The COVID-19 pandemic saw a rise in reports of scammers pretending to be from government agencies. While reports slowed since peaking in early 2021, victims lost more than twice as much money, according to new research by Better Business Bureau® (BBB®). BBB warns people to use caution if they are contacted by a government agency demanding money or offering a government grant for a fee.
After BBB published an in-depth study in 2020 to educate the public about how to detect Government Impostor Scams, reports to the Federal Trade Commission (FTC) soared. In 2021, consumers reported losses of more than $445 million in government impostor and government grant scams, up from $175.4 million reported in 2020.Likewise, BBB Scam Tracker data showed victims of government grant scams lost more money in 2021 than in the previous year. This type of scam is one of the top 10 riskiest scams reported to Scam Tracker, according to the 2021 BBB Scam Tracker Risk Report. Scam Tracker reports also showed government impostor scams as the second-most reported scams by businesses in 2021.
A Grand Rapids woman said she received a Facebook message from a friend about a government grant. The fake agent had her share personal information over the phone to “prove her identity”. After being told she qualified, she was told she had to pay $800 to receive a $50,000 grant. The scammer told her she could pay with gift cards, bitcoin or CashApp. She asked the scammer to remove her number from his list but he refused.
“Scammers look to take advantage of individuals who find themselves vulnerable following the pandemic,” says Lisa Frohnapfel, President and CEO of the Better Business Bureau Serving Western Michigan. “Be wary of unsolicited calls, texts, emails or letters and investigate the legitimacy of an offer with a trusted source like the BBB before you act.”
A Lansing-area woman received a phone call claiming there was fraudulent activity connected to her social security number and needed to give her birthdate and social security number to verify her identity. The scammer told her if she complied, they would read the charges against her. She told the scammer she did not feel comfortable giving her personal information over the phone, and the scammer hung up on her. That’s when she knew it was a scam. The woman says she is still getting the same phone call a year later.
The biggest hurdle for those trying to prosecute these scammers is that most of the scammers are overseas. BBB’s initial study on this topic showed many of these government-related scams originated in India.
Types of Government Imposter Scams
Social Security Administration: This is the most commonly spoofed government entity. Scammers warn victims their identity has been stolen, then ask them to verify their social security number and other personal information over the phone.
Law Enforcement or federal agent: Some scammers pose as law enforcement and threaten immediate arrest if demands aren’t met. They may even ask for payment in gift cards to “solve” the problem.
IRS: Imposters call and threaten arrest unless back taxes are paid. Most reports to BBB Scam Tracker are from people who lost money while filing for an Employee Identification Number from websites that looked like they were official.
Government Grants: Scammers use hacked social media accounts to tell victims they qualify for a free grant that only costs a small fee to receive. Once the first payment is sent, the scammer continues to add various fees. The consumer never receives the grant and loses whatever money and personal information they sent to the scammers.
Method of payment
While gift cards are still the method of payment of choice for scammers, more are beginning to turn to cryptocurrency. The FTC reported more than $22 million in losses from government imposter scam victims using cryptocurrency as payment in 2021. For more about cryptocurrency scams, read BBB’s study on the topic.
Tips to avoid government impostor or government grant scams
A government agency will not call you- Government agencies like the Social Security Administration, IRS or FBI do not call people with threats or promises of money. The SSA will never threaten you because of an identity theft problem and social security numbers are never “suspended”.
Do not always trust your caller ID- Scammers can spoof numbers, making it appear as if they are calling from a government agency. Check with the real agency by going to the agency’s website directly, then click contact us to find out how to connect. Do not trust numbers that may be included in emails, text messages or internet searches.
Do not click on links inside a text message or email claiming to be from a government agency. Scammers can lead you to fake sites that look legitimate.
Never provide your bank account or other personal information to anyone who calls you- The IRS generally makes its first contact with people by regular mail – not by phone – about taxes.
Never pay with a gift card, wire transfer or cryptocurrency- No government agency will take those forms of payment.
Don’t pay for a “free” government grant. If you must pay money for a “free” grant, it isn’t free. Go to Grants.gov for lists of official grants.
Report potential scams
Better Business Bureau – File a report with BBB Scam Tracker.
Social Security Administration – Submit a report through the Inspector General’s online form.
IRS- Fill out the IRS Impersonation Scam form at tigta.gov, or call TIGTA at 1-800-366-4484.
Federal Trade Commission – 877-FTC-HELP or www.ftc.gov.
