Scams and Fraud

This episode of NPR’s Planet Money discusses the “price of a hack” by relating what happened when an employee of a company fell for a “phishing” email. The costs to a company, especially one that deals with confidential financial information, can be huge! The solution turns out to be an age-old, low tech one: insurance! Cyber Insurance to be exact.

In any crisis, scammers jump on the opportunity to prey on peoples’ vulnerabilities. The coronavirus is no exception. In fact, scammers are having a field day. There are the bogus remedies, vaccines and preventative drugs advertised online. There are those claiming to be medical providers demanding payment, or those deploying ransomware on hospitals computer systems. And there are those that are defrauding the public programs aimed at actually helping people. Many of the phishing expeditions are attached to links that appear to be from an authority like the CDC with covid-19 information. Law enforcement of all types are responding, as is private industry to try to protect the public, but one must be extremely cautious. (WAPO)

Other prevalent scams involve diet plans and supplements to help you lose your “Covid-19." And remember the age-old email congratulating you on winning the lottery! And the latest aimed at the most vulnerable, Social Security scams! The threatening phone calls about your Social Security number being suspended if you don’t act! (The Social Security Administration would never call you, by the way.) (Wilmington Biz) (Henrico Citizen).

What else is on the horizon? How about “deepfakes”—where artificial intelligence “creates” a person. A recent example was last month’s hijacking of public figures’ Twitter accounts. Now the fear is that a fake audio or video depiction of a real person will be used to commit in financial crimes. (Carnegie Endowment) 

Bankruptcy

Legislation regarding the discharge of private student loan debt in bankruptcy dates back to 2005, when private student loans were added to Federal student loans in the bankruptcy code. Discharging student loan debt is a separate component of the bankruptcy process, and the definition of “undue hardship” which must be proved to get the loan discharged is not well defined in the legislation. The loan servicer is sued separately, and this can take a lot of time and money. It also means that every jurisdiction has its own interpretation of what is required to prove undue hardship, established by cases decided in that jurisdiction.

So, a recent ruling in the 10^th Circuit Court of Appeals in favor of a borrower may set precedent, at least in this district, for more discharges of debt going forward. This borrower claimed her loans should have been dismissed when she went into bankruptcy, claiming the servicer (Navient) would not work with her on a payment plan, and added all accrued interest once she came out of bankruptcy. The court ruled that separate undue hardship did not apply because the loans were not used solely for the cost of attendance. (Forbes)

The pandemic has driven an increase in the percent of Americans who fear bankruptcy as the result of a health crisis from 45% last August to 50% this year. In addition to rising health costs, rising unemployment, loss of health insurance, six million Americans getting the virus are behind the increase. (Axios)

Identity Theft

In researching news on this topic, I learned that Georgia has the highest incidence of reported identity theft. But perhaps more useful were the warnings about something called “synthetic identity theft.” Of course, scammers have to evolve their tactics as the public becomes more aware of existing tactics. The concern with synthetic ID theft is that your normal routine won’t uncover it.

Here is how it works. The scammer gets hold of a social security or social insurance number. They like using numbers from minors with no credit history. They then apply for credit using this number, a fake name and birth date, and the address of an abandoned property. Of course, the credit application will be denied, but in the process, this identity is established in the credit system. The scammer adds this person to legitimate accounts and, over time, builds a credit history. When they are finally approved for a lot of credit, they max it out and dump the identity. If your social security number was used, you won’t see it because it is not attached to your name. However, when you go to take out a loan, the unpaid balances tied to your Social Security number will be an issue.

If you know or suspect you or your child have been the victim of synthetic identity theft, visit identitytheft.gov to file a report with the FTC and create a personalized recovery plan. Also, report your experience on the BBB Scam Tracker to help increase consumer awareness about this serious crime. (BBB)

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