By Linda Nwoke
Have you or someone you know ever been scammed? In 2020, consumers received over $480 million refunds through the Federal Trade Commission (FTC) effort. One of their missions is to investigate and ensure the reimbursement of money to defrauded or consumers turned victims of illegal business practices.
Scams abound across the United States and beyond, occurring in various forms – easy to make money, threatening phone calls, convincing emails, mind-blowing financial increase, and miracle cures.
Some scams frequently occur from the financial, colleges, government, and health industries on issues like car-buying, student debt relief, for-profit colleges, government impersonators-IRS, prepaid cards, and other money-making opportunities.
Such fraudulent activities occur within the community, across the country, and even continents. It emanates from individuals, reputable impostor companies, and even organized crime rings. Many of these target people of color with varying levels of income and immigration status.
Sources of Data
In a press briefing organized by the Ethnic Media Services in collaboration with the Federal Trade Commission, extract findings from the five-year report were shared by representatives of the agency.
The report is a product of data gathered from various reported fraud cases at reportfraud.ftc.gov, across multiple industries and over the years. Monica Vaca, the Acting Deputy Director of the consumer response division and operations in the FTC’s Bureau of Consumer Protection, was in attendance to share the findings. She explained that since 2016, they have handled more than 25 actions and 100 cases. They identified activities that either specifically targeted or disproportionately impacted communities of color. Also in the meeting was the second FTC representative, Attorney Rosario Mendez, who works in the Consumer and Business Education Unit. She presented and explained that the report used aggregates of the complaints from other law enforcement agencies, attorneys general offices, and the Better Business Bureau. All these sources are vital to the process of data gathering, she explained.
“Those reports are so critical and important to us because they give us a window into the marketplaces that different people are experiencing,” said Monica Vaca.
Ms. Mendez said that an FTC economist combined and analyzed the 2020 reports and the census demographic data “to help us get a sense of who was complaining to us, from what communities, and what they were complaining about. “The agency also examined census data using zip codes to match reported cases and communities because the complaints submitted to the agency do not gather information on race or ethnicity.
By examining census data, they were able to identify issues occurring in specific neighborhoods like primarily Black, Latino, or white populations.
However, data on Asian and Native American populations were excluded from the analysis because of inadequate data from neighborhoods with them as the majority, although they have some information about the community.
Examples of Investigated Cases
While the agency has pursued several cases, some have been quite outstanding over the past years. In 2019, the FTC began investigating Amazon on reports of withheld tips from Flex drivers between 2016-2019. These individuals make deliveries for Prime Now and Amazon Fresh using their vehicles.
FTC filed a lawsuit after numerous complaints that alleged Amazon withheld the agreed 100% of tips on top of $18-25 per hour agreed with drivers. “Most times, customers thought they were tipping their drivers, not Amazon,” Vaca said. “But the drivers were left shortchanged.” The agency made a case that Amazon used those tips to supplement base pay, despite complaints by several drivers.
Amazon ignored the drivers’ complaints and continued the practice before the investigation. Amazon and the FTC eventually reached a $61.7 million settlement. The FTC sent out refunds to the drivers — enough to pay back in full.
In 2018, FTC filed a case against the Tate’s Auto Group, alleging that the group ran false advertising through print and radio ads in Navajo media. Four of their car dealerships falsified income and down payment information on vehicle financing applications. The case resulted in a $450,000 settlement in July. They also shared another car-financing case involving FTC and Bronx Honda. The organization’s general manager allegedly told salespeople to “charge higher financing markups and fees” to Black and Latino buyers.
According to Vaca, the New York City car dealership changed sales prices and double-charged customers without informing them. They “changed the car sales prices on paperwork in the middle of a sale without informing the consumer, and also double-charged people on taxes and fees without their knowledge,” she said. FTC and Bronx Honda settled for over $1.5 million settlement last year. The FTC is sending an average of $370 each as refunds to approximately 4,000 affected people.
Types of Fraud in Communities of Color
The FTC had issued a report on how different consumer issues affect other populations. The top issues reported are credit bureaus, impersonator scams, banks and lenders, auto-related, and debt collection. The most common fraud in Black-mainly neighborhoods involved credit bureau scams, a higher percentage of reports about used cars, and student debt relief cases. “Often, these are problems relating to trying to get something inaccurate off of a credit report, those types of issues,” Vaca said.
For Latinos, it involved car-buying schemes. For whites, the most common type of fraud was impersonator scams. Scams in the form of impersonators, pretending to be representatives from the electric company or even the IRS. The scammers subtly threaten a customer with possible consequences if the targeted person doesn’t pay up overdue bills immediately. Vaca mentioned that the FTC had seen false advertisements in Korean or Vietnamese for COVID-19 treatments or cures targeted at the Asian community. She explained that they targeted “bogus health claims such as “cures” for COVID-19, cancer or diabetes that don’t help at all.”
“These scammers on the phone will say anything to get money from people,” she says.
How to Recover from Scams
There are three primary methods of paying scammers, debit cards, cash, and credit cards. According to Mendez, how you pay matters. “The majority of people from black and Latino communities pay with methods that offer few protections,” Mendez said. Victims from Black and Latino communities often pay through debit cards and cash, while whites get scammed using credit cards.
The payment method often affects the level of difficulty to trace and possibly reverse the transaction. Vaca explained. “These hardcore frauds demand payments that are very difficult to trace, very difficult to reverse, and that helps them stay anonymous,” she said. Of all the methods, credit cards are the most effective way to protect the consumer. In contrast, other payment methods are less effective, offering little or no protection.
“It’s quite hard to get money back when you’ve been defrauded, but it’s not impossible. What we tell people is to try and file your report, try.” The FTC has numerous resources to help consumers, like graphic novels in Spanish and other free publications and the Pass It On campaign. These will educate people on what to do when they are in trouble. They also have resources and tips for buying a new car or a used car, and the consumer.gov website provides “straightforward, basic consumer protection information.”
Reporting a scam helps prevent future occurrences. The more people know of a scam scheme and pattern, the more people are on guard, and it is discouraged.