An underreported crime — battling fraudsters by reporting fraud

Rita Gerona-Adkins recalled precisely how she felt when she got that phone call from the IRS demanding immediate payment for taxes due. “I was afraid,” she freely admitted. But she rallied from her initial shock; resentment rising at the caller’s efforts to intimidate her into issuing an immediate payment. She abruptly hung up mid-call and phoned the IRS directly. She owed nothing and was told by the IRS representative that the agency doesn’t use the phone as its mode of collection.

Gerona-Adkins is a contributing reporter to Asian Fortune, a newspaper covering the culture, politics, and accomplishments of Asian Americans in the Maryland, Virginia and Washington, D.C. region. As a near-victim of consumer fraud, she was sharing her experiences with media colleagues and representatives of local community-based organizations at a briefing organized by New America Media (NAM) in partnership with the Federal Trade Commission. The briefing was hosted by the Office of Consumer Protection of the Washington D.C. Attorney General.

Consumer fraud continues to be an underreported crime, according to Monica Vaca, Acting Associate Director of the Division of Consumer Response in the FTC’s Bureau of Consumer Protection. A victim’s embarrassment or shame of being duped can often inhibit confessions to family members, much less to local, state, and federal agencies. Not in dispute are the enormous costs incurred.

“I can tell you that in 2016, more than three million consumers across the country filed reports with the FTC about consumer issues,” Vaca said. She cited FTC surveys indicating that “fraud is experienced at higher rates by people in the African American community and by people in the Latino communities. At the same time, other studies suggest that these communities underreport fraud.”

Thus, the $774 million Americans reported lost to consumer fraud in 2016 is undoubtedly less than the actual sum, and, given how the data is collected, the exact revenue amount lost by ethnic communities is not known.

Growing problem

Vaca said that D.C. residents reported debt collection as their number one consumer problem, a trend that mirrors the national data. Imposter fraud is the fastest growing scam, particularly frauds perpetrated by someone posing as a government official, from the IRS for example, as in Gerona-Adkins’ case. And, ominously, Vaca said 77 percent of complaints were about fraud that began with a phone call.

A bogus debt collection call is one often for a debt not owed. “They might tell you that you’re going to be fined, you’re going to be arrested or you’re going to go to prison if you don’t pay up and pay up quickly,” Vaca explained. The scammer may allege that the total debt can be settled by immediately paying a discounted sum.

Payments often are demanded in the form of a wire transfer, for example, by Western Union. Vaca said 58 percent of consumers’ money was taken through wire transfer, transactions that are difficult to reverse if and when the fraud is detected and reported.

Lois Greisman, the FTC’s Associate Director, Division of Marketing Services, noted that the fraud has pernicious ripple effects on individuals and their families as the stolen money could have been used for rent, groceries or education. Greisman knows of friends and neighbors who have suffered from scams. “Scammers are sophisticated people; everyone is potentially at risk,” she observed, noting that no one should be embarrassed about reporting scams, regardless of their level of education, sophistication, or self-perceived social status.

Immigrants, however, are prime targets for scammers, especially given current legal uncertainties in today’s political landscape. Rhonda Perkins, an FTC attorney, who works with Greisman, said she is familiar with the case of an immigrant from Panama, a naturalized American citizen. The scam artist attempted extortion by threatening revocation of the victim’s U.S. citizenship unless money for a bogus debt was paid immediately.

Philip Ziperman, Director of the D.C. Attorney General’s Office of Consumer Protection, said that fake ICE warrants threatening searches were appearing in neighborhoods with higher concentrations of immigrant residents. “We think it was probably an extortion scam,” he explained, but, through cooperation with community-based organizations, his office was able to disseminate information to avert what could have been a costly financial debacle.

Ziperman’s office also has stepped up enforcement against slum landlords who seek to drive out their buildings’ residents by withholding repairs and other legally required maintenance services. The landlords’ objective is to empty the buildings, clearing the pathway for conversions or into units that can be rented at higher prices.

Preying on the poor

The D.C. crisis of lack of affordable housing affects low-income and middle-income residents more severely than their more financially secure peers, but financial fraudsters are not discouraged when potential victims have lower earnings.

Heather Hodges, a pro bono counsel at the Neighborhood Legal Services Program, walked attendees through a myriad of structural barriers in low-income communities that provide a rich environment for fraud to flourish. For example, she cited the case of a woman determined to obtain a college degree to improve her long-term chances of obtaining higher paying jobs. Unable to obtain Pell Grants to pay for tuition due to low academic scores — scores in part affected by time away from the classroom tending to family and work — she fell prey to a for-profit college’s pitch to sign-on-the-dotted-line-to-earn-your-Ph.D.

From for-profit college scams, mortgage re-financing and predatory loans to fake charitable donations, business opportunity scams and unsolicited robo-calls, there is a scam waiting for everyone. And while phone scams may originate from strangers, Hodges encouraged media and CBO representatives to caution “seniors who are allowing their family members to set up their online accounts, giving them their passwords; giving them their confidential information — this is a reality in our community.”

The panelists concurred on a key recommendation to anyone who receives that call or solicitation: talk to someone. If not the FTC or your city’s consumer agency, talk to a friend or trusted advisor. “Say out loud what’s happening to you,” Greisman urged.

For fraud complaints, call the Federal Trade Commission: 877-FTC-HELP. A New America Media partner in the FTC briefings, the Better Business Bureau, has initiated an on-line database of scams: BBB.org/ScamTracker.