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Risk Fraud & Compliance

Check the Halls: As fraud around the holidays increases, there is possible relief in sight

Rabihah Butler  Manager for Enterprise content for Risk, Fraud & Government / Thomson Reuters Institute

· 5 minute read

Rabihah Butler  Manager for Enterprise content for Risk, Fraud & Government / Thomson Reuters Institute

· 5 minute read

While the holidays are time of giving for many, some illicit actors use the season as a time to prey on this goodwill and ever-present online shopping to commit fraud

The holidays are a time of giving, caring, and family for most people. Unfortunately, this also makes the holidays a prime time for illicit actors with bad intentions — such as individual scammers and criminal organizations — to prey upon this goodwill.

The holidays often leave people more vulnerable to everything from simple crimes like package theft or mail fraud to more complex relationship scams and identify theft, especially online. A major factor adding to this problem, of course, are at this time of year more people are willing to give what they have and scammers knowingly pounce upon those opportunities.

The prime time for holiday shopping in the United States extends from November through December each year; and as people tend to purchase more gifts online, send cash or checks through the mail, and are more willing to donate financial gifts to other people and charitable organizations, these scams can proliferate. In 2023, online shopping will grow by 7% to 9% in November and December, racking up between $273.7 billion and $278.8 billion in sales, up from $255.8 billion last year, according to the National Retail Federation. These online purchases often leave people vulnerable to individuals stealing packages off doorsteps after they arrive but before the rightful owners can claim them. The holidays also make it more lucrative to steal from package carriers or postal services.

Clearly, the simplest and most obvious of scams to carry out this time of year is the theft of packages or envelopes that might carry checks. This tends to happen more as a crime of opportunity by a nefarious party rather than being perpetuated by a genuine scammer. It is important for individuals to be vigilant in tracking shipments, checking mail, and not leaving items sitting outside the home unnecessarily.

Checking text message scams

One of the more recently developed scams involves the use of text messages concerning purported delayed deliveries or other issues with deliveries. Texts disguised as UPS, FedEx, or U.S. Postal Service notifications about incoming or missed deliveries generally direct the target to go to a link to correct the minor issue. Individuals then are sent to sites with malware, viruses, or phishing sites to collect personal information — and some of the more malicious sites even demand payment.

In fact, Americans reported $330 million in losses to text scams last year, more than double the reported losses from 2021, according to the Federal Trade Commission. This is concerning as it suggests that these scams are becoming more successful over time.

Text message scams can also start on dating websites or with alleged wrong number messages. These scammers create a rapport or relationship with an individual in hopes of getting money in the form of gift cards, digital currency purchases, or numerous other methods of payment transfer. The best prevention in this situation is to not engage in conversations with individuals that you do not personally know. Remember, the less interaction you have with a scammer the safer your finances.

Beware false product sites

Other sophisticated scams involve elaborate websites that take money but never deliver the promised product. Intricate-looking sales sites are developed with offers that are too good to pass up, including those selling hard-to-find or one-of-a-kind items. Individuals seeking to take advantage of the savings can quickly become victims. During the 2022 holiday shopping season, the FBI Internet Crime Complaint Center received reports from almost 12,000 victims reporting non-payment or non-delivery scams, resulting in losses of over $73 million. These scams can be difficult to track because there are so many people ordering so many items that they can overlook a missed item and not even report the scam.

Also during this time of year, people are encouraged to use credit cards instead of debit cards to make online purchases. The use of a credit card allows individuals to dispute the transaction to their financial institutions if there is an issue. These disputes benefit the consumer because they are able to quickly get back the money lost in the scam.

Unfortunately, when giving money, people tend to use payment services apps like Zelle or PayPal to send money directly from their bank. And not surprisingly, scammers were able to find ways to circumvent some of the safeguards and get money from vulnerable individuals. Scams that are romantic in nature or that cause emotional actions typically ask for the victim to send money via transfers in Zelle or similar applications. This would include catfishing, lies about kidnapped family members, or fake charities, to name just a few.

As this holiday season approaches, many payment apps are providing a little more security for their users. For example, Zelle has agreed to begin issuing refunds for individuals who have been scammed out of money from some specific types of scams. This means that innocent individuals, depending on the type of loss, can have some financial recompense.

This is especially helpful as an investigation done by Sen. Elizabeth Warren (D-Mass.) and other lawmakers estimated that Zelle users alone had lost $440 million to all types of fraud in 2021. The move by Zelle comes after pressure from the government sector to make changes to its official practices to help victims of fraud on their app.