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3 Ways You Can Recover Money Stolen By Scammers

Recouping funds is sometimes possible, but reporting the fraud promptly is key


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Chris Gash

Cy Smith, 53, a financial analyst from San Francisco, lost $1.2 million in a fast-moving cryptocurrency investment scam in 2021. “It was a living nightmare,” he says. “My life savings, my daughter’s education fund, it was all gone in five weeks.” But in January, Smith (we changed his name at his request) wept tears of joy in a California courtroom when a judge ordered the return of $110,000 of the stolen money. “I was the lucky one,” Smith says.

Getting money back from criminals is rare. But new efforts by law enforcement officials, banks, payment apps and gift card companies are clawing back some funds lost in a wide variety of scams. Smith recovered money thanks to Santa Clara County Deputy District Attorney Erin West’s crusade to track, freeze and seize stolen cybercurrency as it flows to overseas criminal gangs through online trading exchanges.

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All of this makes reporting fraud — something so many of those targeted fail to do — more important than ever. “The best thing you can do for yourself and future victims is to report as soon as possible,” West says. Your information could launch or further an investigation, trigger warnings to protect others or even help you recover money.

Here’s the latest on efforts to recover scammed money:

  • Cryptocurrency. In 2022, victims reported losing more than $2.5 billion in cryptocurrency investment frauds , according to the FBI Internet Crime Complaint Center (IC3). West’s team is trying to fight back: Since last December, it has seized more than $2.5 million for California victims of cryptocurrency investment scams, in which victims were lured into investing over and over again. The Crypto Coalition, a nationwide law enforcement network started by West in the fall of 2022, has more than 1,000 members in 40 states who are beginning to deploy the same investigative techniques and laws to successfully recover funds. 

But victims need to be careful about how they try to recover that stolen money (see sidebar below). The FBI recently warned that criminals are pretending to offer cryptocurrency recovery services to scam victims, whom they may contact directly on social media or reach through online ads. Sometimes they’ll pretend to be with the FBI, the agency says, noting that law enforcement will never charge a fee for investigating crimes.

Reporting tip: Report crypto scams to the FBI’s Internet Crime Complaint Center and to your local police department.

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Have you seen this scam?

  • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
  • Get Watchdog Alerts for tips on avoiding such scams.
  • Peer-to-peer apps. Starting June 30, the more than 2,000 U.S. banks that provide customers with Zelle, the nation’s largest dollar-volume peer-to-peer (P2P) payment service, are investigating and recovering money lost to scammers. “This is a massive change,” says Ben Chance, chief fraud risk management officer for Early Warning, the network owner and operator for Zelle. Previously, scam victims could recover money lost in unauthorized Zelle transactions only when a criminal took over an account. This rule change even covers transactions authorized by users “if you have fallen for a certain type of impostor scam,” Chance says. “The scammer has to be impersonating a government agency like the IRS or Social Security Administration, a financial institution like a bank or a service provider like a utility company.” Last fall, Congress opened an investigation of Zelle’s fraud and scam recovery policies, saying fraudsters used the service to steal $441 million from users in 2021.

Reporting tip: If you paid scammers using Zelle, you can report it to the bank or credit union where you have your Zelle account up to 120 days after an incident. But sooner is better for bank investigators. The nation’s two other largest P2P apps, Venmo and CashApp, recommend users contact customer service if they’ve been scammed. But, they say, most of the time, payments to criminals cannot be canceled.

  • Gift cards. Gift card companies may be able to recover some or all of the money sent to scammers via gift card numbers if you act quickly The Federal Trade Commission (FTC) noted in a recent alert that some companies are now flagging fraudulent transactions and freezing stolen gift card money so criminals can’t access it. 

“With a receipt and swift reporting, funds or partial funds can be recouped,” says Martha Weaver, spokesperson for the Retail Gift Card Association “The sooner you take action, the more likely you are to minimize the damage and protect yourself from further financial harm.”

Reporting tip: “There should be a 1-800 number on the back of the card — call that number,” Weaver says. “Some gift card issuers may have specific procedures for handling fraud claims, so be sure to follow their instructions. If there is not a 1-800 number on the card, go to the company’s website and contact customer service.” 

Also tell the FTC at ReportFraud.ftc.gov.

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spinner image cartoon of a woman holding a megaphone

Have you seen this scam?

  • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
  • Get Watchdog Alerts for tips on avoiding such scams.