Scams: Vigilance more important than ever

We all love a good scam. Who can forget Paul Newman and Robert Redford in “The Sting,” or George Clooney and friends in “Ocean’s Eleven.” In the movies, a good scam is a good time.

Real life is different. Many people experience the harm caused by real scams. Increased use of the Internet has exponentially expanded exposure to scams. Cybercrime currently impacts more than 400 million adults, with nearly $400 billion in estimated costs.

Internet-based scams include fraudulent Internet auctions and sales. Facebook and e-mail “phishing” scams involve the solicitation of personal and account information. E-card virus e-mails and other harmful “spam” e-mail gain unauthorized access to information and damage accounts and systems.
 
Abuse of online photo-sharing can lead to identity theft, property and violent crime, and embarrassment from unintended use.

Internet scam techniques are sometimes combined with “low tech” means to defraud individuals. For example, mail theft, unauthorized credit card charges, fraudulent credit repair and debt collection practices, certified check fraud, and mortgage rescue schemes may involve electronic, telephone, and in-person activity.

The most pervasive form of scam in recent years is identity theft. More than 250,000 complaints of identity theft were reported to the Federal Trade Commission in 2010, representing 19 percent of all complaints received. Identity theft is particularly concerning because it constitutes an initial step that often is followed by other criminal and fraudulent activity.

While consumer-oriented fraud obtains the most press, businesses are targets for more than mere access to consumer information. Businesses can be subjected to identity theft, counterfeit checks, and other financial crime, software virus attacks, and more complicated fraudulent schemes.

The financial burden of a scam can include direct damage to the business and indirect damage such as reputational harm and costs incurred by customers and employees. When small businesses are involved, there is little distinction between harm caused to the individual and damage to the business.

So what can you do? Preventative measures include monitoring accounts; avoiding unfamiliar vendors and sources for downloads; implementing firewalls; utilizing mobile alerts; and other ways to learn about problems; minimizing information in regular mail; e-mail, and social media; and remaining skeptical about “too good to be true” opportunities. To some degree, preventative measures reflect common sense.

Ultimately, we want to keep scams at the movies, but they may not be avoidable. When they occur, immediate response is crucial, including contact with financial institutions, law enforcement, and credit reporting agencies.
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Pete Trotter is GROWMARK’s associate general counsel. His e-mail address is ptrotter@growmark.com.