Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Commissioner Melissa Holyoak Addresses Consumer Scams at Utah's Freedom from Fraud Event, (Nov 12, 2024)

By WK Editorial Staff

Americans lost over $10 billion to scams in 2023, up more than $1 billion from the prior year.

At the Freedom from Fraud event held for Utah's Pacific-Islander community, Melissa Holyoak, Commissioner of the U.S. Federal Trade Commission (FTC), delivered a speech on November 4, 2024, in which she addressed the pervasiveness and harmfulness of fraudulent consumer scams. Holyoak emphasized the critical role of the FTC in safeguarding consumers and shared practical advice on identifying and reporting fraudulent activities.

Holyoak began her remarks by acknowledging the alarming rise in consumer scams, citing that Americans reported a staggering $10 billion loss to scams in 2023, marking the highest-ever yearly loss reported to the FTC. She noted that one in four fraud complaints resulted in financial loss, with the median loss being $500. Email scams, particularly those involving imposters posing as legitimate businesses or government agencies, were identified as the most common method of deception.

The commissioner underscored the importance of community involvement in combating scams, urging attendees to report fraudulent activities affecting their community. Holyoak highlighted the FTC's dual approach: rigorous enforcement actions and consumer education to prevent scams. She detailed the FTC's mandate under Section 5 of the FTC Act, which prohibits unfair and deceptive practices, and mentioned other laws like the Fair Debt Collection Practices Act and the Gramm-Leach-Bliley Act that the FTC enforces to protect consumers.

Holyoak outlined the FTC's recent enforcement actions against various scams, including business opportunity and investment scams, debt-related scams, and impersonation scams. She highlighted the FTC's success in securing settlements and court orders to halt fraudulent activities and recover funds for affected consumers.

Business opportunity and investment scams. Holyoak explained that business opportunity and investment scams often lure victims with promises of "risk-free" ventures. She cited the FTC's recent settlement with Blueprint to Wealth, a company accused of defrauding consumers by selling non-existent online business opportunities. The FTC's Operation AI Comply also targeted companies making false claims about using artificial intelligence for guaranteed profits in online storefronts.

To help consumers avoid falling prey to such scams, Holyoak offered practical tips: be wary of unsolicited offers, question promises of guaranteed returns, resist high-pressure sales tactics, and conduct thorough research before investing.

Debt-related scams. The commissioner addressed the prevalence of debt-related scams, where fraudsters promise debt relief or falsely claim debts are owed. She highlighted the FTC's actions against operators of a nationwide debt relief scam and a student loan debt relief scheme, which falsely claimed affiliations with the Department of Education. Holyoak noted the FTC's Impersonation Rule, which the agency will use as a tool to stop scammers from pretending to be someone else, like a government agency or honest business.

Impersonation scams. As a side bar on the Impersonation Rule, Holyoak pointed out that even well-meaning regulations can impede competition, stifle innovation, disparately raise the cost of doing business, and ultimately create costs for consumers. But, she said she was willing to support rules like the Impersonation Rule that, consistent with authority granted by Congress, help the FTC put a stop to fraud that harms consumers and honest businesses alike. Impersonation scams, Holyoak said, are the second most common complaint after identity theft. She warned against scams involving fake security alerts, subscription renewals, giveaways, legal problems, and package delivery issues. Holyoak advised consumers to treat any unsolicited request for money or personal information as a potential scam and report it to the FTC.

Other notable scams. Holyoak also mentioned other forms of fraud, such as pyramid schemes and unauthorized billing scams. She cited the FTC's actions against the owners and operators of a credit repair operation known as Financial Education Services that the FTC alleged created a pyramid scheme. She also touted the FTC’s successes earlier this year in shutting down allegedly unauthorized billing and credit card laundering schemes, requiring the operators to turn over assets valued at approximately $40 million. Further, in May of this year the FTC obtained $10 million from payment processing company BlueSnap and executives who allegedly were knowingly processing payments for deceptive and fraudulent companies.

Encouraging community reporting. Holyoak stressed the importance of community reporting in the fight against fraud. She encouraged attendees to report suspicious activities via the FTC's website or hotline, available in multiple languages, including Tongan, Fijian, and Samoan. The FTC's multilingual support aims to ensure accessibility for diverse communities.

Guidance on avoiding scams. To empower consumers, Holyoak shared the FTC's guide—How to Avoid a Scam—available in multiple languages, including a Tongan version that she brought to share with the audience. This guide provides tips on how to avoid a scam:

1. Block unwanted calls and text messages;

2. Don’t give your personal or financial information in response to a request that you didn’t expect. Honest organizations won’t call, email, or text to ask for your personal information, like your Social Security, bank account, or credit card numbers;

3. Resist the pressure to act immediately. Honest businesses will give you time to make a decision. Anyone who pressures you to pay or give them your personal information is a scammer; and

4. Know how scammers tell you to pay. Never pay someone who insists that you can only pay with cryptocurrency, a wire transfer service like Western Union or MoneyGram, a payment app, or a gift card. And never deposit a check and send money back to someone you do not know.

Closing thoughts. In conclusion, Holyoak reiterated the FTC's commitment to combating fraud and urged Congress to grant the FTC authority to secure financial redress for scam victims. She also emphasized the importance of community dialogue in shaping the FTC's efforts to protect consumers.

News: ConsumerProtection FederalTradeCommissionNews