WASHINGTON—The Federal Trade Commission has proposed a rule to fight government and business impersonation scams, which it described as a perennial scourge that has costs consumers hundreds of millions of dollars over the past five years.
The proposed rule would codify the well-understood principle that impersonation scams violate the FTC Act, as do those who provide impersonators with the means to harm consumers, the FTC said.
If put in place, the rule would allow the Commission to recover money from, or seek civil penalties against, scammers who harm consumers in violation of the rule.
“The proposed rule will expand the Commission’s toolkit to combat the significant harm caused by government and business impersonation frauds,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “We look forward to comments from the public on our efforts to deter fraud, hold impersonators accountable, and secure redress for consumers.”
Sharp Rise
According to the FTC, fraud reports to about government and business impersonation scams rose sharply at the beginning of the COVID-19 pandemic. The FTC said it received more than 2.5 million reports of these scams from consumers nationwide from the beginning of 2017 through the middle of 2022, and those consumers reported losing more than $2 billion to these scams.
“Government and business impersonators can take many forms, posing as, for example, a lottery official, a government official or employee, or a representative from a well-known business or charity,” the FTC said. “Impersonators may also use implicit representations, such as misleading domain names and URLs and ‘spoofed’ contact information, to create an overall net impression of legitimacy. These scammers are fishing for information they can use to commit identity theft or seek monetary payment, often requesting funds via wire transfer, gift cards, or increasingly cryptocurrency.”
The proposed rule follows an Advance Notice of Proposed Rulemaking published by the Commission last December. In response to that notice, the FTC received more than 160 public comments, none of which opposed proceeding with the rulemaking process, the FTC said.