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Internet, Telemarketing Scams Over the Top in 2005

January 23, 2006
A report by the National Consumers League (NCL) shows more consumers are reporting scams, and victims are losing more money.

According to the nonprofit organization, the average loss to telemarketing fraud rose from $1,974 in 2004 to $2,892 in 2005, and Internet fraud losses more than doubled, from an average of $895 in 2004 to $1,917.

The number of scams reported rose by 39 percent for telemarketing fraud and 12 percent for Internet fraud.

The report was based on information that consumers provided last year to NCL's National Fraud Information Center/Internet Fraud Watch program.

Wire Transfers on the Rise

For the first time since NCL began tracking Internet fraud in 1997, wire transfer is the most common way that scammers have gotten money from victims (31 percent of payments). It is also the #1 method of payment in telemarketing fraud (34 percent of payments).

"Any request from someone you don't know to wire money should set off alarm bells," said NCL's Susan Grant. "If that's part of the deal, it's a scam."

Payment by wire was most common in connection with fake checks, lotteries and lottery clubs, advance fee loans, prizes and sweepstakes, and Nigerian money offers.

Nigerian Money Offer

Among the Top 10 Internet Scams, the most expensive was Nigerian money offers, with an average loss of nearly $7,000.

These scams originate from con artists, typically in other countries, who promise to share their fortunes if consumers agree to pay to transfer the funds to their own bank accounts for safekeeping.

Even more alarming was the increase in victims. Forty-two people acknowledged losing money to these scams, compared to 18 in 2004, 12 in 2003, 7 in 2002, 10 in 2001, and 1 in 2000.

"We know that what is reported to us is only the tip of the iceberg, so there are probably thousands of victims around the country," said Grant. "Take our word for it -- these ‘fortunes' never, ever exist, and the scammers simply pocket their victims' money."

Free Money from the Government

Bogus offers of scholarships and grants rose from the third most frequently reported telemarketing scam in 2004 to the second most frequently reported in 2005 (this category wasn't even in the Top Ten scams before 2004).

Most of these reports were from consumers who got calls from crooks pretending to be from the U.S. government offering them government grants and demanding fees for processing, or requesting their bank account information for depositing the funds.

"Most government grants are awarded to agencies and organizations for specific projects, not to individuals," said Grant. "The government is not calling people offering them free money because they're such good taxpayers or for any other reason."

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