Beware Of Online Scammers

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The Federal Trade Commission (FTC) has reported a three-fold increase in consumer reports about scams arising on social media since last year as well as a spike around the time the COVID-19 pandemic began.  This includes reports about buying products that never arrived and about scams involving romance, economic relief, or income opportunities, which became particularly problematic as the COVID-19 pandemic caused loss of income and jobs.  Although scammers are typically looking for money, sometimes they seek intellectual property.

The FBI reports that intellectual property theft costs US businesses billions of dollars a year and is a growing threat given the rise of digital technology and online file sharing.  The FBI collaborates with brand owners and copyright and trademark holders and, under a new strategy, is working with online marketplaces, payment service providers, and advertisers to help uncover and prevent fraudulent tactics.  The FBI’s tip sheet on safeguarding trade secrets, propriety information, and research is available here.

Companies that operate exclusively online may be a particular target for such scammers.  I recently witnessed a play on a Nigerian scam that targeted an online retail company owned by a family member. (A Nigerian scam is defined as a scheme, typically via email, where the scammer offers a commission to someone who helps transfer a sum of money.)  In this particular scheme, the owner of an online art gallery received a communication from someone purporting to want to buy an expensive painting as a surprise for her husband.  The scammer sent a cashier’s check for well over the painting’s value, surely with the intent to ask that the check be deposited, that a portion be wired back, and that a commission on top of the painting’s price be retained for the inconvenience.  Those who know this scam can predict what happens next — the wire leaves the target’s bank account, the check never clears, and the target has lost the money that was wired.  In this particular scam, it’s possible the scammer could also have ended up with the painting, potentially a valuable piece of intellectual property, without having paid for it.

Luckily the target was too savvy to fall for the scam.  But we did submit a consumer complaint to the FTC in an attempt to protect others who may not be.  Since then, the FTC has announced a new fraud reporting platform for consumers.  The new website, available at reportfraud.ftc.gov, is meant to be a user-friendly way for consumers to report scams, frauds, and bad business practices and now includes a feature for the FTC to provide next steps on what to do.  The FTC will continue to share reports with local agencies, making it a convenient place to file a single report.

Protect your company, your brand, and your intellectual property.  Beware of scammers and fraudsters.  And report their unlawful behavior.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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