With more than 160,000 reports and over $100 million in losses, COVID-19 fraud has spread rapidly and left many in a more difficult financial position.
Q2 2020 hedge fund letters, conferences and more
A new virus has led to a new type of fraud as scam artists have taken full advantage of the coronavirus pandemic. What exactly is COVID-19 fraud, and which parts of the country have been most affected? The Ascent conducted a study of Federal Trade Commission (FTC) data in early August to find out that and much more about COVID-19 fraud.
Defining COVID-19 Fraud
The FTC's classification of COVID-19 fraud is a fraud report that includes terminology related to COVID-19, such as "COVID" or "stimulus." That means if the fraud has any relation to the coronavirus, then it's considered COVID-19 fraud. Examples include sellers offering fake vaccinations for the virus, stolen stimulus checks, and trip cancellations that weren't refunded.
States With The Most Fraud
Owing to its population size, California was the state with the heaviest COVID-19 fraud losses as of Aug. 10, 2020. Its residents had lost $15.63 million, over 10% of the $105.7 million lost nationwide. New York, Florida, Texas, and Pennsylvania rounded out the top-five, with all of them totaling over $4 million in losses.
The results were much different when ranking states by their median fraud losses. Although Vermont had the third-lowest total fraud losses, it had the largest median fraud loss at $627. It was followed by North Dakota, Idaho, Delaware, and Washington.
After adjusting for population size, Maine had the highest rate of COVID-19 fraud reports, with 6.84 reports per 10,000 people. However, Maine residents also did best at not losing money to coronavirus fraud, with only 32.1% of fraud reports in that state indicating that the victim lost money.
COVID-19 Identity Theft Is Running Rampant In Some States
The COVID-19 identity theft rate (the number of identity theft reports compared to overall reports) was 15.43% nationally, but there were states with much higher averages.
Hawaii stood out with an identity theft rate of 116.1%, likely meaning some of its reports included multiple instances of identity theft. The other states with identity theft rates of over 50% were Massachusetts, Montana, Rhode Island, and Washington.
Another interesting observation is that none of those states had high identity theft numbers in 2019. It appears that there's no correlation between COVID-19 identity theft and all other types of identity theft.
What Consumers Should Look Out For
While this fraud can take many shapes and forms, The Ascent found that there were several common tactics and types of fraud that were particularly prevalent.
Online shopping, which includes products and services that don't arrive or work as advertised, led to the most fraud reports. The travel and vacations category resulted in the most losses. Consumers who plan to book travel in the near future should make sure to review the cancellation and refund policies so they know what their rights are if they need to cancel.
Money wires were how victims of COVID-19 fraud lost the most money, and this is yet another sign of why consumers should avoid wiring money to anyone they don't know.
Reports of COVID-19 fraud decreased from May to August, but that doesn't mean it's gone for good. COVID-19 isn't going anywhere in the near future, so it's likely that these scams will continue as well.
