FTC New Impersonation Scams Rule Effective Today

Government taking action Against Scams!

Authors:
•  SCARS Editorial Team – Society of Citizens Against Relationship Scams Inc.
•  Federal Trade Commission

About This Article

The FTC’s new rule targeting government and business impersonation scams takes effect today, April 1st, 2024, aiming to combat the soaring losses reported by consumers, which surpassed $1.1 billion last year alone.

The rule addresses the most common tactics employed by scammers, such as fake account security alerts and phony subscription renewals, and highlights the rise in text and email-based scams alongside declining phone calls. Notably, bank transfers and cryptocurrency payments have become the predominant methods used by victims, prompting the FTC to propose stronger measures, including prohibiting the impersonation of individuals and facilitating scams.

The agency seeks public input to enhance its arsenal against these fraudulent practices, emphasizing the need for collective efforts to safeguard consumers and hold impersonators accountable.

FTC Announces Impersonation Scams Rule Goes into Effect Today April 1st, 2024

New Scam Data shows more than $1.1 billion in Reported Losses to Government and Business Impersonation Scams

According to the FTC

As the Federal Trade Commission’s new rule on government and business impersonation goes into effect today, the agency is highlighting new data on the most common ways consumers are targeted by these treacherous scams. Combined, reported losses to these impersonation scams topped $1.1 billion for the year, more than three times what consumers reported in 2020.

The new data spotlight reveals the five most commonly reported ways that government and business impersonators convince consumers to turn over their hard-earned money: copycat account security alerts; phony subscription renewals; fake giveaways, discounts, or money to claim; bogus problems with the law; and made-up package delivery issues.

In addition, the spotlight highlights two key trends since 2020 when it comes to government and business impersonation scams: how consumers are contacted by scammers and how they pay scammers. Reports of text messages and email are trending up as phone calls decline. When it comes to payment methods, reported losses by bank transfers and cryptocurrency outrank every other payment method used to pay these scammers. Bank transfers account for about 40 percent of reported losses to government and business impersonators in 2023, followed by cryptocurrency at 21 percent of reported losses. Reported losses using both payment methods have increased many times over since 2020.

Today marks the effective date of the FTC’s new rule on government and business impersonation, which was finalized last month (see below.) The rule gives the agency stronger tools to combat and deter scammers who impersonate government agencies and businesses, enabling the FTC to file federal court cases seeking to get money back to injured consumers and civil penalties against rule violators.

The FTC is also accepting public comments until April 30, 2024, on a supplemental notice of proposed rulemaking that would prohibit the impersonation of individuals and prohibit providing scammers with the means and instruments to execute such scams.

“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.”

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. 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.

Government and business impersonation scams have cost consumers billions of dollars in recent years, and both categories saw significant increases in reports to the FTC in 2023. The rule authorizes the agency to fight these scams more effectively.

For example, the rule would enable the FTC to directly seek monetary relief in federal court from scammers that:

• Use government seals or business logos when communicating with consumers by mail or online.
• Spoof government and business emails and web addresses, including spoofing “.gov” email addresses or using lookalike email addresses or websites that rely on misspellings of a company’s name.
• Falsely imply government or business affiliation by using terms that are known to be affiliated with a government agency or business (e.g., stating “I’m calling from the Clerk’s Office” to falsely imply affiliation with a court of law).  

SCARS Analysis

This new rule opens the door wide in helping to limit impersonation scams across all technologies and platforms.

While there will likely be legal challenges, we believe that this finally chips away at the Communications Decency Act, by making specific types of activities illegal on social media and other internet publications, as well as all other communication mediums.

What it does not do is specify who is liable for the prohibited actions. This may be its most powerful aspect because it may allow liability to extend to the enablers of the prohibited actions as well as the creators and perpetrators. Further legal definition of this will definitely be required, but we believe this will cause far greater attention to this to be paid by the major technology and social media platforms. In addition, we expect a flood of civil litigation (private causes of action) to emerge from this new rule against tech companies for their failures in complying with its requirements.

However, now that it is published and in effect, the legal community will have to more fully evaluate the potential for enforcement and its effects on liability.

Trade Regulation Rule on Impersonation of Government and Businesses

Text of Rule

AGENCY:

Federal Trade Commission.

ACTION:

Final rule.

SUMMARY:

This final rule prohibits the impersonation of government, businesses, and their officials or agents in interstate commerce. This document contains the text of the final rule and the rule’s Statement of Basis and Purpose (“SBP”), including a Regulatory Analysis.

DATES:

This rule is effective April 1, 2024.

16 CFR PART 461—RULE ON IMPERSONATION OF GOVERNMENT AND BUSINESSES

461.1

Definitions.

461.2

Impersonation of Government Prohibited.

461.3

Impersonation of Businesses Prohibited.

Authority: 15 U.S.C. 41 through 58.

§ 461.1

Definitions.

As used in this part:

Business

means a corporation, partnership, association, or any other entity that provides goods or services, including not-for-profit entities.

Government

includes federal, state, local, and tribal governments as well as agencies and departments thereof.

Materially

means likely to affect a person’s choice of, or conduct regarding, goods or services.

Officer

includes executives, officials, employees, and agents.

§ 461.2

Impersonation of Government Prohibited.

It is a violation of this part, and an unfair or deceptive act or practice to:

(a) materially and falsely pose as, directly or by implication, a government entity or officer thereof, in or affecting commerce as

commerce

is defined in the Federal Trade Commission Act (15 U.S.C. 44); or

(b) materially misrepresent, directly or by implication, affiliation with, including endorsement or sponsorship by, a government entity or officer thereof, in or affecting commerce as

commerce

is defined in the Federal Trade Commission Act (15 U.S.C. 44).

§ 461.3

Impersonation of Businesses Prohibited.

It is a violation of this part, and an unfair or deceptive act or practice to:

(a) materially and falsely pose as, directly or by implication, a business or officer thereof, in or affecting commerce as commerce is defined in the Federal Trade Commission Act (15 U.S.C. 44); or

(b) materially misrepresent, directly or by implication, affiliation with, including endorsement or sponsorship by, a business or officer thereof, in or affecting commerce as commerce is defined in the Federal Trade Commission Act (15 U.S.C. 44).

By direction of the Commission.

April J. Tabor,

Secretary.

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Related Information:

• FTC Announces Impersonation Rule Goes into Effect Today | Federal Trade Commission
• Federal Register :: Trade Regulation Rule on Impersonation of Government and Businesses

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