Americans lost a staggering nearly $9 billion to fraud in 2022, a figure that is 30% higher than in 2021. Consumers are left exposed while the top cop on the beat is busy breaking up Big Tech.
Scams are not new. Consumers are often targeted with nefarious schemes by people looking to make a buck. The recent increase in successful scams that steal earnings, savings, and nest eggs from unwitting people is alarming.
What’s happening
The Federal Trade Commission (FTC) just released a report on consumer losses due to scams. The numbers are jaw-dropping. The agency received fraud reports from 2.4 million consumers last year totaling $8.8 billion in losses. The median loss was $650. Scams skyrocketed during the pandemic to between 5-6 million cases annually compared to less than 3.5 million prior to 2020. Concerningly, the ending of the pandemic has not brought scam numbers back down.
By total fraud reports, imposter scams were the most common followed by online shopping scams. With the former, imposters try to steal your money or your personal information by calling, texting, or emailing such as reaching out to you claiming they are calling from a tech support company seeking to fix a problem on your computer, or because you owe money to the IRS, or asking for help for a friend in trouble.
Rounding out the top five scams are prizes, sweepstakes, and lotteries; investment-related reports; and business and job opportunities.
Consumers lost the most money to investment scams–more than $3.8 billion–of all categories. Imposter scams resulted in the second-highest losses at $2.6 billion.
Among demographics, young people (ages 20-29) were more likely to report losses from fraud than the oldest consumers (aged 70+), but older people lost more in dollars. The median loss for young people was $548 compared to $1,000 for older people and $1674 for those over 80 years old.
The FTC compiles a database with these reports directly from consumers, federal, state, and local law enforcement agencies, and other sources. The agency claims that it “does not intervene in individual complaints” housed in this database but works with many of its own law enforcement investigations and shares the data with thousands of federal, state, local, and international law enforcement professionals.
The losses from scams are a big deal to the lives of regular Americans. With inflation at stubbornly high levels, being ripped off from $600 to $1,000 means less money for daily essentials such as rent, food, and gas. For older Americans on fixed budgets, falling for an imposter scam could mean they can’t afford medicine and medical treatments.
What’s up at the FTC
One question we should ask is, does the FTC find spiking scams a concern or a high priority?
Unfortunately, FTC Chairman Lina Kahn and others commissioners seem hyperfocused on frying big fish through headline-grabbing antitrust lawsuits and mega merger blockades. Meanwhile, the little gals and guys are being ripped off with little attention.
Chairman Khan was brought in by President Biden to be a trustbuster. Inspired by the antiquated belief that “big is bad,” the FTC has aimed its firepower toward Big Tech companies. As we’ve written, major technology companies–namely Amazon, Apple, Meta (Facebook), and Alphabet (Google)–face scrutiny from regulators and lawmakers. The clock ran out on specific legislation in the last session of Congress including the American Innovation and Choice Online Act (AICOA) and Open App Markets Act (OAMA).
Furthermore, they have set out to abandon the consumer welfare standard for determining whether antitrust enforcement is warranted. Taking the focus off consumer welfare as measured by price increases, would leave consumers worse off as the soon-departing, lone conservative voice on the FTC Commissioner Christine S. Wilson warned:
As a policy matter, the choice to pivot from a consumer welfare standard is ill-advised, particularly during a period of record inflation… our Strategic Plan means that, by definition, consumer welfare will not be maximized. In other words, the new Strategic Plan will result in higher prices, suppressed production, fewer choices, and dampened innovation.
The FTC faced setbacks recently. A federal court judge threw out the agency’s request to temporarily block Facebook owner Meta’s acquisition of Within, a virtual reality fitness app. Last week, the FTC dropped its effort to block Meta’s acquisition of the app.
Enforcement is well within the purview of the FTC, but so far, the evidence of widespread anticompetitive behavior harming consumers by raising prices has been scant.
These tech companies are being targeted simply because they are massive in size with little regard for the massive benefits that they provide consumers, small businesses, and society.
Tellingly, massive companies in other industries (and even the same industries) are not targeted by legislation like AICOA or OAMA or regulatory enforcement. Trustbusters are lodging an unfair attack on Big Tech.
Big Tech companies are not perfect angels; some more than others, engage in censorship of conservative viewpoints and unpopular opinions to the detriment of society. However, many advocates for breaking up Big Tech should be cautious of the damage they could trigger if they succeed in overturning consumer welfare or breaking up specific companies and how that would outweigh the perceived benefits. Small businesses have weathered the pandemic precisely because of the Big Tech tools that “empower efficiency, access to customers, deep insights, and the ability to thrive.”
Bottom Line
Pursuing Big Tech on antitrust grounds is a distraction from the most pressing issues of the day. Life is unaffordable due to inflation. Americans want to hold onto their dollars and would be better served if the FTC devotes more energy to addressing the rise in scammers robbing consumers blind as well as other ways that prices are kept high. Busting up big companies and blocking mergers, especially those that benefit Americans in their bank accounts, will do more harm than good.