What Are the Top Five Money Traps for Consumers Online?

With the New Year just a few weeks away, MyChargeBack looks back at the top five most dangerous online money traps that added to the madness that was 2020. Fasten your seatbelts. It’ll be quite a ride.

Coronavirus Scams

Without doubt, the most talked about and searched topic of 2020 has to be the novel coronavirus, also known as COVID-19. And like they do with any major event, scammers lie in wait in an attempt to cash in on the opportunity.

Coronavirus scams appear to have proliferated as quickly as the virus itself. According to the U.S. Federal Trade Commission, 269,000 consumer complaints had been lodged regarding COVID-19 and stimulus payments as of December 10, with two-thirds of the complaints relating to fraud or identity theft. The total amount reported stolen as a result of COVID-19 scams topped $201.3 million.

From phishing attacks and fake media ads to scam phone calls and imposter schemes, criminals keep a close eye on updates and changing events in order to keep their nefarious operations going.

For example, now that the U.S. government  has authorized the first COVID-19 vaccines, agencies warn of a torrent of vaccine scams. Fake websites and spam email campaigns are expected to promote quick and easy access to the much-needed shots that are completely phony.

It should be noted of course that since the vaccine rollout is only beginning now, we can expect to see COVID-related scams continuing well into 2021.

Romance Scams

Some say love is blind, and that certainly is the case for the many that have lost money to online romance scams. Millions of people make use of social networking sites and online dating apps in the hopes of finding that special person. These platforms, however, are riddled with opportunists looking to cash in on the emotional vulnerability of others.

Take 2019 for example, where according to the FTC, reported losses to romance scams topped $201 million dollars. In fact, by that year victims of romance scams lost more money than victims of any other scam.

Criminals’ modus operandi includes creating fake profiles on dating applications and websites or contacting their targets directly through social media applications such as Facebook, Instagram and Tinder. Once a connection is established, scammers will take their time to coach their victims and gain their trust before they move for the kill and start with requests for money or worse, threats of extortion.

Bottom line: Never send money to an online contact you’ve never met in person and if you do suspect signs of a scam, cut the communication off immediately and be thankful you got out early.

IRS Scams

IRS scams are run by criminals who contact their victims and claim to represent the IRS or another tax authority. Victims are advised that they owe back taxes that need to be paid immediately with threats of arrest, suspension of licenses or the ceasing of assets.

IRS scams have targeted more than 2.4 million people in the U.S. More than 14,700 victims have claimed losses that totaled a cool $72.8 million in 2020 alone.

According to the Treasury inspector general for tax administration, IRS scams are “the largest, most pervasive impersonation scams in the history of the IRS” and obviously have severely affected many U.S. taxpayers over the last few years.

The IRS urges taxpayers to monitor its website in order to keep up to date with the latest IRS scams and maintain a close eye out for tax related scams and fraud. Taxpayers should also keep in mind that they are legally responsible for what is contained on their tax returns.

Cryptocurrency Scams

According to crypto risk intelligence company CipherTrace, the sudden rise in decentralized finance (DeFi), which is the term applied to transactions on platforms outside the purview of traditional banks, became a profitable target for crypto scammers this year.

Crypto, the digital substitute to traditional, central bank-issued  fiat currency, has evolved to a point where it is  considered a trusted and stable means of payment, supported by blockchain technology.

But there is a downside. Plenty of blockchain and crypto-related technologies are still in the exploratory and speculative stages. That enables scammers to prey on vulnerabilities and weaknesses in the technology, which can provide them with  relatively easy access to cryptocurrency wallets and the crypto stored in them. Don’t forget, of course, fraudulent Initial Coin Offerings (ICOs).  An ICO is the process for introducing new digital coins to the market. Unfortunately, most ICOs have turned out to be scams. These are usually discovered when the operators suddenly close up shop after they have taken in enough funds deposited by would-be investors to acquire the new coin – a tactic commonly known as an exit scam.  

Work-from-Home Scams

The Federal Trade Commission has confirmed that complaints surrounding work-from-home scams and other job-related opportunities have surged this year as a result of the coronavirus pandemic.

The latest stats from the FTC suggests that fake employment agencies, job counseling, international work opportunities and multi-level marketing schemes increased significantly in the second quarter of 2020.

The upward trend in work-from-home scams comes as world economies continue their struggle to correct the economic hardships brought on by the pandemic. In the United States for example, an estimated 26 million Americans are receiving unemployment benefits with an estimated 11 million fewer jobs than there were before the pandemic.

Report a Scam and Recover Your Funds

Scammers are constantly working on new techniques to defraud their victims. Anyone can become a victim at any time. However, if you know what to look out for and remain vigilant, the chances of you falling victim to a scam rapidly decrease. If you are looking to recover your funds, you can contact MyChargeBack. We are an American financial services firm specializing in complex dispute resolution. Working with over 800 banks worldwide, we have assisted clients on every continent recover millions of dollars in assets that they thought they lost for good.