First-time fraud victims likely to be hit again

With reload scams and sucker lists, some people are fleeced over and over

Susan Ladika
Personal Finance Writer
Expert on fraud, travel and debt.

Are first-time fraud victims more likely to be hit by fraud again?

If you’ve been a fraud victim once, you are more likely to be fleeced and scammed in the future. In some cases, fraud victims wind up on sucker lists, and they are targeted by every shady Tom, Dick and Harriet. 

These scammers might be working together in one location and taking on different roles, such as a bogus official with the IRS, says Hugh Harris, an attorney in the public protections section of the North Carolina Department of Justice.

“They’re a group of sharks who keep feeding and feeding” off an individual, he says.

Reload scams and sucker lists

In a “reload scam,” a consumer falls victim to fraud over and over again, says Harris. It is almost as if they have a “defraud me” sign pinned to their back. He says fraudsters sell and pass around sucker lists of victims.

Harris cites the case of one North Carolina resident who recently fell victim to a sweepstakes scam. The man received a call from someone purporting to be an overseas lottery official, telling him he had won a prize. To claim it, he was told he had to pay an upfront fee.

The man sent money, then received a call from someone claiming to be a U.S. Customs agent, who said he had to pay to get the money released from Customs. The man again complied.

Next came calls from a purported IRS agent, a supposed Department of Homeland Security official and someone claiming to be from the U.S. Postal Service Office of the Inspector General. Then he received a call from someone claiming to be from a consumer protection agency, saying the agency would help him recover the lost money if he paid a fee.

With every call, the “reload scam” victim paid out more, running up cash advances on his credit cards and even cashing out his individual retirement account. The final total paid to the scammers was about $100,000.

The scammers, Harris says, might have been working together in one location and taking on different roles, such as a bogus official with the IRS.

How do they do it? Often fraudsters are armed with the technology to “spoof” telephone numbers, to make it look like they are calling from the IRS or other important agencies. “That’s what makes it really scary,” Harris says.

Once, twice, three times a fraud victim

A pilot study published in February 2017 to measure financial fraud found that half the 2,000 respondents had fallen victim to fraud in the past year. More than one-third had fallen victim to two or more types of fraud, and almost 15 percent to four or more types of fraud. 

Someone may be more susceptible to repeated fraud attempts because they can’t believe it would happen again, or they’re “a little more desperate to get their money back,” says Marguerite Irene DeLiema, lead author of the study by the Stanford Center for Longevity and FINRA (Financial Industry Regulator Authority).

The study considered a case to be fraud when the victim consented to an offer of a promise, rather than someone who had no control over the incident, such as someone whose personal information was stolen in a data breach. The survey found the average age of the fraud victims was 40.9 years, and the majority were male.

A dozen ways to cut your fraud risk

  1. Don’t click on links in suspicious emails.
  2. Don’t download apps from third-party sites.
  3. Don’t use unsecured Wi-Fi.
  4. Make sure information in your social media accounts is only visible to friends, and don’t accept friend requests from people you don’t know.
  5. Shop only on secure websites.
  6. Use strong passwords and change them frequently.
  7. Use different passwords for each credit card account.
  8. Sign up for email or text alerts on your accounts to notify you of possible suspicious activity.
  9. Monitor your online transactions.
  10. Check your health insurance explanation of benefits to make sure no procedures were done in your name.
  11. Check your credit report for free three times a year at AnnualCreditReport.com or CreditCards.com.
  12. Never share your personal info (Social Security, bank account and credit card number, for example) with someone you don't know. 

Older consumers and millennials have higher fraud risk

“Anyone can be a victim of fraud,” says Amy Nofziger, a regional director for the AARP Foundation. “We all have our vulnerabilities to certain types of scams.”

“You can do everything right and become a victim,” says Eva Velasquez, CEO of the Identity Theft Resource Center. Velasquez’s own information was compromised in the Anthem data breach.

“Older adults may be more vulnerable because they may be isolated and unaware about new frauds and scams,” says Nofziger. Older adults, she adds, “grew up in a different time – when a handshake was all it took to trust someone.”

Bad guys target the elderly for their wealth and because they are often home all day and answer their phone. “Scammers know who holds the majority of wealth in the United States, so they go where the money is and relentlessly target seniors via phone calls, emails and mail solicitations,” she says.

Millennials, too, can be easy targets for repeated fraud.

Younger people “aren’t taught good hygiene with their personal information,” says Michael Bruemmer, vice president of consumer protection at consumer bureau Experian. “They’re all over social media, posting things they shouldn’t.”

Information in social media posts can be used to open credit cards or bank accounts in your name, or to conduct health insurance fraud, and have medical procedures done in your name, Bruemmer says.

“Once your information is out there, it’s out there,” says Bruemmer. “You can remediate against it, but you can’t claw it back.”

‘More fraud victims than ever’

Javelin’s 2017 Identity Fraud Survey found identity fraud soared 16 percent from 2015 to 2016, impacting 15.4 million victims in 2016. Meanwhile, the amount of money lost to fraud climbed from $15.3 billion in 2015 to $16 billion in 2016.

“We have more fraud victims than ever,” says Al Pascual, research director and head of fraud and security for Javelin Strategy and Research, the study’s co-author. “This is a function of how digitally inclined we’ve all become.” 

Nathan Fisk, assistant professor of cybersecurity education at the University of South Florida in Tampa, says fraud victims tend to be more susceptible to persuasive messages or to the claims of people who appear to be in authority (see the reload scam above, for example).

Studies also have found that males, as well as those with lower incomes and less educated, are more likely to fall victim to scams, Fisk says.

“The prevailing advice, think before you click, holds true,” Fisk says.

And once you have been a victim of fraud, learn from the experience. Do even more to protect your personal information to cut your chances of repeat fraud victim. You don’t want to end up on a sucker list and targeted by scammers from this point forward.

See related: How to detect card fraud, identity theftPoll: Credit card fraud alerts surge, false alarms still common


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Updated: 10-18-2018