FTC refunded over $11.45 billion to financial fraud victims

Edward G. | September 16, 2020

Scams in cyberspace have been a prevalent issue for quite some time, but the US government is taking measures to help cybercrime victims.

According to data presented by the Atlas VPN research team, the Federal Trade Commission (FTC) refunded $11.45 billion to US consumers that were scammed by cybercriminals. As many as 7.04 million individuals received a refund from the FTC since its inception.

The FTC’s main mission is to protect US consumers by halting unfair, deceptive, or fraudulent practices in the marketplace. This independent agency of the United States government conducts investigations, sues companies, and people that violate the law.

Once an FTC lawsuit or settlement is final and the defendants have paid the money, the Bureau’s Office of Claims and Refunds creates a plan for returning that money to the victims.

By far, the most significant case involving fraudulent practices was carried out by AMG Services. After the settlement, the Federal Trade Commission issued $956.26 million refund checks to over 1.18 million recipients.

AMG Services, a company founded by Scott A. Tucker, charged consumers with undisclosed and inflated fees on the loans. The court found that the company ran by Scott A. Tucker violated federal law when they misinform consumers on how much fees they would have to pay for the loans.

The second biggest fraud case in which the FTC sent out refund checks is the settlement with Herbalife. The case resulted in $199.51 million refund checks to 260 thousand victims, and Herbalife’s restructuring.

The lawsuit alleged that Herbalife deceived consumers into believing they could earn significant profits from selling the company’s products. However, after investigating the business model, it became apparent that "it’s virtually impossible to make money selling Herbalife products." the FTC said in a press release.

The third biggest case resulted from LifeLock’s scheme. The company failed to establish and maintain the promised information security program, which was meant to protect its customer’s sensitive personal information, like credit cards, bank account, and social security numbers.

LifeLock promised that they had integrated the same high-level safeguards that are used by financial institutions, but that was not the case. FTC sent out refunds totaling $61.11 million to 1.07 million misled LifeLock’s customers.

The fourth most significant case involves DeVry University, which spread misleading ads deceiving students about the future job prospects and income levels the students could get upon graduation.

To be more specific, DeVry promised students that 90% of graduates landed jobs in their field within six months of graduation and had 15% higher incomes than graduates of all other higher education institutions.

As a part of the settlement, the University agreed to pay $49,09 million to the FTC for partial refunds to some students as well as $50.6 million in debt relief. The debt forgiven included $30.35 million on all private unpaid student loans that DeVry University issued. The other $20.25 million in student debts was forgiven for tuition, books, and lab fees.

One of the most known brand names - Office Depot, also got in trouble with the FTC over allegations that they tricked people into purchasing computer repair services. The FTC is sent out 541 thousand checks totaling more than $34.29 million as the result of a settlement with Office Depot and Support.com.

The FTC alleged that Office Depot and Support.com configured an antivirus program that falsely reported detecting a virus, even though that was not true. The false scan then persuaded individuals to purchase computer repairs costing up to hundreds of dollars.

In addition to the FTC settlements and refund programs mentioned above, the refunds include money returned to consumers directly by defendants and other third parties in Uber, The Tax Club, Helping America Group, AdoreMe, Amazon, AT&T, Mobility, Breathometer, Devy, Fashion Nova, GreenTree, LifeLock, Manual Alban, Netspend, Pact, University of Pheonix, Volkswagen, and Western Union.

FY 2019 - a record year

In total, from the fiscal year 2016 to the fiscal year 2019, the Federal Trade Commission, or companies and individuals that were a part of fraudulent schemes, refunded more than $10.5 billion to scam victims.

In some cases, the FTC sends out the refunds by themselves. The FTC directly sent out $977.5 million in refunds since the fiscal year 2016. Over 9.1 million people cashed out these checks. The administrative costs of distributing the money reach $22.1 million.

The independent government agency provides its direct refund numbers since the fiscal year of 2016 when they sent out $56.5 million to scam victims. Next year, in the fiscal year 2017, the FTC’s refunds jumped by 532.98% to $356.9 million.

Moving forward, FY 2018 seemed to be better as the refunded amount dropped to $83.6 million, a decline of 76.71%. However, FY 2019 was a record period, with over $478.4 million refunds sent out to individuals, which is a 472.25% growth when comparing it to the previous fiscal year.

In short, it appears that the Federal Trade Commission is sticking to its word and helping scam victims. On the other hand, fraudulent schemes are still a painful and growing issue for US consumers.

Edward G.

Edward G.

Cybersecurity Researcher and Publisher at Atlas VPN. My mission is to scan the ever-evolving cybercrime landscape to inform the public about the latest threats.



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