A recent Gallup poll combined with a new Federal Trade Commission (FTC) estimate of fraud losses show that criminals are stealing 10s or 100s of billion dollars from 21 million Americans each year. The perpetrators are mainly foreign organized crime gangs. Increased public-private partnership can make a difference, as shown by recent joint actions in the UK and Australia that are showing signs of progress.
US citizens face an increasing torrent of cyber attacks in the form of fake emails, scam text messages, malicious pop-up ads, social media impersonators, and spoofed phone calls. Criminals have learned how to exploit our technology and use ever-more sophisticated techniques to scam individuals. For example, an FBI Public Service Announcement in September 2023 warned of a sharp rise in a complex scam that layers tech support imposters, impersonators who assume bank or government personas, and installation of remote access software.
As a result of the growing sophistication of organized crime syndicates, scam victims and losses have skyrocketed in recent years. FBI data show that reported fraud losses have increased nearly seven-fold since 2017. Worse yet, the chair of the FTC recently said that artificial intelligence could “turbocharge” fraud.
Stop Scams Alliance, a nonprofit dedicated to combating scams, worked with Gallup to conduct the first Gallup poll to address scams. The October 2023 poll revealed that 8% of those polled said that they had been scammed in the last year, which translates to roughly 21 million US adults. That’s larger than the population of New York state.
- In other words, more than 57,000 Americans are being scammed each day.
We all know of someone who has been scammed. It can happen to anybody, including your friends and family. Scams affect all ages—in fact, adults under age 50 report higher victimization rates than those over 50.
How much are we losing to scammers?
An October 2023 FTC report estimated that total fraud losses in the US range from $20.5 billion to as high as $137.4 billion. The lower figure, which the FTC called “very conservative,” assumed most people reported their loss; the higher figure assumed few people report, which is almost certainly true given the new Gallup poll.
- Losses in the $100 billion range would mean that consumer scam losses are equal to the annual revenue of companies like UPS, Citigroup, or Bank of America. Or about the size of the annual budget of the Department of Homeland Security.
Who are the perpetrators?
Tech-based scams are mainly perpetrated by foreign organized crime gangs. According to British government research, most fraud has an international component, and organized crime plays a significant role. Scam proceeds also have been used to fund terrorist activity, according to the Royal United Services Institute. At least some fraud is conducted by nation states. The FBI has seen North Korea’s state-backed hackers steal money and cryptocurrency through fraud and cyber crime.
Law enforcement agencies have identified scammers in such countries as India; West Africa (especially Nigeria); Jamaica; and Southeast Asia (especially Myanmar and Cambodia). Many of the gangs in the lawless corners of Southeast Asia are controlled by Chinese crime bosses. In June 2023, Interpol issued a global warning, saying that scams have fueled a “global human trafficking crisis.”
What should government and industry do?
Public-private partnership and cross-sector cooperation can make a difference. Other nations are seeing progress in their joint anti-scam efforts, particularly the UK and Australia.
In November 2023, the UK signed the world’s first “Online Fraud Charter” with 12 of the world’s largest technology companies. The signatories included: Amazon, eBay, Facebook, Google, Instagram, LinkedIn, Match Group, Microsoft, Snap, TikTok, X, and YouTube.
The UK Charter recognizes that online platforms and services are increasingly being exploited by criminals for the purposes of fraud and establishes voluntary commitments to tackle fraud. The signatories agreed to adopt the following actions within six months:
- Blocking: Deploy measures to detect and block fraudulent material.
- Reporting: Have a simple and quick route to report fraudulent material.
- Takedowns: Take prompt action against fraudulent content and users.
- Advertising: Deploy measures to protect people from fraudulent ads.
- Law enforcement: Have dedicated company liaisons to respond to law enforcement requests.
- Intelligence sharing: Initiate mechanisms to quickly share information about frauds.
- Transparency: Provide information about fraud risks and what is being done to address them.
- Education: Deliver simple messaging to help the public recognize and avoid online fraud.
- Horizon Scanning: Participate in exercises to stay ahead of the threat.
The November 2023 Charter expands on UK measures to combat fraudulent advertising that began in 2021. The recent charter also builds on a 2021 Telecommunications Fraud Sector Charter that the British government signed with eight major telecommunications firms, including British Telephone, Sky, TalkTalk, and Vodafone. The charter called for telecommunications providers to significantly increase information sharing to combat scam calls and text messages.
The Australian government and private sector are taking similar actions. In November 2023, the Australian Treasury issued a Scams Code Framework that proposes a code of conduct for digital communications platforms, telecoms, and banks. Also in November 2023, the Australian Banking Association (ABA) launched an industry-led “Scam-Safe Accord” that outlines measures the banking sector will take to disrupt, detect and respond to scams.
Early signs that joint government-industry efforts are having an impact:
- In the UK, Google says it has seen a “pronounced decline in reports of ads promoting financial scams” since September 2021. That’s when Google began requiring financial services advertisers to demonstrate that they are on a British government authorized list. In June 2022, Google announced that it was expanding its fraudulent ads policy to Australia, Singapore, and Taiwan.
- British telecom providers have blocked inbound international calls that spoof domestic phone numbers since 2022. TalkTalk, one of the companies involved, said it saw a 65-percent reduction in complaints about scam calls since it took action. In Australia, scam call complaints fell by 72 percent as a result of similarly aggressive call blocking.
- Starting in 2022, Singapore worked with 2,000 companies to create an SMS registry that has reduced text-based scams by 64%. Australia has announced it will deploy a similar capability in 2024.
- The Australian Securities and Investments Commission in July 2023 began taking down more than 2,500 investment scam websites and imposter scam websites where legitimate financial service businesses are being impersonated.
- In November 2023, the British government said that because of government actions to date, “the latest Crime Survey in England and Wales showed incidents of fraud fell by 13% in a year.”
Meanwhile, fraud losses in the United States continue to escalate.
