Fraud Losses Hit All-Time High in 2023

Did you fall prey to fraud in 2023? This probably won’t make you feel any better, but you were not alone.

Consumers reported losing more than $10 billion in fraud in 2023, according to the recently released Federal Trade Commission (FTC) trend data. That is a $1 billion increase over 2022 and an all-time high. Although the loss is bigger, the number of fraud reporters, 2.6 million, was about the same.

Email overtook text as the number one contact method for scammers in 2023. Text was on top for just one year having displaced telephone calls, which held that spot for decades. The phone is still popular, however, coming in just behind emails in 2023. Text bumped down to third.

On the email front, consumers were fielding fake messages scammers posing as businesses or government agencies to steal money.

The various types of fraudulent scams remain familiar. In order of prevalence based on number of reported incidents:

Imposter scams: the most common form of fraud, saw significant increases in reports of both business and government impersonators and include people pretending to be your bank’s fraud department, the government, a relative in distress, a well-known business, or a technical support expert;

Online shopping scams: typically hijacking legitimate promotions to obtain private information from consumers, were the second most reported fraud, followed by

Prizes, sweepstakes, and lottery scams: typically beginning with a winner notification for a non-existent prize, sweepstake, or lottery for which the real prize is consumer personal information;

Investment-related scams: generally involving “low risk-high reward” strategies investing in the financial markets, cryptocurrency, real estate or precious metals and coins; and

Business and job opportunity scams: generally requesting consumer responses for low-skill jobs for which the real target is consumer private information for “vetting” and/or pay fees to get a job or obtain placement services.

Despite having fewer reports overall, investment scams are per capita the costliest form of fraud with consumers’ reported losses of greater than $4.6 billion in 2023 – representing a 21% increase over 2022. One contributing factor was a marked rise in losses connected to cryptocurrency frauds. The second highest reported loss amount came from imposter scams, with losses of nearly $2.7 billion reported.

Here are other takeaways:

•  Losses by age. Of scam victims who reported their age, younger adults (20-29) reported losing money more often than older adults (70+). However, when older adults lost money, they lost the most.
• Social media scams. Scams starting on social media accounted for the highest total losses at $1.4 billion – an increase of 250 million from 2022.
• Lucrative phone scams. Scams that started by a phone call caused the highest per-person loss ($1,480 average loss), explaining in part why it retains a special place in a fraudster’s arsenal.

Having highlighted the key metrics, the FTC announced actions to be taken and adjustments made in its efforts to combat fraud, including:

• Significant crackdown on illegal telemarketing.

The FTC joined more than 100 federal and state law enforcement partners nationwide, including the attorneys general from all 50 states and the District of Columbia, in Operation Stop Scam Calls, a broad crackdown on illegal telemarketing calls to U.S. consumers.

• Strengthening its regulatory muscles to focus on perpetrators of impersonator fraud.

The FTC is in the final stages of a rulemaking process targeting business and government impersonation scams.

• Cracking down on investment and business opportunity scams.

The FTC brought multiple cases against investment and business opportunity schemes, including Wealthpress, Blueprint to Wealth, and Traffic and Funnels.

Protect Your Business From Fraud

To avoid the scammers, educate yourself and your staff about scams – especially imposter scams. That legitimate-looking email, phone call, or text may be from an imposter person or entity – or someone posing as a legitimate representative of an organization you may deal with regularly. Here are some tips on protecting your business from fraud:

• Coordinate with your information systems team and instruct your employees to think first and act second (only after vetting) messages that request/urge/demand, etc. to send money, provide personal information, click on a link, or download software.
• Be cognizant that fraudsters can monitor businesses so when you communicate with customers (and potential customers) and ask them to pay or identify how to pay, bear in mind who else is trying to attract their attention and their dollars.
• Bank transfers and payments accounted for the top payment method for fraudulent transactions with reported losses at $1.86 billion – always double (or triple) check instructions for bank transfers and payments.
• Understand that scammers target businesses and business owners because that is where they can find money. While youth and the elderly are attractive marks, company employees (and principals) can leave the proverbial barn door wide open as well.