Scams cost U.S. consumers $40B to $50B a year. Here’s how to spot them and stop them.

Scams are happening more than many people realize. Michigan is ranked fourth among all states in fraud complaints, with more than 60,000 annually. According to FBI statistics, scams cost consumers up to $50 billion per year.

Here’s a common example. You get a call from someone in tears who says, “I’ve been in a terrible car wreck and need money. Can you help me out?”

Mary Phelan D’Isa, a lawyer with the Consumer Protection Division of the Michigan Department of Attorney General, says this call could easily be a scam.

“Ask questions – don’t answer them,” D’Isa advises. Don’t be afraid to say you need to verify who’s calling. Then, ask a personal question, such as, “What’s your mom’s first name?” Scammers, who most likely are just dialing random numbers and talking to whomever picks up the phone, won’t know the answer and will hang up.

Email scams are on the rise

The internet has opened new opportunities for financial fraud. Criminals can blanket the country with emails at one time, notes Barbara L. McQuade, U.S. attorney for the Eastern District of Michigan. Telemarketers make about 80 percent of their calls to older consumers. Seniors are likely to have money available after a lifetime of saving, and they’re often polite and trusting.

Tricks of the (fraud) trade

Scammers, even those overseas, can use fake caller ID information from local organizations – including the police department – to appear legitimate. Email scammers sometimes use a fake logo identifying as the IRS, a bank or an organization they find online. Two of the most common financial scams are:

1. IRS audit: An official-sounding caller warns that you owe back taxes or are being investigated for tax fraud. They say you can avoid more charges if you pay the penalty immediately. They may even threaten to arrest you. In one variation, the caller says the IRS has sent you a check you have never cashed and they now need your bank account number to process payment.
2. Lottery: You get a phone call or an email congratulating you for winning a foreign jackpot or a fancy vacation. To receive your payoff, you need to send a fee for registration, taxes or processing.

Scammers usually create a sense of urgency: Pay now or the offer goes away, says Chad Canfield, operations manager for the Consumer Protection Division of the Michigan Department of Attorney General. 

Many scammers ask you to get a prepaid card or use a wire transfer to provide cash immediately, which is very difficult to trace. And, once you start to pay, they begin adding new fake fees or penalties. Worse, some scammers may ask for bank or credit card information, opening you up to identify theft.

Protect yourself

“Never provide private information in response to a phone call or email message that you did not initiate,” McQuade says. “Legitimate entities like banks and the federal government will never ask for your private data over the phone.” 

Never click on an internet link unless you’re sure of the source. Be wary if the message uses clumsy language or bad grammar.

Collect your mail from your mailbox every day. “Criminals troll through neighborhoods at night and steal mail such as bank and credit card statements and other documents that contain personal information,” she says.

If you’ve been scammed

“Don’t be ashamed to admit that you have been victimized,” McQuade says. “Unless you report it, you or someone else may be targeted again.” 

Canfield agrees and encourages being proactive.

“It is far easier to prevent yourself from being a victim than it is to recover from fraud,” he says.

To report a scam in Michigan:

Call the Michigan Attorney General’s office: 8:30 a.m. to 4:30 p.m. Monday through Friday (517) 373-1140 or toll-free (877) 765-8388.  Or file a complaint online at michigan.gov. Search for “file a complaint.” 

If you think your identity has been stolen:

Contact the Federal Trade Commission, which has a step-by-step recovery plan at identitytheft.gov.

Help fight medical fraud

Scamming doesn’t stop at your identity. Medicare loses billions of dollars to fraudulent claims each year when it is billed for services you never receive. You can make a difference by keeping a close eye on your Explanation of Benefits and medical records.

For more information, go to: HAP’s Fight Fraud page, or visit Help fight Medicare fraud.

Sign up for free credit card safety

HAP offers free identity theft protection to its members through a partnership with Assist America. Services include:

1. Credit card and document registration with lost and stolen recovery assistance.
2. Credit and debit card internet surveillance when you register your cards.
3. Identity fraud support to help restore your personal information.

Sign up at today at HAP I.D. Theft.