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May 29, 2024 • 27min
So you've been scammed, now what?
Planet Money
We are living in a "golden age" of online fraud, as the proliferation of apps and services for storing and sending money has enabled bad actors to devise increasingly sophisticated scams. While we hear more and more stories of financial heartbreak each year, what often goes untold is what happens after the scam.
So you've been scammed, now what?
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Key Takeaways
- Frances, a white-collar worker in her 40s, was scammed out of over $800,000 - nearly her entire life savings - through an elaborate "phantom hacker" scheme
- The scammers impersonated bank security and government officials, convincing Frances to transfer her money into cryptocurrency accounts under the guise of a secret FBI investigation
- When Frances tried to get help from the real FBI and her banks, she hit roadblocks - the FBI has limited resources and the laws around reimbursing scam victims are outdated
- Tracing and recovering the stolen funds is extremely difficult, as the money was quickly converted to cryptocurrency and scattered across blockchains
- This case highlights the challenges victims face in navigating the systems meant to protect them, as well as the limitations of law enforcement and financial institutions in addressing the explosion of online fraud
Introduction
We are living in a "golden age" of online fraud, as the proliferation of apps and services for storing and sending money has enabled bad actors to devise increasingly sophisticated scams. While we hear more and more stories of financial heartbreak each year, what often goes untold is what happens after the scam.
In this episode, Planet Money follows the story of Frances, a white-collar worker in her 40s who was scammed out of over $800,000 - nearly her entire life savings. Her journey to try to recover the stolen funds takes her from the halls of the FBI to the fraud departments of major financial institutions, offering a window into how the systems meant to protect victims often fall short in practice.
Topics Discussed
The Phantom Hacker Scam (3:09)
- Frances received a voicemail claiming to be from Citibank about a suspicious $50,000 wire transfer
- She was then contacted by someone claiming to be from the bank's security department, who said she was being targeted by Russian hackers
- Over the next few weeks, the scammer, posing as "David Smith," convinced Frances to give him remote access to her computer and transfer money into cryptocurrency accounts, claiming it was part of a secret FBI investigation
- By the time Frances realized she had been scammed, over $800,000 had been drained from her investment accounts
Hitting Roadblocks with Law Enforcement (9:23)
- When Frances went to the real FBI for help, the agent confirmed it was a scam but said the FBI likely wouldn't open a case due to limited resources
- Former FBI agent Kyle Armstrong explains the FBI prioritizes cases based on factors like dollar amount lost - a $50,000 case is less likely to be investigated than a $5 million one
- With 2,400 cybercrime complaints received daily and only around 10,000 FBI agents nationwide, the agency has to be selective in which cases to pursue
- The fact that several months had passed before Frances reported the crime also reduced the chances of the FBI being able to recover the funds
Navigating Financial Institutions (15:04)
- Frances next tried to get help from the banks and payment apps her money had been transferred through
- Consumer advocate Carla Sanchez Adams explains the key laws around reimbursing fraud victims, like the Electronic Fund Transfer Act (EFTA)
- However, the EFTA only covers certain types of transactions like debit cards and peer-to-peer payments, not wire transfers like those used in Frances' case
- Even for covered transactions, banks have latitude in determining whether a case qualifies as "fraud" (unauthorized) vs. a "scam" (where the victim was deceived into authorizing the transfers)
- Banks are also less obligated to reimburse if the victim waited too long to report the crime
One Final Call with the Scammers (22:08)
- Months later, the scammers reached out to Frances again, claiming to have an update on her "case"
- This time, Frances recorded the call, hoping to gather evidence for a potential future investigation
- Throughout the call, Frances wrestles with the conflicting realities - wanting to believe the scammers' story, but also recognizing it as a "complete bullshit" scam
- By the end of the call, Frances finally breaks free and hangs up, ending contact with the scammers for good
Ongoing Legal Efforts (27:28)
- Frances has hired cybercrime lawyers who are working on contingency to try to trace the stolen funds across blockchains and potentially get the courts to freeze and seize any recoverable assets
- However, her lawyers say the banking laws are outdated and not designed for the current technological landscape, making recovery efforts extremely challenging
- The outcome remains uncertain, as the sheer volume of online fraud cases overwhelms the systems meant to protect victims
Conclusion
This case highlights the devastating impact that sophisticated online scams can have, as well as the significant obstacles victims face in trying to recover their stolen funds and get justice. Frances' journey takes her from the false promises of the scammers, to the limited resources and outdated laws that constrain law enforcement and financial institutions, ultimately leaving her with an uncertain path forward.
The explosion of apps and services for storing and sending money has enabled a "golden age" of fraud, with thousands of victims reporting losses each day. Yet the systems designed to protect consumers have struggled to keep pace. This episode offers a window into that reality, as well as the emotional and financial toll it takes on those caught in the crosshairs of these increasingly complex scams.
