Top Impostor Scams Putting your Finances and Credit at Risk

We recently reported that impostor scams submitted to the FTC more than doubled from 2013 to 2014. But what exactly are impostor scams and how do they jeopardize your credit? As part of National Consumer Protection Week, we want to take a closer look the tactics scammers are using and how you can stay protected. In particular, one form of this scam is creating havoc for consumers across the country during tax season.

Impostor Scams Defined

Impostor scams involve a group or individual posing as someone else, usually over the phone or email. These con artists are trying to trick consumers either into making a payment or handing over valuable personal information, such as a social security or credit card number, which could lead to identity theft. These scams take on a few different categories, and the FTC’s most recent report of consumer complaints divided them into government (6%), business (~4%), family/friend (>.5%), and romance scams(<.5%).

Common Types of Impostor Scams

As you can see, these types of scams vary greatly. Here are a few examples of the common scams involving impostors.

Tax Payment Phone Calls

How it works: This particular type of impostor scam is a serious issue now as we approach April 15. Consumers will receive a phone call from someone posing as a representative of the IRS. The person on the other end of the line will make claims that the consumer’s taxes are overdue and that the consumer will be arrested or fined if they don’t pay up immediately.

Consumers are then urged to wire money or pay with a prepaid debit card, all while the caller continues to make threats about arrest, loss of driver’s license, or even deportation. What’s worse is that these callers might even provide part of your social security number, give an IRS badge number and fake your caller ID to say IRS, making their scheme all the more believable.

What you should do: Withhold information. Remember, the IRS will always contact you first via direct mail. Write down details from the call, such as the number they used. Then, call the IRS to ensure it wasn’t them that called you, and report the call to the FTC and TIGTA.

For more information, visit the FTC guidelines about this scam.

Utility Company Calls

How it works: You receive a call from your utility company, and a representative tells you, likely in an angry and threatening voice, that payment is due immediately. If you don’t pay, your service will be cut off or maybe you will be reported to collections. They then urge you to wire money or pay with a prepaid debit card.

What you should do: Gather all information. Call your utility company to report the incident and ensure they were not the ones who called. File a complaint with the FTC.

Grandparent Scams

How it works: A grandparent gets a call from a thief pretending to be either their grandchild or an acquaintance of their grandchild. Typically, the scam includes a made up story about the grandchild being in some sort of legal, medical or other emergency. Maybe they need money for an urgent car repair, have to pay a fine to avoid arrest or need a quick medical operation of some sort.

Regardless of the story, the scam almost always involves a request to wire money or provide bank account routing numbers. The worst part is that these sorts of transfers are serious. It’s essentially the same as giving away cash, and it’s usually irreversible.

What you should do: Record any information you can about the call, and whatever you do, don’t provide personal or payment information. File a local police report, and the FBI recommends that you also file a report with the IC3. Also, whether or not you have been affected by this scam, talk to friends and family and make sure they are aware and know not to give up this sort of information. Ensure that family members will call around to double check any information or requests like this that they receive.

Dating Website Impostors

How it works: Someone begins communicating with you on an online dating website. More than likely, they are frequently travelling or stationed overseas for military service. After exchanging quite a bit of information (including conversations via phone or webcam, pictures, etc.), your new love interest begins to ask for money. This could be money for a flight to come visit you, or for some other purpose.

What to do: Be cautious and calculated in terms of who you communicate with online. The BBB recommends that you be on the lookout for people who always have an excuse to postpone meeting, have a photo that doesn’t match the profile, claim to be from this country but are always abroad, or have a suspicious Facebook profile. Don’t wire money to people you’ve only met online, and consider any request for money via online dating sites to be suspicious.

How These Affect your Credit

These impostor scams cover a wide variety of tactics and end goals for the thieves. In some cases, they just want cash, and having it wired to them is easy and almost impossible to trace. On the other hand, they sometimes want your most personal information, such as credit card and bank numbers, along with a social security number. In these instances, you have much more to lose than money. You could potentially end up with severe damage to your credit report and years of fallout and cleanup as a result.

Action to Take

For those who do find themselves as victims to these scams, it’s important to take the correct action and to take it swiftly. Follow the FTC’s guidelines on creating an identity theft report, and then start cleaning up your credit. After the incident, you might also consider a budget overhaul and making a plan to pay off your creditors. If that’s the case, we encourage you to learn more about our free budget and credit counseling program.

Thomas Bright is a longstanding Clearpoint blogger and student loan repayment aficionado who hopes that his writing can simplify complex subjects. When he’s not writing, you’ll find him hiking, running or reading philosophy. You can follow him on Twitter.

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