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Getting scammed is a life-shattering event. What could possibly make it worse? How about getting scammed again while trying to recover your losses?
That’s the idea behind a fraud refund scam or fraud recovery scam. It works like this: Scammers contact fraud victims offering to help them regain their stolen money. To recover the funds, the criminals will charge a fee, which they may call a retainer fee, a processing fee or an administrative charge.
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They may claim to provide certain services (such as filing complaint paperwork on your behalf) or promise to speed up your reimbursement, the Federal Trade Commission (FTC) warns. They may also request your Social Security number or financial account information, which they need, they say, to deposit your refund (they might also claim to be holding your money for you).
Frequently, they disguise themselves as legitimate entities, from law firms to consumer advocacy organizations to government agencies.
The FBI warned in June that fake law firms have been targeting victims of cryptocurrency scams in particular, noting that between February 2023 and February 2024, cryptocurrency scam victims who were then victimized by fictitious law firms reported losing a total of more than $9.9 million.
Many other authorities have issued warnings about fraud recovery scams, including the FTC, the Financial Industry Regulatory Authority (FINRA), the Commodity Futures Trading Commission (CFTC) and financial institutions such as Ameriprise.
“Recovery offers can be tempting, especially if you’ve already lost a large sum of money and are anxious to reclaim any amount you can,” FINRA notes. “But engaging with these scams will only further your losses.”
“That’s what makes this so insidious,” says Elsie Kappler, an attorney in the FTC’s Division of Marketing Practices. “They know these people have already been scammed, so they know they’re really good targets.”
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