FTC Reports Text Scam Losses Hit $470 Million, Fueling 'Friction Tax' for Retailers

A new data analysis released by the Federal Trade Commission in April 2025 reveals that consumer losses to text message scams reached $470 million in 2024, marking a more than five-fold increase since 2020. The surge in fraudulent activity is creating a significant operational challenge for retailers and other businesses, eroding customer trust and imposing a costly “friction tax” on legitimate digital communications. The FTC’s Consumer Protection Data Spotlight details a landscape where scammers are increasingly successful despite a decline in the overall number of reported scam texts. The report highlights the top five most common text scams, which include fake bank fraud alerts, phony package delivery notifications, bogus unpaid highway toll notices, and deceptive “wrong number” texts that escalate into fraudulent investment schemes. According to the FTC, these reported figures likely represent only a fraction of the actual financial harm, as many incidents go unreported. The effectiveness of these scams is particularly pronounced among younger consumers. According to Jason Dorsey, a researcher at the Center for Generational Kinetics, Gen Z is disproportionately affected due to a convergence of factors. Texting is their primary communication method, making them more susceptible to malicious messages mixed in with hundreds of legitimate ones. They also participate frequently in large group chats with unknown contacts, blurring the line between trusted and unknown senders. Combined with less experience in identifying fraud and immediate access to funds on their phones, the barrier for scammers to succeed is significantly lower. This erosion of trust has a direct and costly impact on businesses. As consumers become more skeptical of unsolicited messages, they are more likely to ignore or delete legitimate communications from retailers, such as order confirmations, shipping updates, and marketing promotions. This forces companies to contend with increased customer service calls from users trying to verify message authenticity, leading to higher operational costs. The added suspicion can also lead to abandoned shopping carts if security or verification processes become too cumbersome, creating what industry observers call a “friction tax” on e-commerce. Scammers are adept at mimicking legitimate business interactions to exploit this environment. The FTC report notes the prevalence of fake package delivery texts that prompt users to click a link to resolve an issue, a tactic that closely mirrors standard communications from e-commerce companies. Other scams relevant to retail include refund fraud, where criminals pose as customers to claim refunds for items they never bought, and identity theft, where stolen personal information is used to make fraudulent purchases. The IRS has also issued warnings about tax-related text scams, cautioning that the agency never initiates contact via text to request personal or financial information. For consumers who fall victim, recourse can be difficult. Financial industry experts note that authorized scam transactions—where the consumer is tricked into sending money themselves—are particularly challenging to resolve through traditional chargeback processes. This difficulty further damages the consumer’s relationship with digital commerce. Some financial institutions are beginning to implement reimbursement programs for common deception scams as a strategy to rebuild that broken trust, recognizing that a secure customer relationship is paramount. When trust is compromised, every subsequent interaction, from marketing outreach to payment collection, becomes more difficult and expensive. The financial and emotional aftermath for a scammed customer can make them wary of all digital engagement, impacting their willingness to keep funds in certain accounts or interact with businesses online. In our experience, this rising tide of fraud is not just a cybersecurity issue; it is a fundamental business process challenge that directly impacts profitability. The so-called “friction tax” manifests as tangible costs: higher customer acquisition expenses to overcome skepticism, increased cart abandonment rates from wary buyers, and bloated customer service budgets. Companies can no longer treat customer communication as a simple, low-cost channel. Every touchpoint must be secured and authenticated, which requires a deep look at internal workflows. We have seen clients successfully mitigate these risks by redesigning their communication and verification systems from the ground up. This is a core component of the business process reengineering services C&S Finance Group LLC provides at csfinancegroup.com, helping companies build more resilient operations in an environment of declining trust. Looking ahead, businesses will face continued pressure to balance seamless customer experiences with robust fraud prevention. This will likely drive greater investment in AI-powered detection tools that can identify fraudulent behavior in real time without creating undue friction for legitimate users. The development of more secure, verified communication channels will become a key competitive differentiator for retailers seeking to maintain customer confidence and protect their bottom line.