CON GAMES & FRAUD SCHEMES & SCAMS (oh my) Karen Stegenga Crime Prevention Officer Mesa Police Department 480-644-5014

Con game = "any scheme whereby a swindler wins the confidence of his victim and then cheats him out of his money by taking advantage of the confidence reposed in him.“ “Confidence Man” – first used in 1849; William Thompson trial Fraud = unfair or unlawful deception of consumers that causes them financial detriment Scam = fraudulent business scheme Fraud follows the headlines

Incidence 30.2 million adults (13.5% of population) lost money from at least one type of fraud in 2004 *FTC study in 2005 $70 million loss to Canadian telemarketers $120 million/year to foreign lotteries (USPS)

No single demographic profile for victims Victim Profiles Seniors 26% of telemarketing victims are 60+ (AARP) 60% of victims of sweepstakes fraud are 60+ (AARP) Investment fraud against seniors rose 40% in 2007 (North American Securities Administrators Association) African-Americans and Hispanics More debt than can comfortably handle 25-34 year old age group No single demographic profile for victims FTC 2005 Fraud Survey

Fraud Victims One of the most underreported crimes One-time Repeat 1/3 those 65+ did nothing when victimized (AARP 1999) Only an est. 15% of fraud victims report to law enforcement One-time Repeat Chronic

The Effects on the Victims Personal violation; psychological equivalent of rape Shattered trust in self and others Societal condemnation and indifference Isolation Fear for financial security Shame, embarrassment, anger, guilt

Fraud Exploits: Greed Dishonesty Vanity Honesty Compassion Naiveté - Emotion is a stronger force than logic

Psychological triggers used by scammers to succeed Reciprocation: scammer gives “gift” or assistance then victim feels obligated to offer something in return Commitment and consistency = embarrassment of seeming indecisive or inconsistent Social proof = “everyone does it” Liking = build a rapport, befriend the victim Authority = use authority to support their product Scarcity = fear of missing out, “act now”, “once in a lifetime offer” Excitement

Sample Envelopes

Many times they bring truckloads of mail into the United States to mail it out of a United States post office to disguise the fact that it’s an overseas company.

Fraud Lists

Phoenix-Mesa-Scottsdale AZ (FTC Consumer Fraud and ID Theft Complaint Data 2007) Category % Complaints Shop at Home/Catalog Sales 10 Internet Services 7 Foreign Money Offers 5 Prizes/Sweepstakes/Lotteries 5 Health Care 4 Total number of complaints: 13,903

IRS 2008 list of 12 most egregious tax schemes and scams Phishing Economic Stimulus Payment Scams Frivolous Arguments (to avoid paying taxes) Fuel Tax Credit Scams Hiding Income Offshore Abusive Retirement Plans (to avoid limits on contributions to Roth IRAs Zero Wages False Claims for Refund/Request for Abatement Return Preparer Fraud Disguised Corp. Ownership Misuse of Trusts Abuse of Charitable Organizations and Deductions

Top Ten Telemarketing Frauds 2006 2007 Fake Check Scams Prizes/Sweepstakes Advance Fee Loans Lotteries/Lottery Buying Clubs Phishing Magazines Credit Card Offers Scholarships/Grants Buyers Clubs Nigerian Money Offers Fake Check Scams* Prizes/Sweepstakes Magazine Sales Scholarships/Grants Advance Fee Loans Lotteries/Lottery Clubs Credit Card Offers Phishing Work-at-Home Plans Travel/Vacation *800 victims/month file complaints 2007 USPS crackdown – arrests in Nigeria, Canada, Netherlands: 540,000 checks=$2.1billion face value

More Fraud Schemes Investment Fraud; annuities, lunch seminars Charity Fraud Bank Examiner Fake Grandson Scam Obituary Scam Pigeon Drop Home Repair Fraud Distraction Crime/Impostor Burglaries

INTERNET FRAUD

Method of Contact for Internet Fraud (FTC)

Top Ten Internet Scams 2006 2007 Auctions General Merchandise Fake Check Scams Nigerian Money Offers Lotteries/Lottery Offers Advance Fee Loans Phishing Prizes/Sweepstakes Internet Access Services Investments Fake Check Scams General Merchandise Auctions Nigerian Money Offers Lotteries/Lottery Offers Advance Fee Loans Prizes/Sweepstakes Phishing Sweetheart Swindles Internet Access Services (NCL)

Top Ten IC3 Complaints (Internet Crime Complaint Center) Auction Fraud 35.7% Non-delivery 24.9% Confidence Fraud 6.7% Credit Card Fraud 6.3% Check Fraud 6.0% Total dollar loss in 2007 = $239.09 million Computer Fraud 5.3% Identity Theft 2.9% (many go to FTC) Bank Fraud 2.7% Threat 1.6% Nigerian Letter 1.1% (many go to Secret Service)

Resources & Reporting AZ Attorney General Consumer Information & Complaint line: 602-542-5763 Better Business Bureau: 602-264-1721 (verify charities) National Fraud Information Center : 1-800-876-6090 Registrar of Contractors: 602-542-1525 www.rc.state.az.us (most wanted) US Postal Inspector: www.postalinspectors.uspis.gov Internet Crime Complaint Center www.ic3.gov Federal Trade Commission 1-877-FTC-HELP (1-877-382-4357) www.ftc.gov or spam@uce.gov Secret Service: 419.fcd@usss.treas.gov or fax: 202.406.5031

Prevention – fraud is a preventable crime Educate Residents Banks Send out alerts Encourage reporting Get Officers involved

Thank You