What's Happening in Arkansas

Presented By State’s Chief Consumer Advocate Purpose of Consumer Protection Division

Represent and protect the State, its subdivisions, legitimate business community, and general public as consumers. What Does Consumer Protection Do?

Mediates consumer complaints

Prosecutes civil Investigates cases on behalf of violations of the the consumer law public

Educates consumers and businesses about Reports results fair business practices

Advocates for consumers 501.682.2007 or 800.482.8982 [email protected] ASSIST IN GATHERING USEFUL INFORMATION Cooperation With Banks and Other Lending Institutions

• The Area Banker’s Security Council has provided us an email request conduit, which gives our office direct access to all Security//Risk Officers in most of the prominent Banks in Central, Southern, NW, and NE Arkansas. • This allows our office to submit requests to the Council representatives, which are then disseminated out to all of the Banks on the Council Contact List. Banks Provide Useful Information

• Identifying the location of Suspect/Target Accounts for our Scam/Fraud related investigations • Identify pertinent subpoena formats, contact information, & internal policies, which vary from to Bank • Identify Suspects/Targets that are perpetrating Scams, which our office may not have been aware of previously Banks Provide Useful Information

• Allows for a quick conduit for contacting the area IRS, FBI, Secret Service, & Postal Inspection Agents/Investigators, when sharing case information is essential • Allows our office to quickly request Fraud verification Documents and Materials for related mediations/investigations (Example, I was able to contact the Bank Ozk Regional Fraud Investigator last week to verify an account was fraudulent with respect to a ID Passport Application Review) Examples

• Target was a photographer who scammed dozens of consumers by not providing prints or refunding prepaid amounts. We got information from Target’s bank showing he cashed all the consumers’ checks and could not have refunded consumers’ money even though he was promising to do that.

• In several investigations, subpoenaing bank records has allowed us to get an accurate picture of the targets financial activity and others involved. SCAMS How Banks Become Involved In Scams

• Conduit for funds • Scammers like to tell potential victims to use bank wires because it is a fast way to send money. • The bank transfer is sent immediately and there usually is not possibility of recovering the funds. How Banks Become Involved In Scams

• An information-provider for Attorney General • Many banks will notify our office if they suspect abnormal activity from their account holders. • We develop relationships with compliance and operations managers who call us just to ask questions! How Banks Can Help Stop Scams

• Pay close attention to seniors, recently-widowed, or intellectually disabled customers. Get to know them and don’t be afraid to ask questions. • The banker needs to ask questions if an account holder is request to send a wire for a large amount. • If the account holder tries to deposit a large check amount outside of their normal deposits they need to ask questions. Common Scams

Counterfeit Check Scam

Charity Fraud

Online Purchase and Internet Auction Fraud

Phishing Scams

Government Imposter Scam

Tech Support Scam

Sweepstakes, Lottery and Prize Scams

Family Emergency Scam

Online Dating Scams

Employment Scams Types of Scams: Social Engineering

Scammers often call seniors and pretend to be a representative of a reputable or well-known organization. They will develop a relationship with the senior and, through a process known as social engineering, find out details of the senior’s life that can be used to exploit them. In a recent case, a scammer was able to find out a victim’s name, SSN, DOB, and bank account numbers at several state and national banks. The scammer then posed as the victim, called the banks, and accessed the victim’s account balances. Then, the scammer knew the amount of money the victim was worth to him and the scam. The banks were not prepared for this type of misrepresentation. Types of Scams: Work From Home Scammers pose as employers in online ads looking to hire employees to work from home. Sometimes, these scams involve the innocent employee depositing fake or fraudulent checks into their own accounts and being told by the employer to immediately wire it back. Then, the checks are returned, and the “employee” just lost money in the scam. Red flag here is if the potential employer requires the employee to have a bank account. This is a variation of the Check Overpayment scam, where a consumer sells something online and a scammer buys it but they pay with a check/money order that is more than the selling price. The scammer then asks the consumer to cash the check and wire/mail them the difference. Then, the consumer discovers the check/money order was a fake. Types of Scams: Sweepstakes

Scammers will tell consumers that they’ve won the lottery, but to claim the prize, the consumer must send money to the lottery company to cover taxes and fees. Consumers will often visit their bank to wire large amounts of money to unusual places or purchase cashiers’ checks for large amounts. Oftentimes, the scammer uses a to hide his tracks. Types of Scams: Sweetheart & Grandparent Scams Scammers posing as a new online boyfriend, have used their “girlfriend’s” information to open bank accounts without the girlfriend’s knowledge. Typically, this happens when banks allow accounts to be opened online. The scammer then uses the account for illegal purposes, or convinces the “girlfriend” to give him money so that they can save for their future.

Grandparent Scams How Banks Help ARAG Identify and Stop Money Mules

Combine traditional account activity monitoring with account behavior changes. Is a customer spending more than they usually do? Are they moving more money through than they normally do? Are they increasing the number of monthly payees they have? Do they typically cycle $5,000 a month through their account, and is it suddenly $20,000? How Banks Help ARAG Identify and Stop Money Mules • Know your Customer. • Banks help us identify money mules through our subpoena power. • The bank will shut down the money mules account. CURRENT MATTERS Current Investigations

• Online payday lenders • Solar companies • SBA Loan Forbearance Scam • Extending Credit to Risky Consumers National Banks and Federal Savings Associations as Lenders (Docket No. OCC-2020-0026) • OCC rule that determine when a national bank or federal savings association (bank) makes a loan and is the “true lender” in the context of a partnership between a bank and a third party. • The OCC and FDIC put the rule out after the Madden v. Midland ruling in order to clarify that if the interest rate is “valid when made,” a bank can sell it to another State entity and keep the interest rate. • The proposed rule would specify that a bank makes a loan and is the “true lender” if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan. • This rule may impair a state’s ability to enforce its usury and other lending laws.

800.482.8982 [email protected]

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