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Consumers Lost Over $500 million Due to COVID-related Fraud

It will be many years before we have a full understanding of what COVID-19 cost us as a society. As that information is incrementally collected and released, we’re starting to see the picture take shape. One of the most recent reports on the subject was issued by the Federal Trade Commission, which has estimated that consumers victimized by COVID-related fraud lost over $500 million.

The numbers are devastating, especially because there is a strong sense that the self-reported losses pale compared to those that went unreported. The FTC acknowledges that the more than 558,000 complaints it has received art of 2020 barely scratch the surface of how many consumers have been ripped off by online shopping scams, fraudulent travel websites, and other schemes. Far more consumers have likely shrugged off the losses rather than go to the trouble of registering a complaint. But based on the complaints that were lodged (60% of which were specifically associated with fraud), the average theft per person amounted to about $370.

It is heartbreaking to realize that fraud continues and thrives in the midst of a global pandemic. Yet, this frequently happens in the midst of a tragedy. As citizens have struggled to avoid sickness and deal with isolation and job loss, unethical opportunists have set up fake online shopping sites and found ways to rob individuals of their government stimulus checks. Even more, opportunists have tried to take advantage of consumer demand: according to a Consumer Federation report, price-gouging of toilet paper, hand sanitizer, and face masks —items in short supply and desperately needed — was the most frequently-lodged complaint to state and local consumer agencies. Others reported issues with a lack of refunds related to event cancellations, school, and childcare closures. Illegal evictions were also common.

Of the 53,000 scams reported to the FTC, the lion’s share was about online shopping fraud. Approximately 16% indicated that as they spent more time indoors and online, they were tricked by “opportunistic websites” that advertised the availability of in-demand items, then never delivered. Consumers filed complaints about sites selling clothing, electronics, hand sanitizer, and pets, but the biggest losses were to sites that refused to issue refunds on canceled vacations and travel. Ironically, the Better Business Bureau reports that now that travel has resumed, new scams have arisen offering fake airline tickets and other travel accommodations.


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