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Financial Services Law Insights and Observations

FTC proposes rule to combat impersonation fraud

Agency Rule-Making & Guidance FTC Consumer Protection Covid-19 Privacy/Cyber Risk & Data Security Fraud

Agency Rule-Making & Guidance

On December 16, the FTC issued an advanced notice of proposed rulemaking (ANPR) seeking comments on a wide-range of questions related to government and business impersonation fraud. According to the FTC, reported losses due to impersonation fraud have spiked during the Covid-19 pandemic, with data from the Social Security Administration reporting $2 billion in total losses between October 2020 and September 2021. These impersonation scams include persons posing as government officials or employees or persons claiming they represent well-known businesses or charities, and may use “misleading domain names, URLs, and ‘spoofed’ contact information’” to create the illusion of legitimacy. The FTC added that scammers are looking for information that can be used to commit identity theft or seek monetary payment and often request that funds be paid through wire transfer, gift cards, or cryptocurrency. Government impersonators also often threaten consumers with severe consequences, while business impersonators regularly use ploys claiming they have identified suspicious activity on a consumer’s account or computer.

The ANPR - the FTC’s first action under its streamlined rulemaking procedures announced earlier this year (covered by InfoBytes here) - seeks feedback, data, and arguments from the public concerning the need for rulemaking to prevent this type of fraud.” Comments on the ANPR are due within 60 days of publication in the Federal Register.