For the fourth year in a row, Internet merchandise scams topped the list of complaints reported to Fraud.org. The way many consumers first come into contact with these scams is via a “too good to be true” ad on a website, social media platform or Internet forum. Popular ways scammers catch consumers’ eyes is with deep discounts on goods like iPhones, sneakers, luxury apparel, video game systems and even pets.
While the top scam didn’t change in 2016, a key measurement of how scams affect consumers did: the cost of falling victim to fraud increased significantly in 2016. In complaints where a loss was reported, the median loss was $600, double what was reported in 2015. The most expensive type of scam for victims continued to be friendship and sweetheart swindles (also known as “romance scams”), with a median loss of $2,000.
Another trend observed in 2016: scammers have been turning away from wire transfer and embracing gift cards as payment method. In 2016, wire transfers and credit and debit cards remained the payment method of choice for scammers, but gift cards increased significantly as a new form of payment.
In 2016, Fraud.org saw a 30% increase in complaints where the payment method included gift cards, including numerous complaints where scammers asked for payment via iTunes gift cards. In such instances, the victim is instructed to load funds onto a gift card and then give the code and PIN number off the back of the card to the scammer, who then quickly deducts funds from the card, leaving the consumer with worthless plastic and little recourse to obtain a refund.
The National Consumers League (NCL), the nation’s pioneering consumer advocacy organization, analyzed more than 7,000 fraud complaints submitted by consumers to Fraud.org in 2016.