Many victims who become targets of consumer fraud can include even the savviest of consumers, especially if they are unaware of the variety of schemes.
DEBT CONSOLIDATON
Fraudsters will take advantage of consumers who are experiencing financial difficulty. It is important for consumers to understand what they need to do to prevent becoming a victim. In telemarketing fraud, ask the caller to provide valid information about the product or service they are offering, their company name and contact information. Do not provide any personal information until you have verified this caller. When you hand up, research the contact information given to you and use the words, scam and review in your internet search bar with the company’s name or the person’s name.
Debt that is past the statute of limitations means that collectors cannot sue a consumer to collect it even though they may send letters to try. As soon as a consumer does make a payment, the clock resets and a new statute of limitation begins. Consumers need to look at their countries statutes on consumer debt and determine what the limitations include. Consumers need to ask for the date of the last payment to determine if the debt is past the statute of limitations, and if they believe the collector has broken the law. If so, they need to file a complaint with their local consumer protection agency.
In lender debt collection schemes, a fraudster illegally tries to garnish a borrower’s wages, but only the US law and government agencies can do this. Private lenders cannot do so without a court order.
Fake debt collector schemes are when fraudsters call a consumer indicating that they owe a debt or are late on paying a debt that does not exist or isn’t theirs. They threaten consequences such as seizure of property or other assets. However, these people have no power over the consumer because they are fictious.
Foreclosure rescue schemes are for homeowners who are facing foreclosure and who are delinquent on their payments. The legitimate programs offer short term financing to pay off the delinquent amount while the person is in the process of obtaining long term financing.
When a homeowner is desperate to save their home and they lack the knowledge about the foreclosure process or are kept in the dark about it, this can contribute to them falling for a foreclosure rescue scheme.
Another type of consumer fraud scheme targets people who are already victims of a scam and are trying to recoup the money they lost. The fraudsters’ goal is to get the victim to send them money via a money transfer or wire service. They may use another person’s post office box or residential address and have a courier to pick up the payments. The courier does not have information about the scam; however, they are getting paid by a person who knows or is the scammer – to pick up the payment.
Individuals experiencing financial hardship and not wanting to file for bankruptcy may consider debt settlement or a debt relief company, however, it is important to understand what the risks involved are and the services that are provided. These programs work by modifying how a consumer pays their debts.
Debt consolidation services may cover credit cards, but not usually large expenses, such as student loans and mortgages.
Fraudsters who promise to decrease or eliminate student loans may use official looking seals appearing to be affiliated with the government and advertise that they have special access to student loan information with unique repayment plans or other loan forgiveness programs. Any program that requires an upfront fee before services can be offered, one that offers total loan forgiveness and requests the borrower to stop making payments, are all red flags for a fraudulent company.
Consumers that find themselves in financial straits may look for easy solutions and may be more willing to accept higher risk. This creates a position in which they don’t recognize potential schemes.
HOME IMPROVEMENT SCAM
After a natural, but unavoidable occurrence that can cause damage to a homeowner’s exterior part of the home, individuals may knock on doors, indicating that a homeowner needs their roof repaired. It is important for the consumer to get a second opinion to ensure they are not falling for a scam.
Red flags of home improvement schemes: materials left over from another job, only accepts cash payments, makes the homeowner get the building permits or discourages them, makes over the top guarantees (your project will be done in 3 weeks), pressures consumers to sign a contract and does not have a business number listed.
Home improvement schemes involve fraudsters who do not provide the service promised, change the terms of the agreement, increase the cost of the labor product initially agreed upon and make false claims. Victims are duped by the hidden costs in the contracts or the promotional offer. Consumers must research and read the fine print in contracts to avoid unanticipated costs. Lawn service, carpet cleaners, water treatment devices and equipment, and repairs are examples.
Home improvement, repair and maintenance contractors often advertise in booklets, small postcards, online, in newspapers, and on radio and television. Consumers should not take that a business that is advertised this way is indicating quality work. The best indicator is a recommendation from friends or others who have worked with the contractor.
In a green energy scheme, fraudsters sell energy saving devices at very high prices. They don’t work and some are not intended to save energy. In addition, they do not qualify for tax credits. People who buy these devices end up losing money that cannot be offset by the energy saving tax credit.
For consumers to avoid green energy schemes, look for the unsolicited door-to-door sales visit and high-pressure sales tactic that offers energy saving improvements. They offer devices for furnaces, windows, roofing and other home items. To confirm this agency or service, contact your local consumer protection official and government licensing agency.
Service contract schemes provide additional coverage for an extended warranty usually when the initial warranty runs out. Consumers need to evaluate the cost and benefits of purchasing a warranty and determine what is covered versus what the cost is of the warranty. If the cost of the warranty is exorbitant and provides a minimal amount of coverage, the consumer needs to rethink and consider other options.
If you were considering a home improvement project, ensure that you’re not rushing to make a decision. Take your time, think it through and compare options by obtaining at least 3 different estimates by a licensed contractor. Always get something in writing, read the fine print and if necessary, obtain a consultation with a lawyer before signing anything. Never pay the full amount of services upfront and only make the final payment when services are performed according to the contract. Check online for any reviews or scams through the Better Business Bureau or check with the federal trade commission. Before hiring the contractor, obtain a criminal background check, verify licenses, the company, insurance and determine if there were any present or past fines or sanctions.
TELEMARKETING SCAMS
Fraudsters have strategies that target and lure certain victims, using tactics such as a limited number, gaining trust easily through something familiar (your neighbor just bought), indicating that there is a problem and that it can only be paid by a certain method – wire transfer, app or gift card.
In the United States, it is a violation of law for the telemarketer to obtain funds from a consumer’s bank account without prior authorization. In order to do this, they must obtain a consumer’s written authorization, tape record the authorization and send the consumer a written confirmation prior to debiting the account. There is also a refund procedure in case there is a dispute.
Before a telemarketer can debit a consumer’s bank account, they must disclose the following: the demand draft date and amount, the payers name and who will receive the funds, the total quantity of draft payments, and the phone number of the company so it can be reached during normal business hours. Verification of the date, and that the consumer is providing verbal authorization are the final pieces required.
Fraudulent telemarketers obtain the trust of their customers by complying with requests for more information that features shills. Shills are people who are being paid to make false statements about a company, product or service.
In a telemarketing scam, the fraudster calls and indicates that the consumer has received a free product or service, but they need an upfront free to pay for the shipping. A tricky request is when the fraudster verifies the customers mailing address as “proof” that the customer is giving the “OK” to bill charges.
Telemarketing schemes that solicit donations are mostly fraudulent, deceptive and target older people, recent immigrants and the unemployed. The key to identifying scams like these is to listen for the selling points of high profits, and substantial savings with little to no risk.
Younger people fall victim to online shopping schemes because they buy more online, while older people fall victim to sweepstake schemes because telemarketers will call landline phones.
Fraud is likely to occur when a fraudster wants to make money and obtains telephone numbers of the elderly. This population of victims are not warned about the dangers of sending money after being called by a telemarketer. This is no different than sending an email to someone who wants to make money claiming they have won the lottery or an inheritance and no one is there to advise them.
INTERNET/COMPUTER SCAMS
One of the ways that a fraudster can obtain access to a victim’s computer is through different types of malicious software. This comes through a link on a mobile phone, an app, or through an email that contains a link in which the consumer downloads by clicking – then - a virus infects the device in which the link was clicked.
Fraudsters may physically drive around commercial or residential properties looking for unsecured wireless networks. This is why it is important to secure it with a password. If the fraudster is able to gain access, it can launch a malicious attack by sending thousands of spam email messages to their computer. This is one way that a fraudster can spread malicious files. This can harm a computer or technological device.
Ensure that your computer is updated with antivirus software and a firewall, and that they are performing regular updates. Check your computers privacy policy before doing business on it as the policy should list what personal information on the website offers. Operators collect why and how they will use it. Turn off the computer when finished, as shopping scammers may install malicious software and can do so remotely to commit cybercrime.
Some consumers will experience their computers being hacked by a drive-by attack from an unsecured internet access. It is important to disconnect from the internet when the computer is not in use. Fraudsters can still access your computer if it is connected to the Internet. It is not safe to download free software programs from sites that are not known or trusted.
ELDER FRAUD SCAMS
In 2022, the Better Business Bureau scam tracker report indicated that the biggest scam risk for the elderly was a home improvement scam.
The national elder fraud hotline created by the US Department of Justice’s Office for victims of crime offers free help to individuals 60 and over who have been victims of financial fraud. The toll-free number is 833-372-8311.
One reason the elderly are targets of consumer fraud schemes is they are unaware of the value of their assets, such as their home.
There are circumstances that may indicate that elder fraud is or has occurred. These are the warning signs: outstanding bills, disconnection notices, large bank withdrawals, new friends, forged illegal documents, missing property such as real estate or titles, and having made major financial decisions made by an unaware elder.
JOB OPPORTUNITY SCAMS
Work at home opportunities can recruit innocent people to further criminal activity, unbeknownst to them. The scam may require reshipping and re-packaging products. What consumers need to be aware of is that in reality, it’s transferring illegally obtained, stolen merchandise and shipping it to the fraudsters.
Extreme couponing has gained popularity, however websites that crop up and auction off coupons are often counterfeit, even though they have working barcodes. They result in huge losses to manufactures and consumers each year.
A fake coupon is identified by the following: an expiration date in the distant future, non UPC code, the coupon looks blurry, it lacks terms and conditions, such as it cannot be sold or transferred.
A reshipping scam cheats victims out of money, but also helps fraudsters further crimes. It smuggles illegally purchased items out of the country to be distributed to other fraudsters in other countries. It’s another work from home opportunity. The products that are shipped to the victims’ homes are bought using stolen credit cards or counterfeit postal money orders. The reimbursed payment for mailing the goods doesn’t come. A victim faces jail time when law enforcement tracks the package to the victims’ homes. If you accept a job that requires you to re-ship packages and you accept the payment, and your name is listed on the return address of the package, you are more than likely involved in a re-shipping scam and can be held liable.
PAYMENT SCAMS
Hackers have increased their activity by hacking into consumer accounts online. Once they have access to the credit card information, they can open new accounts or sell the information on the black market.
Minimizing payment for credit card fraud is limited to $50 in the United States depending on the merchant. For debit cards, the parameters are much different. You will need to spend time, money and legal expenses to refute fraudulent payment card account transactions. Consumers then have to wait until the dispute process is resolved before gaining access to their accounts.
LOAN SCHEMES
Car title loan schemes are for consumers who need money fast and to give the lender their car title to borrow money. Some fraudsters deceive loan seekers by not listing interest rates or charging exorbitant rates on loans. The surprise comes when their car is repossessed – at any time. This is due to some locations not having regulations regarding car title loans.
If you are considering a car title loan and are trying to determine if the location is reputable, ensure that it contains information regarding the interest rate, what happens when there is a missed or late payment and the criteria for repossessing a car. Remember there are better options out there than a car title loan.
In order for a consumer to recognize the red flags of payday loan scams, look for the following: do not provide personal information, read the fine print, look for suspicious or fraudulent transactions on your bank account statements, & look for alternatives to obtain a loan that does not charge high interest rates. Fraudsters who charge high fees may pocket the difference.
Robo calls are made through Internet technology which hides the location of the caller. Even though you have registered your number on the Do Not Call registry, this technology does not take this into consideration.
LOTTERY & AUCTION SCAMS
Fee stacking refers to hidden charges that are due from purchasing or winning a product after an auction ends. Some fees, such as postage and handling are charged at a flat rate, however, because they can vary greatly, the buyer should inquire to avoid any unexpected fees. Fraudsters may add separate charges for postage, packaging, handling, shipping and other devised fees.
EBay has programs for buyer protection and fraudulent website protection as well as other safeguards that prevent a fraudster from abusing their services and advertising products that don’t exist. This helps prevent auction fraud schemes, and suspends people who break the rules.
A bid manipulation process is when a fraudster bids during the last few seconds of an auction to gain the high bid, but just as time runs out, another bidder answers with an even higher bid. This is illegal and is called sniping.
An example of mail fraud is when a product is purchased from an online auction, but the victim does not receive the product. Contact the seller for the item or to request a refund is one choice. If it was made with a credit card, ask the company to deny the charges. The US Postal Inspection Service can be contacted to report the scam. Give the seller plenty of time to correct and refund.
Black market goods are a good way for fraudsters to use internet auctions as a way to sell unauthorized copies of software, music or games. The buyer receives the items without a box, a warranty and even instructions.
In gray-market goods, items are legal and are being sold on internet auction sites, but the distribution channel is illegal and may be sold at a marked up price.
Those who have lost a loved one and planned to make an obituary public should consider that fraudsters may call the victims home claiming to be from a company in which the deceased owes money. If you haven’t had time to sort through your deceased affairs, sending money through impulse payments via a wire transfer, credit/debit card payment is ill-advised. Ask for a copy of the itemized bill to determine its legitimacy. Ask for the name of the company, their address. After you hang up, research them online. If it turns out they are a fake bill collector, call the federal trade commission.
EQUITY SCAMS
Have you ever wondered how future owners or lenders inherit a large outstanding mortgage with penalties? Equity skimming, legally, uses the home to make money. Owners collect from renters but do not pay the mortgage, taxes or maintenance. Eventually the house forecloses, evicting the tenants. The fraudster disappears with the money. This can occur even if the tenants were the original owners of the house.
Another type of equity skimming is perpetrated by an owner who promises to lease or sell the property to a renter, but they do not transfer the property to the tenants’ names. They collect on the rent and the tenant doesn’t know they are not the legal owner of the property.
Equity stripping is when a fraudster drains the equity from a home and establishes a home equity line of credit or takes multiple loans out on a property. The excess loans are used by the fraudster for personal use.
Another type of equity stripping scheme is when a perpetrator charges a homeowner an inflated rate that is supposed to help the owner refinance their home multiple times. The fraudster takes fees each time.
A mortgage appraisal scheme is when an appraisal comes in too high and worth far more than what the house can realistically be sold for. A fraudulent appraisal versus a legitimate appraisal determines the property’s actual worth. To prevent this, hire a certified, independent appraiser separate from the lender and ensure that the appraiser works for banks and not mortgage brokers.
MOBILE PHONE SCAMS
A common form of mobile phone fraud is a subscription fraud. A fraudster signs up for and uses the service, and uses another person’s identity and personal information to open the account. Although he/she doesn’t pay for it. If a victim is unable to prove to the phone carrier that the account was opened fraudulently, they are held responsible for the charges made to the account.
Mobile phone subscription fraud can be combatted using the following: requiring a pin that a user must physically enter, and that a user speak a password that matches a voice print; requiring users to pre-pay for service on the account before the phone can be accessed. Sometime GPS can be used to identify the traffic and area analysis to detect suspicious behavior. In other words, if you are in California, and service was opened up in Maine, the provider should ask if you are visiting or have opened up an account there.
The recovery room is where fraudsters prey on victims who have lost monetarily in a scheme and are looking to obtain the merchandise or their money, that was never received. However, an advanced fee is usually required by check or credit card.
Although government agencies and consumer organizations do assist consumers who have lost money, they do not charge a fee or guarantee recovery, nor do they give preferential treatment for filing a complaint.
TICKET SCAMS
For consumers to prevent purchasing stolen or counterfeit tickets for sporting events and music concerts: obtain a receipt showing that the tickets are paid for, obtain the sellers account number, which is on the ticket and contact their rep to verify their name and account number. Try to meet them in person, pay with PayPal or another secure money transfer service. Pay part of the portion upfront and the rest upon the receipt of the tickets. Use a trusted reseller rather than an online platform and request a receipt with the details of when the ticket will be delivered.
SCHEMES
Take-the-money-and-run scheme is when a fraudster fakes a vacation rental listing or a website and posts photos of legitimate properties on their fake website. The fraudster will ask the victim to wire funds for the stay and may even require to have them pay it in full. Once the funds are received, they disappear and cannot be contacted. The property the victim paid for doesn’t exist.
What is a diploma mill scheme? Fraudsters offer university diplomas without testing, classes, books or admissions applications. Students can earn a degree, all the way up to a doctorate based on present knowledge and life experiences. These degrees are from a non-accredited institution, in which students buy their degree.
The following tips help consumers to avoid an online pharmacy scam: avoid sites that do not list a physical address and phone number, that offer controlled medication’s without a prescription. If it does not offer an initial consultation with a licensed pharmacist, then contact the National Association of Boards of Pharmacy to research online pharmacies.
Consumers can avoid medical alert system schemes by the following: do not trust claims that a medical device is free. Most insurers do not pay for this type of equipment. Immediately hang up on Robo calls; unsolicited prerecorded calls are also part of a scam. Never pay for unordered items, even if threatened.
In a bait and switch scheme, a fraudster advertises unavailable properties that are less desirable and will double book the location, sending whomever arrives last to a backup rental in worse condition that the advertised place.
This is a popular hotel scheme in which a consumer received a late-night call from the front desk asking to verify credit card information due to billing issues. Normally, hotel personnel will call and ask you to come down to the front desk to resolve these issues.
To prevent becoming a victim to a charity scam, a donor should ask how contributions are used, where the money will be sent, and request financial information about the charity. Never send money in the mail or give telephone solicitors a credit card number or bank information.
Fraudsters may take advantage of individuals who have experienced a tragedy, a death due to a fire, crime, fatal accident or loss of material assets and a house destroyed due to an earthquake. Crowd funding schemes are online fundraising events held for specific causes. Fraudsters may establish other accounts for donated money and keep the profits for themselves. If you have been scammed in this manner, contact the federal trade commission, your local consumers bureau and the BBB to report this scam.
Holiday Scams
Deceptive merchandising scams involve free trials in which consumers are lured into receiving free merchandise on a trial basis; the difference between trial and free is a trial offer may require future purchases.
During the holiday shopping season, consumers need to ensure that they are leaving the store with a purchased sale item that was charged at the sale item price, not the regular price. Consumers need to check the receipts before they leave to make sure they were not overcharged.
Retailers sometimes charge a reduced price, but not as low as the advertised price. They hope the customer won’t notice. Again, consumers need to ensure that they are actually being charged the reduced price of the advertised discount.
How to prevent holiday shopping schemes and prevent falling victim to consumer fraud:
MEDICAL SCAMS
Fraudsters that target individuals seeking to reverse the aging process use a solution called the human growth hormone, or HGH. This can only be obtained with a doctor’s prescription. HGH has shown a lack of reliable evidence that it slows the aging process. Consumers need to be cautious of products that contain HGH because they are not the same as ITC products and can cause significant damage to the body.
Patients who receive any type of treatment from healthcare professionals need to review their medical bills for errors, overcharges, and double billing; patients have a right to an itemized medical bill.
Self-referral medical billing schemes occur when healthcare professionals order a test or procedure and refer themselves or another to share the proceeds. This scams patients into thinking they need a procedure when one is not necessary.
Drive-by doctoring is becoming a popular scam. A doctor is present, but does not assist with the surgery and still charges thousands for being in the room. Another example is when a doctor speaks to another doctor’s patient for a few minutes, then charges the patient for the consultation. When patients receive the medical bill, they have no way of getting those charges removed.
There are several types of hospice fraud schemes. The first one is where hospice hires underqualified professions, and in doing so results in mistakes that endanger patients. For example, a Licensed Practical Nurse may fill in for a Registered Nurse, and perform duties that only a RN are qualified to do. If they don’t know how to do them correctly, there may be adverse consequences to the patient.
A second type of hospice fraud scheme is where hospice management manipulates the care that patients receive for in-home health services – meaning that the patient doesn’t receive the level of care the patient needs. This makes family members place their loved one in a hospice facility. Insurance is charged at the maximum level of care when patients might be receiving less care.
Hospice management knows that many patients and their families are not aware of the regulations or laws that dictate the type of hospice required. An example is billing for a drug or procedure that they claim is partially covered or not covered at all. The patient may not receive the treatment, but the provider bills both the provider and the insured and is paid twice.
Families and patients need to be aware that the level of care that a patient needs is dictated by the law. They need to educate themselves on the rights for the in-home and hospice care. If they feel pressured by staff to move the loved one to a facility, they should consider it a red flag.
Family members have the right to demand a higher level of care if they feel their loved one is not getting the right care. But, if the problem continues and the family members continue to report their concerns to a local agency (licensed hospice care), they can contact the International Association for Hospice and Palliative Care if they have any questions.
CAR BUYING SCAMS
It is important to negotiate the value and trade-in price of a used vehicle before negotiating the price of a new vehicle involving the trade-in. It can be confusing when a dealer combines the trade-price with the value of the new vehicle and customer realizes their trade-in was valued for far less than they expected.
Curb stoning schemes typically do not involve major dealerships, but more of the smaller one-off businesses on the corner. They acquire cars at low end auctions, and spiff up the dents and dings. These types of schemes have very few sanctions and are rarely prosecuted if you purchase a vehicle from this type of dealer. In all probability you are buying a vehicle that has been stolen, is a flood vehicle, might not have a clear title, or the odometer was turned back illegally.
To prevent being scammed by curb stoning: check the sellers driver’s license against the car’s title and if they don’t match, do not purchase. Have a mechanic inspect the car prior to purchasing it or buy a care from a reputable local dealer. Also, run a report on the vehicle to determine if it had been in any major accidents or had several title changes. This is one way that a fraudster can use a vehicle that was involved in a crime to get rid of it quickly.
Consumers looking to purchase a vehicle need to look at their financing options before going to a dealership. You may find out that the dealer does not finance the vehicle loan. Dishonest dealers are aware that some people do not understand this financing and use this to their advantage. If someone tries to sell you a care this way, recognize the scheme and turn them into the Federal Trade Commission.
A financing scheme called packed payments is when a dealer focuses on the monthly payments to distract you from the actual purchase price. This distraction adds money to your monthly payment as it is adding costs you didn’t agree to - extended warranties and other services you don’t need.
In some locations, there are dishonest tow truck drivers who take advantage of consumers by monitoring private parking lots waiting to illegally tow vehicles. Drivers get around this by partnering with impound companies. The target demographic for this scheme is low-income neighborhoods because individuals are less likely to have the money to obtain their vehicle released from an impound.
