QUESTION
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?
ANSWER
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
Managing Director
Lenders Compliance Group
