1. CON GAMES & FRAUD SCHEMES & SCAMS (oh my) Karen Stegenga Crime Prevention Officer Mesa Police Department

2. 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

4. 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)

5. 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

6. 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

7. 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

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

9. 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

10. Sample Envelopes

12. 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.

13. Fraud Lists

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

15. 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

16. 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

18. 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

20. INTERNET FRAUD

21. Method of Contact for Internet Fraud (FTC)

22. 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)

23. 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 = $ 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)

24. Resources & Reporting
AZ Attorney General Consumer Information & Complaint line:
Better Business Bureau: (verify charities)
National Fraud Information Center :
Registrar of Contractors: (most wanted)
US Postal Inspector:
Internet Crime Complaint Center
Federal Trade Commission
1-877-FTC-HELP ( ) or
Secret Service: or fax:

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

26. Thank You