"It's Me, Grandma" -- The Growth of "Grandparent Scams"

For most of the last decade, Japan has been plagued with the so-called "It's me" scams (translated from "Ore ore sagi").  These are telephone-based fraud schemes in which the fraudster calls a person and pretends to be a younger relative who is in legal or other trouble and urgently needs money for bail, traffic fines, or hospital expenses.  (The scheme got its name from the caller saying, if the person appeared to sound older, "Grandma (or Grandpa), it's me."  If the person receiving the call then assumes it is their relative and responds accordingly, such as "Ichiro, is that you?", the caller then "confirms" his identity and seeks to persuade the call recipient to transfer money through a particular bank account.

Some empirical data about "It's me" schemes are available from a survey of victims that the Tokyo Metropolitan Police Department conducted between October and December 2011.  According to a report on the survey by the Japan Times, out of 323 cases, 75 percent involved the caller posing as the call recipient's son, and another 14 percent posing as the recipient's grandson.  The Tokyo Police also reported that 70 percent of victims lived alone or with their spouses and had never discussed the "It's me" fraud with their families.

This apparently simple scheme has proved surprisingly lucrative for fraudsters.  In 2011, according to the Japan Times, Japan's National Police Agency (NPA) reported that the fraud had increased by 34 percent from 2010 to yield ¥10.6 billion, equivalent to about US$138 million, and that more than 4,600 cases of such fraud had been recorded.  In 2012, the Tokyo Police stated that of the 340 "It's me" cases in Tokyo this year, the average amount stolen from victims was ¥3 million, equivalent to about US$12,800. 

Perhaps because this type of scam requires minimal preparation and skill of the criminal, while yielding substantial sums of money, some "It's me" scams reportedly were being run by Yakuza members.  More recently, as early as 2009 some "It's me" callers reportedly claimed to be Yakuza members and demanded money from the persons they called.  In 2011, in the aftermath of a major earthquake in northern Japan, the Telegraph reported that some callers pretended to be relatives who were earthquake victims and urgently needed funds.

Some have speculated that the scheme succeeds in Japan "because debt holds great shame." Yet since about 2008, "it's me" schemes began a dramatic surge, under the name "grandparent" or "emergency scams," in a variety of countries where debt has less cultural sensitivity, including the United States, Canada, and Australia:

• In the United States, victims span the country from New York to Florida to Hawaii.  So pervasive have these schemes become that numerous government and private-sector organizations -- including the AARP, the FBI, the State Department, MoneyGram, and the Canadian Anti-Fraud Centre -- have issued warnings to the public about them. Moreover, where "It's me" schemes were confined to Japan, "grandparent" schemes targeting U.S. residents can be traced to Canada, Spain, Mexico, and Nigeria, according to the New York State Attorney General's Office, and to the United Kingdom.
• Last year, according to the AARP, "more than 25,500 older Americans reported sending money" to grandparent schemes.  The typical amounts that these scams request from U.S. victims vary widely, but typically range from $1,000 to $4,000, as reflected in recent reports from California (jail/auto accident/court settlement pitch) and New York (bail money pitch). When the scammers seek to "reload" the victim -- that is, to find additional bases to request more money from the victim, such as lawyers or additional fees -- reported losses have risen to $8,100, $11,000 and even to nearly $90,000 in one case.
• Canada, too, has its share of victims from both domestic and international schemes. Victims there have publicly reported comparable loss ranges:CA$1,200 to $1,900, up to $5,900 and even $20,000 when the victims were reloaded.
• Australia has reported a surge in grandparent scams victimizing its residents.  One recent report by the Western Australia Department of Commerce listed fraud losses ranging from AU$3,000 to $30,000.  Particularly noteworthy in two of these cases was the apparent targeting of people who spoke Central European languages.  One victim who sent AU$30,000 was called by someone who spoke Serbian, the victim's first language, and claimed to be from the Australian Embassy in Belgrade.  Another victim, who spoke Croatian, sent AU$3,000 after the caller, who spoke fluent Croatian, claimed to be from the Croatian Embassy in Dubai.
• In general, single demands for higher amounts of money are less likely in this scheme, as the amount being requested presumably has to bear some reasonable relationship to the type of purported need for immediate assistance. One Florida resident reported that he became suspicious immediately when a scammer pretending to be the call recipient's granddaughter asked for $100,000 so she could get out of legal trouble in Las Vegas.

Law enforcement authorities, including in the United States and Canada, have shown that they are willing to pursue the cases.  Just two weeks ago, after parents and grandparents of students of the University of Texas at Austin got calls claiming that the students had been kidnapped or injured or needed medical attention and demanding small amounts of money, the University Police Department announced that it, the FBI, and the Joint Terrorism Task Force were investigating the calls.  Moreover, any defendants prosecuted in such a scheme would be unlikely to find sympathetic juries.  Just two months ago, a U.S. federal district judge sentenced two Montreal-based emergency scammers to two years imprisonment.

The key to effective law enforcement responses, however, is prompt reporting by the public.  So long as only about 8 percent of victims report the crime, according to Steve Baker, a regional director of the Federal Trade Commission, law enforcement will inevitably get a fragmented and misleading picture of the scope and extent of the problem.  Proactive public-service programs -- such as the Consumer Federation of America's consumer education campaign and the Japanese National Police Agency's advertising campaign against "It's me" schemes -- could help to encourage more reporting and fill the gaps in that picture.