The COVID-19 pandemic saw a rise in reports of scammers pretending to be from government agencies. While reports slowed since peaking in early 2021, victims lost more than twice as much money, according to new research by Better Business Bureau® (BBB®). BBB warns people to use caution if they are contacted by a government agency demanding money or offering a government grant for a fee. 

BBB published an in-depth study in 2020 to educate the public about how to detect Government Impostor Scams. In 2021, consumers’ reports to the Federal Trade Commission (FTC) soared with losses of more than $445 million in government impostor scams, including impostors offering phony government grants, up from $175.4 million reported in 2020. 

Likewise, BBB Scam Tracker data showed victims of government grant scams lost more money in 2021 than in the previous year. The median loss in government grant scams rose from $800 to $1,000, making it one of the more expensive and eighth riskiest scam reported to Scam Tracker in 2021, according to BBB Institute for Marketplace Trust’s 2021 BBB Scam Tracker Risk Report. Scam Tracker reports also showed government impostor scams as the second-most reported scams by businesses in 2021. 

How do I know if I'm being scammed? 

In government impostor schemes, scammers may spoof a legitimate government agency phone number to call a potential victim. The scammer threatens arrest if the consumer fails to comply with their requests. Scammers typically ask for payment in gift cards to rectify the problem. Social Security Administration (SSA) impersonators warn the targeted individual that their identity has been stolen and ask them to verify their social security number and other personal information. Ironically, the individual may then actually become a victim of identity theft. Fake Internal Revenue Service (IRS) callers threaten arrest unless back taxes are paid. 

In government grant fraud, scammers contact the consumer using an acquaintance's hacked social media account. The consumer is told about a lucrative grant program that only costs a small fee to receive. Once the first payment is sent, the scammer continues to add various fees. The consumer never receives the grant and loses whatever money and personal information they sent to the scammers. 

While gift cards are still the method of payment of choice for scammers, more are beginning to turn to cryptocurrency. The FTC reported 1,392 complaints in the first 10 months of 2021 about cryptocurrency use in government impostor scams, with losses of more than $22 million. For more about cryptocurrency scams, read BBB’s study on the topic. 

2021 FTC statistics show that people young and old can fall prey to government impostors or grant scams, but the amount of loss increases with age.