Consumer fraud is a major problem in the US with no shortage of scams to rip off the naïve or desperate consumer. Consumer fraud entails any misrepresentation or deceptive activity designed to lure a person into buying a product or service. It also includes deceiving a person into divulging his or her personal identification and financial information such as a Social Security number, bank account, or passwords.
Here is a list of the most common types of consumer fraud:
Credit Card Fraud
There are many types of consumer fraud associated with credit cards. Companies often send out mail solicitations promising low interest rates while in very small print or in confusing language reserve the ability to greatly increase the interest rate even if you are one day late in payment.
Another subtle type of consumer fraud is theft of your financial information, bank account, and Social Security number, which is commonly done on the internet. Cyber thieves are able to install malicious software on your computer by getting you to open emails and to click on their links where you enter the information, thinking you are either buying something or protecting your paypal or bank account. Retail store employees can also steal your credit card numbers by copying them.
Timeshares are legitimate, but many who buy an interest in some of these deals become victims of consumer fraud by being misled by hidden fees, restrictions on use, and ability to sell their interests. Stay away from companies that offer you a free meal or products by attending a presentation where a hard sell and threats of drastically increasing the price unless you buy now are designed to cloud your judgment and could lead you to financial disaster.
At-Home Business Opportunity
There are new at-home business opportunity ads that are presented every day and many are quite elaborate and professional-looking. These are some of the worst consumer fraud schemes that prey on desperate people, who are told they can make thousands of dollars per month with little effort. These include data entry jobs, multi-level marketing schemes, envelope stuffing, answering emails, and placing ads. For a fee, many of these merely send you a list of defunct companies or those with no interest in hiring you that you have to contact. Others ask for a fee and send you a list of addresses for you to send certain ads to and promise you thousands of dollars depending on how many you send.
Consumer fraud is practiced by even well-known insurance companies that will suddenly increase premiums, cancel your policy for making a legitimate claim, or refuse to pay a legitimate claim. Lesser known companies which fail to disclose that they are not licensed to offer insurance in your state will not return your phone calls or respond to your claims, and you will have to sue them in another state, which may be impossible.
The internet is fraught with consumer fraud. Internet users are bombarded with emails telling them they have won the UK or Australian lotto, or some unknown person left them millions in a will. Others offer cut-rate drugs or supplements, or offer employment as a secret shopper or agent and will ask for personal information.
Credit Counseling Fraud
People with large credit card debt may be tempted by companies that advise you that they can cut your credit card by 60 percent or more. These companies require that you pay a fee into an account before they negotiate with your credit card company or companies. Consumer fraud is found by there being no guarantee that the credit counselor will negotiate or that the credit card companies will agree to negotiation or how much they are willing to reduce the balance or interest rate.