. Similar scams occurred after other disasters such as the tsunami in 2004 and Hurricane Katrina in 2005. Awareness of the issue was raised by the CPB through the media and scam prevention information was created in multiple languages -- including English, Spanish, French and Haitian Creole -- and distributed through governmental agencies and community-based organizations.
Loan Modification
With the national and New York foreclosure rates remaining high, many homeowners have turned to loan modification or foreclosure "rescue" companies for help - - only to realize that they've been scammed. These con artists use slick advertising and sales pitches to bilk homeowners out of money and oftentimes their homes. The parties may pressure the homeowner to sign paperwork that they didn't have time to read and understand, claim the process will be relatively quick, advise the homeowner not to contact a lawyer or their lender, or falsely claim to be affiliated with the government.
The Financial Crimes Enforcement Network (FinCen) reported in the third quarter of 2009 that depository institutions submitted more than 15,000 mortgage loan fraud reports, a 7.5% increase over the same period in 2008. New York State ranked third in the number of reports. Further, FinCen reported that more than 3,000 Suspicious Activity Reports involving loan modification/foreclosure rescue scams were filed in 2009 by depository institutions, money services businesses, and firms in the securities and futures industries. The FTC also reported a rise in the number of fraud complaints involving foreclosure rescue services and loan modification consulting.
In early 2010, the CPB joined with NeighborWorks America and other partners to launch the statewide "Loan Modification Scam Alert" campaign. The campaign provides homeowners facing the possibility of foreclosure with vital information to guard against loan modification scams, find trusted help, and report illegal activity to authorities. This initiative was the highlighted feature of the CPB's Consumer Action Day, where hundreds of New York consumers took advantage of information and direct services offered by more than thirty State, federal, and not-for-profit agencies at the Empire State Plaza.