The War Against Scammers
If you believe all the headlines, you probably think scammers are running unchecked in America given all the data breaches, information sales on the Dark Web and millions of dollars reported lost annually. Yet, it's not all bad news. A group of unsung investigators has knocked off dozens of fraud rings in the last 12 months, surprising many victims with an unexpected refund check.
The Federal Trade Commission (FTC) is the heavyweight in the scam-busting biz—refunding over $480 million in 2020—but state officials are also hungry for a fight.
Refund checks announced August 2, 2021, resulted from a collaboration between FTC and State of Florida. The result was full refunds to victims averaging $1,000 per claim. The states of Illinois, West Virginia and Ohio also collaborated with the feds to shutter scam operations and generate refunds. In a recent Uber data breach case, 22 Attorneys General banded together to wrangle a settlement for victims. These agencies want to hear about all you scam experiences even if they can't guarantee to get your money back.
How Refunds Work
In April 2021, The FTC distributed checks totaling over $11 million to more than 11,000 people who'd been scammed E.M. Systems & Services. This company falsely promised consumers in debt help reducing interest rates to save individuals thousands of dollars.
Settlement with First Data Merchant Services—the payment processor another scammer used to secure funds—created a $40.2 million refund pot amidst charges that First Data repeatedly turned a blind eye to warnings that its client scammed the public.
Another 10,000 checks totaling over $4 million were mailed to clients of Stark Law, a company that the FTC says collected payments for fake debts by threatening to sue or arrest people who didn't pay. And in a recent FTC settlement with ABCmouse, over $9.7 million was returned to more than 200,000 clients. According to the FTC, ABCmouse never clearly stated to customers that their memberships would automatically renew. Further, the company made it difficult to cancel the service.
Who's Scamming You?
Full refunds are not generally the norm, but even partial reimbursements are a welcome gift. In the final five months of 2020, legal actions created large refund pots for consumers, including:
- A $37.5 million fund from a California-based adult Web site operation charged with operating an illegal billing scam
- $1.5 million in refunds tied to an auto loan scheme
- $250,000 mortgage remodification scam refunds (third round of checks)
- $6.5 million in Fashion Novo paybacks due to delayed shipping and no cancellation option. "The company also illegally used gift cards to compensate consumers for unshipped merchandise instead of providing refunds. Gift cards are not considered refunds under (our) Mail Order Rule," FTC's announcement stated.
The wins continued in 2021:
- Vivint Home Security $5 million
- $273,500 in student loan scam refunds
- $3.2 million from J. K. Publications
- $60 million from a pharma company using scare tactics to discourage generic alternatives.
- $172 million rent-to-own overcharges via Progressive Leasing, whose clients include: Big Lots, Inc., Mattress Firm, Cricket Wireless, Conn's Corporate, Kay Jewelers, Art Van Furniture, Best Buy, Zales Jewelers
- $30 million from lead generator company for false promises
- $538K to student loan scam victims and homeowners charged upfront loan fees
- $2.3 million in fake credit card interest relief schemes
- $9.6 million in a T-Mobile second round of checks for mobile cramming
- $240K cryptocurrency scams—second round of checks
- $1.5 million for worthless marketing to would-be entrepreneurs
- $350K to reimburse consumers for deceptively marketed low-light health pain relief devices
Settlements of Note
Victories against scammers can be large or small. In June 2021, the FTC reached a massive settlement with Career Education Corporation (CEC) settlement that delivered $3,700 back to each victim—a new record. In 2020. A government agreement with Western Union created that year's largest refund pool.
"(It) was a multi-agency settlement with Western Union. As a result, approximately 142,000 consumers received 100 percent of their money back, totaling approximately $300 million. Refunds went to people who sent money via Western Union in response to romance scams, grandparent scams, advanced-fee loan scams, lottery scams, and other internet scams, and who filed complaints about having been so defrauded," the FTC stated.
Not All News Is Good
In July 2021, the FTC withdrew a complaint against AbbVie Pharma that would have created a $473 million pool for legitimate fraud complaints.
FTC Commissioners recently testified before Congress about the agency's challenges after a recent Supreme Court's ruling stated the FTC had no authority to seek funds for monetary relief. FTC has used Section 13(b) of the FTC Act to do so. Cases filed in the wake of that decision seek to dismiss several major claims which would have generated more refunds.
"The Commission relied on its 13(b) authority to return billions of dollars to defrauded Americans and to ensure that lawbreaking companies could not pocket their ill-gotten gains. For example, pending cases today involve $2 billion in potential relief to victims, which is not available after (that ruling)," the Commissioners stressed.
"If someone contacts you claiming that they're from the FTC and wants you to spend money in order to get a refund, it's a scam. Report that to us at ReportFraud.ftc.gov," the FTC warns in every refund announcement.
Still, these scam busters need your help. First, file a complaint at ftc.gov or with your local Attorney General if hit by a scam. Then, share the truth about refunds and a link to this article with friends and relatives—especially most vulnerable individuals like students and elders. Third, check a list of fraud refunds issued in the past year with friends.
Given the sheer volume of checks mailed out, agencies can use four different third-party check sending firms. Therefore, the FTC also provides advice on determining whether the refund check you receive is legit.
A recent University of Michigan study on the number of consumers who knew their data had been compromised showed an alarming percentage of individuals with compromised data were unaware they'd experienced a data breach. In addition, many never receive any sort of breach notice. IDShield monitors data like your bank account number and other key financial details to promptly alert you to any breach that includes your personally identifiable information.
IDShield is a product of Pre-Paid Legal Services, Inc. d/b/a LegalShield (“LegalShield”). LegalShield provides access to identity theft protection and restoration services. IDShield plans are available at individual or family rates. A family plan covers the named member, named member’s spouse or domestic partner and up to 10 dependent children under the age of 18. Certain benefits are only available with a 3Bureau identity theft plan and are not offered with a 1Bureau identity theft plan. For complete terms, coverage, and conditions, please see an identity theft plan. All Licensed Private Investigators are licensed in the state of Oklahoma. An Identity Fraud Protection Plan (“Plan”) is issued through a nationally recognized carrier. LegalShield/IDShield is not an insurance carrier. This covers certain identity fraud expenses and legal costs as a result of a covered identity fraud event. See a Plan for complete terms, coverage, conditions, limitations, and family members who are eligible under the Plan.