So you've been scammed, now what?
11Digest
This episode of Planet Money explores the aftermath of a complex financial scam, following Frances, a white-collar worker in New York City, as she attempts to recover over $800,000 stolen from her accounts. The scammers, posing as Citibank security and FBI agents, convinced Frances she was the target of Russian hackers and needed to cooperate with a secret investigation. After months of being manipulated, Frances finally realized she was scammed and sought help from the FBI and her financial institutions. However, the FBI declined to open a case due to limited resources and the time elapsed since the money was stolen. Frances then contacted her banks, but they were not obligated to reimburse her under the Electronic Fund Transfer Act (EFTA) because the transactions involved wire transfers and checks, which are excluded from the law. Despite the challenges, Frances remains determined to recover her life savings and has hired lawyers specializing in cybercrime to help her trace the money and potentially hold her financial institutions accountable. The episode highlights the complexities of online fraud and the limitations of current laws and law enforcement in addressing this growing problem.
Outlines
Introduction
This Chapter introduces Sam Brigger, a longtime fresh air producer and interviewer, who will be interviewing Maggie Rogers about nostalgia, her new album, and her decision to go to Harvard Divinity School.
Frances's Scam
This Chapter details how Frances, a white-collar worker in her 40s, was lured into a scam by a voicemail claiming to be from Citibank. The scammers, posing as security personnel and FBI agents, convinced Frances that she was the target of Russian hackers and needed to cooperate with a secret investigation. Over several months, Frances was manipulated into transferring her funds into cryptocurrency accounts, ultimately losing nearly all of her life savings.
Seeking Help from Authorities
This Chapter describes Frances's efforts to seek help from law enforcement after realizing she was scammed. Her family encouraged her to file complaints with the Federal Trade Commission and the FBI, and she met with an FBI agent who confirmed the scam but declined to open a case due to limited resources and the time elapsed since the money was stolen.
FBI's Limited Resources
This Chapter explores the challenges faced by the FBI in investigating cybercrime cases. Kyle Armstrong, a former FBI agent, explains that the FBI prioritizes counterterrorism, counterintelligence, and cybercrime threats from nation-states over individual cases of cybercrime. The FBI receives thousands of complaints daily, making it difficult to allocate resources to every case, especially those involving smaller dollar amounts.
Seeking Reimbursement from Financial Institutions
This Chapter examines the legal framework governing banks' responsibility to reimburse customers for cybercrime losses. Carla Sanchez Adams, a senior attorney with the National Consumer Law Center, explains the Electronic Fund Transfer Act (EFTA) and its limitations in covering wire transfers and checks. Even for transactions covered by the EFTA, customers must prove that the loss was due to fraud rather than a scam, and they must report the fraudulent activity promptly.
Keywords
Cybercrime
Cybercrime refers to any criminal activity that involves a computer or network. It encompasses a wide range of offenses, including hacking, phishing, malware distribution, identity theft, and financial fraud. Cybercrime is a global issue with significant financial and social consequences.
Financial Scam
A financial scam is a deceptive scheme designed to defraud individuals or organizations of their money or assets. Scammers often use sophisticated techniques to gain trust and manipulate victims into making unauthorized transactions or providing sensitive information. Financial scams can have devastating consequences for victims, leading to significant financial losses and emotional distress.
FBI
The Federal Bureau of Investigation (FBI) is the primary federal law enforcement agency in the United States. It is responsible for investigating a wide range of crimes, including terrorism, espionage, cybercrime, and organized crime. The FBI has a vast network of field offices across the country and plays a crucial role in protecting national security and upholding the rule of law.
Electronic Fund Transfer Act (EFTA)
The Electronic Fund Transfer Act (EFTA) is a federal law that governs electronic fund transfers in the United States. It provides consumers with certain protections against unauthorized transactions and errors in electronic fund transfers. The EFTA covers transactions made through automated clearing houses (ACH), debit cards, and certain online payment services, but it excludes checks and wire transfers.
Cryptocurrency
Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates independently of a central bank. Bitcoin is the most well-known example of cryptocurrency. Cryptocurrencies have gained popularity as a means of payment and investment, but they are also associated with risks, including volatility, fraud, and regulatory uncertainty.
Phantom Hacker Scam
The Phantom Hacker scam is a type of cybercrime where scammers impersonate financial or government officials to gain access to victims' accounts. They often create a sense of urgency and fear, convincing victims that they are the target of a hacking attack and need to cooperate with a secret investigation. The scammers then manipulate victims into transferring their funds into cryptocurrency accounts, where they are ultimately stolen.
Social Engineering
Social engineering is a type of psychological manipulation used by attackers to gain access to sensitive information or systems. Scammers use various techniques, such as impersonation, phishing, and pretexting, to build trust and exploit human vulnerabilities. Social engineering is a common tactic used in cybercrime and can be very effective in deceiving victims.
Coinbase
Coinbase is a cryptocurrency exchange platform that allows users to buy, sell, and store various cryptocurrencies. It is one of the largest and most popular cryptocurrency exchanges in the world. Coinbase provides a user-friendly interface and offers a range of services, including trading, staking, and portfolio management.
Cash App
Cash App is a mobile payment service that allows users to send and receive money, invest in stocks and Bitcoin, and make purchases. It is a popular platform for peer-to-peer payments and is known for its user-friendly interface and integration with social media.
Wire Transfer
A wire transfer is a method of transferring funds electronically from one bank account to another. Wire transfers are typically used for large transactions and can be completed quickly. However, they are also vulnerable to fraud, as scammers can intercept or redirect wire transfers to their own accounts.
Q&A
What is the Phantom Hacker scam?
The Phantom Hacker scam is a type of cybercrime where scammers impersonate financial or government officials to gain access to victims' accounts. They often create a sense of urgency and fear, convincing victims that they are the target of a hacking attack and need to cooperate with a secret investigation. The scammers then manipulate victims into transferring their funds into cryptocurrency accounts, where they are ultimately stolen.
Why did the FBI decline to open a case on Frances's scam?
The FBI declined to open a case on Frances's scam due to limited resources and the time elapsed since the money was stolen. The FBI prioritizes counterterrorism, counterintelligence, and cybercrime threats from nation-states over individual cases of cybercrime. They receive thousands of complaints daily, making it difficult to allocate resources to every case, especially those involving smaller dollar amounts.
What is the Electronic Fund Transfer Act (EFTA) and how does it apply to Frances's case?
The Electronic Fund Transfer Act (EFTA) is a federal law that governs electronic fund transfers in the United States. It provides consumers with certain protections against unauthorized transactions and errors in electronic fund transfers. However, the EFTA excludes checks and wire transfers, which were some of the methods used in Frances's scam. Therefore, the EFTA did not provide her with much protection.
What are the challenges Frances faces in recovering her life savings?
Frances faces several challenges in recovering her life savings. The FBI declined to open a case, and her financial institutions are not obligated to reimburse her under the EFTA. The money has likely been moved to cryptocurrency accounts and scattered across various blockchains, making it difficult to trace. Additionally, the scammers have been very effective in manipulating Frances, making it difficult for her to break free from their narrative.
What are the implications of this episode for the fight against online fraud?
This episode highlights the complexities of online fraud and the limitations of current laws and law enforcement in addressing this growing problem. The banking laws are outdated and not designed for the current technological landscape. The law enforcement system is overwhelmed with the sheer number of complaints, making it difficult to investigate every case. This episode underscores the need for stronger legal protections for victims of online fraud and for increased resources for law enforcement to combat this growing threat.
What steps can individuals take to protect themselves from online scams?
Individuals can take several steps to protect themselves from online scams. Be wary of unsolicited calls or emails claiming to be from financial institutions or government agencies. Never provide personal or financial information to someone you don't know or trust. Verify the identity of anyone claiming to be from a financial institution or government agency by contacting them directly through their official website or phone number. Be cautious of offers that seem too good to be true. If you suspect you are being scammed, report it to the authorities immediately.
What is the role of financial institutions in protecting customers from online fraud?
Financial institutions have a responsibility to protect their customers from online fraud. They should implement strong security measures to prevent unauthorized access to accounts. They should also educate customers about common scams and provide resources for reporting fraudulent activity. Financial institutions should be more proactive in reimbursing customers who have been victims of scams, even if the transactions were technically authorized by the customer.
What are the future challenges in combating online fraud?
The fight against online fraud is an ongoing battle. Scammers are constantly developing new techniques and exploiting vulnerabilities in technology and human behavior. The rapid evolution of technology, particularly the rise of cryptocurrency, makes it more difficult to track and recover stolen funds. Law enforcement and financial institutions need to adapt to these challenges and work together to protect consumers from online fraud.
Show Notes
On today's show, we follow one woman who was scammed out of over $800,000 on her quest to get her money back. That journey takes her from the halls of the FBI to the fraud departments of some of the country's biggest financial institutions. And it offers a window into how the systems that are theoretically designed to help the victims of financial cybercrime actually work in practice.
This episode was hosted by Alexi Horowitz-Ghazi and Jeff Guo. It was produced by Willa Rubin and edited by Keith Romer. It was engineered by Neal Rauch and fact-checked by Sierra Juarez. Alex Goldmark is Planet Money's executive producer.
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