Identity Fraud in Focus quarterly report for Apr - Jun 2022

Key discoveries:

3 scam trends from the second quarter of 2022

Phishing emails continue to cause problems

Top identity theft and fraud crimes for April - June 2022

3 scam trends from the second quarter of 2022

The scam industry is booming, tactics are evolving, and bad actors are getting more persistent.

Remote job scams are on the rise

More people are looking to work from home than ever before, and bad actors are capitalizing on these job searches. In 2021, the FTC received over 104,000 consumer complaints about fake job opportunities, nearly three times the amount reported in 2019.¹ In the second quarter of 2022 alone, Americans were scammed out of $86 million due to fake business and job opportunities, according to the FTC.²

In these scams, a fraudster may pretend to be from a reputable company and set up a fake interview, conducted over instant message. On the spot, the job seeker is offered the position, which includes a signing bonus. The victim is then pressured to deposit a counterfeit check into their bank account using mobile deposit technology, then pay for work-related supplies upfront from a company-trusted vendor. Once a victim has sent money, it’s gone forever. Then the counterfeit check is flagged by the bank and the victim realizes there’s no job to start.

Crypto scams are now commonplace

Cryptocurrency is a popular topic today among investors. But like anything involving money, scammers are cashing in. Since the start of 2021, Americans have lost more than $1 billion in crypto scams, according to the Federal Trade Commission (FTC), which is nearly 60 times the amount lost in 2018.³ Here at Allstate Identity Protection, we’ve seen crypto scams lead to thousands of dollars in losses in the second quarter of 2022 alone. Like cash or money sent electronically, once a payment is made in cryptocurrency, it’s hard to recover. Despite the risks, our new data shows that Americans continue to make cryptocurrency payments without proper precautions.⁴

“The allure of fast profits with minimal risk is tempting. But the reality is, investing in crypto is risky, and it’s very difficult to spot signs of a scam. Our educational tools help spread awareness, so consumers recognize the warning signs before fraud occurs. We want people to hold onto their investments,” said Allstate Identity Protection Senior Vice President of Operations Doug Kaplan.

Catfishing is a serious threat

Most people associate catfishing with fake online dating accounts that humiliate victims or damage their reputation. Today, though, criminals also create fake personas to lure victims into sending sensitive personal information or money. And younger generations aren’t the only ones targeted. Older Americans are being scammed out of pensions or retirement funds as part of elaborate romance scams that target the most vulnerable.

Phishing emails continue to cause problems

Last quarter’s fraud report covered robocall and scam texts, and how they’re more than simple annoyances. Now, we’re covering another communications-based fraud, one that’s long been around but continues to cause damage: phishing emails.

Just like with scam texts, phishing emails prey on a sense of urgency, the promise of a reward, or an emotional reaction. These emails are designed to look like they came from a trusted source such as a bank, credit card, or retailer. The goal of phishing is to get people to click on a dangerous link or download a malicious attachment.

Fraud patterns we saw in Q2

Fraudsters took advantage of job instability during the pandemic. This led to a dramatic surge in unemployment benefits fraud over the past two years. While our unemployment fraud cases are down year over year, we did see an 85% increase in disability fraud — another type of government benefits fraud — in the second quarter of 2022. In last quarter’s report, we predicted this rise in disability fraud may hit last-minute tax filers, since most people don’t discover they’re victims until they file taxes and learn someone has already claimed disability benefits on their behalf.

Another trend we’ve seen is an increase in unauthorized credit inquiries — up 116% in quarter two. These appear as hard inquiries on credit reports, typically indicators that someone is trying to open a new account.

Javelin Strategy and Research attributes this spike in part to AI-powered bot networks,⁶ that target financial institutions and consumers by synthesizing human behavior to steal sensitive information.

“Signs of identity theft require fast action." says Allstate Identity Protection Director of Customer Care Brian Stuart. “It’s important to investigate and dispute hard inquiries that you believe are unauthorized, not only with credit bureaus reporting them, but also with the company that made the inquiry in the first place. Of course, my team is here to help members repair the damage if identity theft occurs. We won’t stop until their identity is restored.”

*normalized to account for total subscriber growth