We are a large mortgage lender, with multiple offices through the United States. Because the first week of March was designated as National Consumer Protection Week (NCPW), we decided to recognize NCPW as a nationally coordinated campaign to help consumers understand their rights, while giving them access to free educational materials. Our company provided training to compliance officers and employees on the pitfalls our customers might face. We are going to provide Best Practices training semi-annually to employees and to new hires. I am writing you to give us some feedback on areas that we could include in our upcoming training. We want to concentrate on complaints and fraud. So, what are some important some consumer complaints and fraud scams?
I appreciate that you took note of National Consumer Protection Week (“NCPW”). This initiative, developed by the Federal Trade Commission (FTC), ran March 3-9, 2019. Participating were many banks and nonbanks as well as state and federal agencies. Various materials were offered, such as articles, social media images and messages, and military outreach information.
It is a good idea to discuss consumer complaints and fraud scams, inasmuch as the FTC has made a firm commitment to reduce these attacks on consumers. Each year, the FTC issues a report categorizing the consumer complaints it receives. The method consumers use to complain about businesses is fairly simple: access is made through the FTC Complaint Assistant and then they select the category that matches the complaint criteria. Also, if the consumer has received a phone call or email from someone claiming to be from the government, the consumer can report it to the FTC Complaint Assistant.
In all, the FTC received nearly 3,000,000 complaints from consumers in 2018.
Government impostors top the list of consumer complaints submitted in 2018. These impostors are individuals who falsely claim to be from the Internal Revenue Service, Social Security Administration, or another government agency. Their scam is to convince people to turn over money or personal information. For a frame of reference, government impostors made up nearly half of the 535,417 impostor scam reports to the FTC in 2018, with reported consumer losses totaling nearly $488,000,000 to all types of impostor scams in 2018.
Unfortunately, many of these calls are aimed at seniors who depend on their social security checks to get by each month. So, your employees should know that if any of your older account holders mentions a phone call from a "government individual," they should assure the account holder that the Social Security Administration will never initiate a call, ask for a social security number over the phone, or direct somebody to send money in order to keep receiving benefits.
Debt collection complaints dropped to the number two spot after topping the FTC’s list of consumer complaints for the previous three years. Identity theft was the third most common complaint, but it consistently ranks among the top consumer complaints made to the FTC.
As in previous years, wire transfers and credit cards were the first and second most widely reported form of payment for fraud. In 2018, however, a growing number of consumers reported that scammers demanded to be paid with gift and reload cards. The number of consumers who said they paid with a gift or reload card grew from over 28,000 in 2017 to more than 41,000 in 2018, while the total amount paid using a gift or reload card to scammers nearly doubled to $78 million.
I note that your financial institution is in all fifty states, so you may be interested in demographics. To see the top complaints in your state, you can look at the FTC’s data book, which has a state-by-state listing of top reports in each state. The top states in 2018 reporting fraud and other consumer issues were Florida, Georgia, and Nevada. The FTC also releases consumer complaint data on a quarterly basis. You can find all of this data on the FTC’s Website.
Jonathan Foxx, PhD, MBA
Lenders Compliance Group