Your Money: Fraud Watch
GET BACK WHAT’S YOURS
Recovering what you lost to scammers is a long shot. But that’s starting to change
Cy Smith, 53, a financial analyst from San Francisco, lost $1.2 million in a fast-moving cryptocurrency investment scam in 2021. “It was a living nightmare,” he says. “My life savings, my daughter’s education fund. It was all gone in five weeks.” But in January, Smith (we changed his name at his request) wept tears of joy in a California courtroom when a judge ordered the return of $110,000 of the stolen money. “I was the lucky one,” Smith acknowledges.
Getting money back from criminals is rare. But new efforts by law enforcement officials, banks, payment apps and gift card companies are clawing back some funds lost in a wide variety of scams. Smith recovered money thanks to Santa Clara County Deputy District Attorney Erin West’s crusade to track, freeze and seize stolen cybercurrency as it flows to overseas criminal gangs through online trading exchanges.
All of this makes reporting fraud—something that nearly half of those targeted fail to do—more important than ever. “The best thing you can do for yourself and future victims is to report as soon as possible,” West says. Your information could launch or further an investigation, trigger warnings to protect others, or even help you recover money.
Here’s the latest on efforts to recover scammed money.
→ CRYPTOCURRENCY. Since last December, West’s team has seized more than $2.5 million for California victims of cryptocurrency investment scams in which victims were lured into investing over and over again. The Crypto Coalition, a nationwide law enforcement network started by West in the fall of 2022, has more than 1,000 members in 40 states who are deploying the same investigative techniques and laws to recover funds.
Reporting tip: Report crypto scams to the FBI’s Internet Crime Complaint Center (ic3.gov) and to your local police department.
→ PEER-TO-PEER APPS. Starting June 30, the more than 2,000 U.S. banks that provide customers with Zelle, the nation’s largest dollar-volume peer-to-peer (P2P) payment service, have been investigating and recovering money lost to scammers. “This is a massive change,” says Ben Chance, chief fraud risk management officer for Early Warning Services, the network owner and operator for Zelle.
Previously, scam victims could recover money lost in unauthorized Zelle transactions only when a criminal took over an account. This rule change even covers transactions authorized by users “if you have fallen for a certain type of impostor scam,” Chance says. “The scammer has to be impersonating a government agency like the IRS or Social Security Administration, a financial institution like a bank, or a service provider like a utility company.” Last fall, Congress opened an investigation into Zelle’s fraud recovery policies, saying scammers used the service to steal $441 million from users in 2021.
Reporting tip: If you paid scammers by using Zelle, you can report it to the bank or credit union where you have your Zelle account up to 120 days after an incident. But sooner is better for bank investigators. The nation’s two other largest P2P apps, Venmo and CashApp, recommend users contact customer service if they’ve been scammed. But, they say, most of the time, payments to scammers cannot be canceled.
→ GIFT CARDS. Gift card companies may be able to recover some or all of the money sent to scammers via gift card numbers if you act quickly, says Martha Weaver, spokesperson for the Retail Gift Card Association. “With a receipt and swift reporting, funds or partial funds can be recouped,” she says. “The sooner you take action, the more likely you are to minimize the damage and protect yourself from further financial harm.”
Reporting tip: “There should be a 1-800 number on the back of the card—call that number,” Weaver says. “Some gift card issuers may have specific procedures for handling fraud claims. Follow their instructions. If there is not a toll-free number on the card, go to the website and contact customer service.”
Don’t Fall for the ‘Recovery Scam’
Asset-recovery scammers hit you when you’re down. Using “sucker lists” of recent victims that fraudsters buy and sell among themselves, the crooks pose as consumer advocates or government agents, and they promise they’ll get your lost money back.
The con: Recovery scammers describe the ruse that’s already cost you money, then offer to recover the funds—for a fee up front. Some ask for bank account or credit card information. Others send a check for too much money and ask you to return the extra amount. By the time you learn the check is fake, your money is gone. In one Florida case, recovery scammers going by the name Consumer Collection Advocates bilked older people out of $2.8 million.
How to steer clear: Don’t trust offers to recover scammed money for a fee or any that require financial information. And never pay in advance to get a refund, the Federal Trade Commission advises.
Sari Harrar writes frequently for the Bulletin and AARP The Magazine on the topics of health, finance and fraud.
Have questions related to scams? Call the AARP Fraud Watch Network Helpline toll-free at 877-908-3360. For the latest fraud news and advice, go to aarp.org/fraudwatchnetwork.
ILLUSTRATION BY CHRIS GASH