Monday, October 10, 2011

Avoiding Consumer Fraud [Guest Post]

“You’ve just won $10,000! Act now! This opportunity won’t last long!” Every day, millions of consumers run into ploys like this one, and some of these people fall victim to the scam. Americans lose hundreds of billions of dollars to consumer fraud every year.

Victims of mass market fraud could potentially lose their life savings and/or have the need to file for bankruptcy. Con artists can find these innocent people through the internet, by telephone, email, and even post mail. People easily get tricked into trusting these scams and give out money or their very valuable personal information.

What is Consumer Fraud?

Consumer fraud occurs when a seller knowingly misleads a consumer by misrepresenting or failing to reveal an important fact. This may seem very straight forward, but it is quite difficult to prove fraudulent acts at times. To prove that fraud has occurred, a person much show all of the following: false representation, knowledge of untrue facts and statements by the defendant, intention of deception, true belief of those statements by the victim, and real damages as the result of the false representation.

Identify Consumer Fraud

While proving consumer fraud can be difficult, it can be quite easy to avoid the fraudulent act in the first place. With the right information, identifying potential consumer fraud can be simple. There are four types of fraud you should be aware of to avoid falling victim to their scams.

  1. Mail – Americans over 65 account for 26% of all mail fraud victims. This percentage is greater when the fraud offers prizes or sweepstakes (60%). These types of scams work most often when victim is ignorant of fraudulent acts through mail until after they have already sent in money or personal information.
  2. Telemarketing – So called “boiler room” sellers use high pressure sales techniques over the phone on unsuspecting consumers. Typically, these scams will use mystery phone charges, request money for a nonexistent charity, or use some other lie to gain the trust of the victim and unknowingly commit the fraudulent act.
  3. Door-to-Door – Phony home repair companies, magazine subscription salesmen, or students raising money for a nonexistent school project could come to the victim’s door asking for a hand out. Not only could these solicitors ask for money, but they could also request access to the victim’s home to commit other crimes like theft.
  4. Internet – This is the easiest way for scammers to solicit money and/or information from victims because there is easy access to a greater number of people when compared to the other options. Deceptive internet sales or companies, emails from what may seem like an official website asking for personal information and hackers working their way into your computer are just a few ways these people can try to take money and information.

Avoid Consumer Fraud

If you get an email, phone call, or other notification for a prize or lottery, the following tips can help you detect possible fraudulent acts. If the offer has one or more of the following characteristics, you should probably not respond.

  • The name of the company is listed online as a scam.
  • The organization doesn’t have a website and cannot be found through a search engine.
  • The offer (email, telemarketer, etc.) requests bank account information, credit card numbers, driver’s license or passport numbers, your mother’s maiden name or other personal information.
  • The offer says that you have won a prize, but you did not enter a competition represented by the same company.
  • An email says you have won a lottery. There are no legal lottery organizations that notify winners by email.
  • The return address for the email is from yahoo, Hotmail, or other free email account.
  • The prize promoters require a fee paid in advance. Any administration, processing, taxes, or other fees are deducted from the winnings in legitimate lotteries.
  • The company requires you to travel at your own expense to receive your prize.
  • The offer sounds too good to be true. Don't trick yourself into thinking that you are the exception to the old mantra: if it sounds too good to be true, it probably is. 

Avoiding fraud can be a lot easier if you know what you are looking for. There are many trustworthy companies out there that will do great things with the money you give them, but there are also many others who will do just the opposite. Whenever a stranger comes to your door or you get a piece of junk mail, just make sure you keep these warning signs in mind.

Amy Young is an author of finance articles published to help inform readers about credit resources available online.

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