Refund and recovery scams are a type of fraud in which victims are promised refunds or recoveries for money they lost in a previous scam.
Victims are typically targeted through unsolicited emails, texts, phone calls, or social media messages.
They may be asked to pay money upfront before they can receive the promised refund or recovery.
It is essential to be aware of the dangers of these scams so that you can protect yourself from falling victim to them.
How Do Refund and Recovery Scams Happen?
Here’s how Refund and Recovery Scams usually play out:
1) Prior Scam
You’ve already been scammed once. You might have paid for a counterfeit prize, donated money to a fraudulent organization, or fallen victim to one of the many different ways con artists try to scam you.
2) Sucker List
Your name is put on a “Suckers List,” as scammers refer to it.
Scammers collect lists of people who have already lost money to fraud and sell those lists.
Your name, address, phone number, the type of scam that conned you, and the amount of money you spent may all be included.
These lists are bought, sold, and traded by con artists who believe that victims of scams are prime candidates for further scams.
3) You’re Recontacted
Using the “Suckers List,” new scammers get in touch with you via phone, mail, or the internet.
This time, they promise to reimburse you for any funds, prizes, or items you lost in the first scam.
Some people may not even be aware at this point that they were scammed once.
So, using the information they purchased, the con artist might “helpfully” alert you about the prior scam. The information makes the con artist seem trustworthy.
4) They Build Your Trust
They are experts at getting you to trust them.
It’s not every day that you have to deal with a scammer. But scammers deal with victims every day, all day. So they’ve had lots of practice to get good at it.
They’ll seem trustworthy by saying they are representatives of the government, consumer advocacy groups, law firms, charities, or other organizations.
Some even claim to represent the fraudulent business that scammed you the first time, and they are giving refunds to unsatisfied customers.
They might promise to submit a complaint with a government agency on your behalf, say they’re holding money for you, or say they can place your name at the front of a list for compensation.
Whatever they claim, it is a lie told in an effort to win your trust and your money.
5) The Ask
Once they feel they’ve built your trust, the scammer will demand payment or financial information in exchange for their promise to retrieve your lost money or goods.
They may refer to the up-front cash as a “gift” to a charity or even a “retainer fee,” “processing fee,” “administrative charge,” “tax,” or “shipping and handling charge.”
Alternatively, they can claim that they want your debit, checking, or other bank account number to deposit a refund into your account.
Your money will disappear if you provide them with the requested charge or account information.
Once payment has been made, it is doubtful that the money will ever be recovered.
Tips for Avoiding Refund and Recovery Scams
The best way to avoid becoming a victim of a refund and recovery scam is by being aware of how these scams work and taking steps to protect yourself from becoming a target.
Here are some tips:
1) Research the Organization
If you receive unsolicited contact from an organization offering help with getting your money back, it is important to research the organization before engaging with them further.
Search for the name of the organization or business online using terms like “complaint,” “scam,” or “review.”
To find out if other people have complained about the group, check with your state’s attorney general.
Look for the phone number of any government organizations on your own.
To confirm that they got in touch with you, phone them.
Never dial a number that a caller provided for you.
2) Don’t Fall for the Payback Scam
In some cases, victims may even receive a check for more than they paid out.
However, this is part of the scammer’s strategy to get victims to wire back the excess money once they have deposited the check into their account.
This usually results in the victim losing all of their money plus any fees associated with wiring funds back to the scammer’s account.
3) Avoid Wire Transfers and Cryptocurrency
Be aware that only con artists would advise you to send money via wire transfer, cryptocurrency, or gift card using services like Western Union or MoneyGram.
Anyone who requests payment in any of these methods is a con artist.
4) Protect Personal Information
Do not provide any personal information, such as bank accounts or Social Security numbers, until you are certain that you can trust them.
5) Too Good to Be True
Remember the old saying, if something sounds too good to be true—it probably is!
6) Act Quickly
Scammers frequently make payment requests that make it challenging to get your money back. The sooner you take action if you’ve paid a con artist, the better.
To try to halt a transaction, get a transaction reversed, or receive a refund as soon as possible.
7) Stay Alert and Be Cautious
Be vigilant to protect yourself from scammers.
If someone contacts you claiming they can help get your money back, it is essential to be cautious and stay alert.
Don’t be afraid to sound like a skeptic and challenge the scammer.
Hang up if unsure, and contact verified agencies to check if you’re being scammed.
How to Report Refund and Recovery Scams
If you ever suspect that you have been contacted by someone attempting to perpetrate a refund/recovery scam, report it immediately so that other potential victims can be warned about this type of fraud scheme.
Report any refund or recovery scams you’ve fallen victim to and any information you may have about the business or con artist that called you.
Contact your state attorney general or the FTC at ReportFraud.ftc.gov.
Refund and Recovery Scam FAQ
Q: How do I know if a refund and recovery scam is legitimate?
A: If someone contacts you out of the blue, offering to help you get your money back, it’s likely a scam. Research the organization and look for reviews or complaints about their services before engaging with them further. Be wary of anyone who requests payment in wire transfer, cryptocurrency, or gift card services.
Q: What kinds of personal information should I never give away?
A: Never provide any personal information, such as bank account numbers, Social Security numbers, credit card numbers, etc., until you are certain that you can trust them.
Q: How can I report a refund and recovery scam?
A: Report any refund and recovery scams you’ve fallen victim to and any information you may have about the business or con artist that contacted you to your state attorney general or the FTC at ReportFraud.ftc.gov.
Q: How can I prevent myself from falling victim to a refund and recovery scam?
A: Be skeptical of anyone who contacts you out of the blue offering to help get your money back. Research any organization before engaging with them further, and never provide personal financial information until you can trust them. If someone requests payment in wire transfer, cryptocurrency, or gift card services, walk away because it’s likely a scam. Stay alert and be cautious!
Q: What should I do if I’ve already fallen victim to a refund and recovery scam?
A: Take action immediately. Contact the company you wired money to and request a transaction reversal, or contact your bank or credit card provider for a refund.
Q: What is an example of a refund and recovery scam?
A: An example of a refund and recovery scam is when someone contacts you to help you recover money lost in a previous transaction. This person may request payment for their services upfront but will rarely be able to provide any evidence of success or offer a satisfaction guarantee. If this happens, it’s likely a scam.
Q: How can I protect myself from becoming a refund and recovery scam victim?
A: Be skeptical of anyone who contacts you out of the blue offering to help get your money back. Research any organization before engaging with them further, and never provide personal financial information until you can trust them. If someone requests payment in wire transfer, cryptocurrency, or gift card services, walk away because it’s likely a scam.
Q: What red flags might indicate a refund and recovery scam?
A: Red flags that could signal a refund and recovery scam include requests for payment upfront in wire transfer, cryptocurrency, or gift card services before the business does any work. Additionally, if someone contacts you out of the blue offering to help with refunds without any guarantee of success, be wary, as this may be a sign of a scam. Also, research and review complaints about their services before engaging with them further. Finally, never provide personal financial information until you can trust them. Stay alert!