Coronavirus Fraud Is Costing Americans Millions
The coronavirus epidemic has created fertile ground for scams.
And it's already costing Americans tens of millions of dollars.
A March memo from the U.S. Department of Justice reads:
As you know. we have seen an unfortunate array of criminal activity related to the ongoing COVID~19 pandemic. Capitalizing on this crisis to reap illicit profits or otherwise preying on Americans is reprehensible and will not be tolerated.
The Dow Jones listed a variety of different frauds being used, including robocalls making fake offers for protective equipment, fake COVID-19-related apps and websites, phishing emails asking for cash, social media scams fraudulently seeking donations, sales of fake testing kits, cures, and immunity pills, among others.
These and other frauds like price gouging have been running rampant throughout the coronavirus crisis. As of April 30, the Federal Trade Commission had logged over 31,800 consumer complaints related to the COVID-19 outbreak, including almost 18,000 fraud complaints.
In total these victims claim to have lost $22 million. And that figure is likely to grow in the coming weeks.
An April article in Business Insider estimates:
If the number of coronavirus-related complaints and monetary losses reported to the FTC continue to grow at the current rate, Americans could face more than $100 million in losses to fraud and scams by July.
There have already been many different attempts to thwart fraud. Back in March, for example, Amazon removed over a half-million suspicious coronavirus-related products from its website and has, to date, suspended over 6,000 seller accounts for price gouging.
Meanwhile on YouTube, Twitter, and Facebook, new policies were enacted banning the spread of false information and content aimed at hawking overpriced face masks and bogus test kits and vaccines.
Despite these measures, the fraudsters found a way. On April 10, the FTC reported victims of coronavirus scams had lost $12 million. As mentioned, the latest FTC data shows victims of coronavirus scams have lost $22 million as of April 30 -- an 80% increase in under three weeks. If that rate of increase is consistent, there certainly could be damages from coronavirus scams nearing $100 million by summer.
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To give that figure a little perspective, the FTC says that of the 3.2 million reports made to the agency last year, the number one fraud in 2019 was imposter scams.
Imposter scams come in many different flavors and varieties. But they all pretty much work the same way: A scammer pretends to be someone you should trust in order to convince you to send them money. One of the most well-known examples of this right now are scammers pretending to be from IRS or other tax agency demanding money or threatening jail time.
These imposter scams are big money. The FTC says Americans reported losing $667 million to imposters, "who often pretended to be calling from the government or a well-known business, a romantic interest, or a family member with an emergency."
So a nationwide total of small coronavirus-related scams adding up to $100 million is very significant. Each year, the FTC puts together a list of "Top Frauds." For the past few years, imposter scams have topped the list. This year, I think we can expect to see coronavirus-related scams make a strong showing on the FTC's list.
The FTC goes into detail about specific coronavirus-related scams and what to do when confronted with them here.
It's unfortunate we have a section of the population willing to prey on the weak at their most vulnerable. But, such is life. It's a truth we must accept -- and must always remain diligent to resist.
Falling for scams doesn't make you stupid. I don't think there's anyone who hasn't been bamboozled at least once in their life by something. But the less you're duped, the better.
So, buyer beware, folks. Coronavirus scams are still commonplace.
Until next time, As an editor at Energy and Capital, Luke's analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing's Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor's page.
Luke Burgess