The current pandemic changed many things. A significant world event launched substantial changes that result in uncertainty combined with chaos. With the onset of the COVID-19 spread creating an unpredictable environment, scammers predictably took advantage of, if not exploited, the unprecedented events that followed.
Scammers take advantage of a pandemic
A recent Securities and Exchange Commission (SEC) investor alert revealed a troubling pattern of illegal activity. They announced that investment fraud has significantly increased and took a variety of forms that included:
- Ponzi schemes where scammers use money from recently defrauded investors to pay existing ones
- Counterfeit certificates of deposit used when investors need a fixed rate of return during a time of market volatility.
- Fake promotions by so-called “investment firms” touting stock for products and services that will cure coronavirus that they claim is set to grow significantly
- Community-based scams where trust is established only end up targeting residents based on everything from age to ethnicity. Via fake websites, they promise a lucrative, so-called fixed rate of return that never occurs
- Pyramid schemes and work-at-home programs that exploit coronavirus-related financial hardships, promising much-needed extra cash
Income scams have grown significantly. According to the Federal Trade Commission, these types of complex cons skyrocketed to 70 percent in the second quarter of 2020 compared to the same time in 2019.
While the specific damage done over the past several months has yet to be documented, income fraud in the form of investment scams has resulted in more money lost than any other time. The FTC reports that, on average, individual victims will see a median loss of $16,000 each. For those 50 and older, their losses average $24,000.