Everyone thinks they know how to avoid a telephone or online scam and the warnings about protecting privacy, being skeptical and being aware abound in modern society. And yet Americans lost $8.8 billion to scams last year, up more than 30 percent from 2021. In the Los Angeles area, 142,784 reports of fraud were recorded last year and in the first quarter of this year, officials tracked another 34,417 reports.
The harsh reality is that criminals are combining cutting edge technology with good old-fashioned lies to continue to fool people. They often target vulnerable groups, such as the elderly or those with limited resources and the victims are everywhere, including here in Santa Monica.
So called “Imposter Scams” are the most common type in Los Angeles.
In an imposter scam, the criminal impersonates someone to solicit money from the victim. They often pretend to be authority figures demanding money, sometimes to help a friend or family member out of trouble and sometimes threatening the victim directly. That could be a fake lawyer demanding bail for your grandson, a fake doctor demanding a copay for an emergency surgery or a fake police officer demanding payment for an unpaid ticket. The details may vary but there are common themes to identifying these scams.
Criminals will use fear as a motivator, they will know an often surprising amount of detail about their target, the demand for money will be phrased as urgent and they will want you to keep it secret.
“Scammers play with your emotions,” said the Federal Trade Commission in a warning. “They’re counting on you to act quickly to help your family or friends. And they’re counting on you to pay without stopping to check out whether there’s really an emergency. If you get a call like this, you can be sure this is a scam.”
With the advent of new technologies, these scams have only grown stronger.
“Artificial intelligence is no longer a far-fetched idea out of a sci-fi movie,” said the FTC. “We’re living with it, here and now. A scammer could use AI to clone the voice of your loved one. All he needs is a short audio clip of your family member’s voice — which he could get from content posted online — and a voice-cloning program. When the scammer calls you, he’ll sound just like your loved one.”
Officials said potential victims have to be more careful than ever.
“Don’t trust the voice,” said the FTC in a recent warning. “Call the person who supposedly contacted you and verify the story. Use a phone number you know is theirs. If you can’t reach your loved one, try to get in touch with them through another family member or their friends.”
Local impact
While local resident Cy Carlberg wasn’t targeted by an AI voice, she did fall victim to an investment scam.
Criminals leveraged a deep knowledge of her personal habits, interests and personality to convince her to participate in a fraudulent cryptocurrency scheme.
Carlberg received a text that appeared to be part of an exchange between two friends. She replied to say the sender had the wrong number and the criminal used that opening to introduce themselves as a recent immigrant from Japan. The scammer spent weeks slowly drawing Carlberg into conversation.
“So we had that little bit in common and, and somehow she knew I was interested in architecture, and Japanese design, spirituality and Buddhism,” she said. “And she must have done her research on the internet probably saw my website, Facebook, and brought up all these subjects, which we then discuss, and it was really nice and we kind of got friendly.”
The scammer eventually brought up trading in cryptocurrency claiming to manage assets for elderly family members and Carlberg said she was already trading in crypto as a hobby. The scammer suggested a new trading platform that was sophisticated enough to pass an initial inspection by Carlberg and a family friend.
“So I opened an account, and I put my assets in that account, and we started short term trading,” she said.
After a couple of weeks the fake accounts showed a huge increase in value prompting Carlberg to ask about withdrawing some cash and it was during the discussion of paying taxes that she first grew suspicious.
“And at that time, she said I had to pay the taxes up front, and that was close to $200,000 and I started to get nervous, because they didn’t withdraw the taxes from my assets. But I withdrew almost $200,000 from my retirement account …”
After making the payment, the scammer said she’d made a mistake and a second deposit would be necessary. “But at that point, I knew the gig was up. And at that point, I tallied up what I had lost, and it was well over $550,000.”
According to the FBI, Carlberg’s experience was almost textbook, the style of scam is known as “pig butchering” because the criminals spend considerable time and effort crafting elaborate storylines and props to “fatten up” their targets.
“Using the methods of traditional con artists, high-tech fraudsters have taken advantage of the publicity and hype surrounding cryptocurrency to encourage an untold number of Americans to invest in get-rich-quick schemes,” said United States Attorney Martin Estrada. “We all know that investment scams are not new, but the use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds – which likely total billions of dollars in the so-called ‘pig butchering’ schemes. The major seizures announced (recently) show that law enforcement is confronting the new challenges and taking strong measures to address this fraud, but the public should be extremely wary of investment scams that use cryptocurrency and promise unrealistic returns.”
Recovery of stolen funds is rare but not impossible. The Justice Department announced a recovery of $112 million earlier this month and about half of that came from Los Angeles victims.
“Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings. Now that we have seized this virtual currency, we will seek to swiftly return it to victims. In addition to our tireless efforts to disrupt these schemes, we must also work to raise public awareness and help inform potential victims: be wary of people you meet online; seriously question investment advice, especially about cryptocurrency, from people you have not met in person; and remember, investments that seem too good to be true, usually are.”
The big red flag
Regardless of the scam’s form, the ask for money will always be a red flag. Scammers will not use a normal, established form of payment. They will ask for a payment in a way that is untrackable such as a money order, gift card, prepaid reloadable cards, cryptocurrency or a wire transfer. Experts said you should never, under any circumstances, pay for something using these services.
“A reminder no professional institution will ever ask you to submit payment via cryptocurrency from a Bitcoin ATM at a liquor store or behind a gas station,” said SMPD Detective Ashley Allen.
Other warning signs include a general awareness of just how interested callers are in you as a person.
“Wells Fargo, Bank of America, whoever, is not going to stay on the phone with you for over two hours just asking you questions about your friends and family,” said Allen. “It’s probably a clue that they’re, you know, fishing, mining information from you to use against you.”
He said he had a victim who lost his wallet and received a call from a scammer. During the 90 minute conversation the victim gave out enough personal detail that the criminal was able to open multiple bank accounts in his name during the call.
Some victims don’t realize they’ve unwittingly provided much of the information needed to scam them through “leakage” on social media.
“Now that I’m investigating financial crimes, I tried to get all my friends and family to get rid of their social media as well,” said Allen. “Or at least make it private. Because there’s a lot of hooks that go into our social media, whether it be things we like to eat, places we like to go or even clothes we like to wear. Now these scammers they’re very, very good at what they do. They train. They will usually work in teams and they have scripts that they use based off things that are triggered from my victims.”
Allen said the best defense against any of these scams is direct, human to human contact with a real, live person.
“Phone calls from banking institutions are highly irregular. Feel free to hang up the phone, go to your brick and mortar bank location and say hey, ‘I lost my information’ can you shut down these accounts’ or ‘hey, would you ever call me asking these type of questions?’”
The recourse for victims is limited. Scammers are often in far off places from the victims making pursuit difficult and untraceable payments are hard to recover. Victims can report fraud to the authorities (https://consumer.ftc.gov/articles/what-do-if-you-were-scammed) and Carlberg is working with a third party company Scam Help, to try to recover what she can.
She said the money isn’t the main focus for her anymore as she feels a sense of responsibility to share her story.
“I think it’s important to let go of any embarrassment or shame. And people will ask you ‘How could you be so stupid?’ And you know, it’s just not about intellect. This was an emotional con. And it was very sophisticated. I’ve let go of any anger really towards them. This is the dark side of human nature. These folks lack empathy,” she said. “I don’t think they have much of a conscience. And there’s no percentage in me wallowing in what evil kind of people they are.”
editor@smdp.com
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