Every day throughout the United States, consumers encounter scams in many different forms, including travel scams, con-jobs, medical fraud, counterfeiting, credit card fraud and identity theft.
Consumer fraud is defined as intentionally deceiving the general public and it can be committed by an individual, a company or a group of companies. Occurrences of consumer fraud have increased over the years, partly due to the popularity and accessibility of the internet. Identity theft is currently the most common form of consumer fraud and it typically involves credit card, bank, employment and/or utilities fraud. In 2009, approximately 10 million Americans became victims of identity theft which resulted in about $5 billion in losses. In addition to identity theft, other common types of consumer fraud include internet & computer services, internet auctions, shop-at-home/catalog sales, foreign money offers, advance-fee loans, credit protection, sweepstakes & lotteries, business & work-at-home offers and even telephone services.
While some types of scams can be easy to spot and avoid, others can be more difficult to detect. Being able to identify a scam is a very important step to avoiding these types of things altogether, but unfortunately not all people have that kind of awareness, even despite warnings and common advice. All consumers should be on the lookout for these types of scams, especially when buying a car, using a credit card, shopping online, buying insurance or taking out a loan. Always remember, if money is involved, there's a high chance that someone out there has designed a scheme to take your money and cheat you out of what is rightfully yours.
Our nation's current economic state has opened a door of sorts for scammers who are looking for "creative" ways to make money off of honest consumers during a difficult recession. The Top Ten Scams report, released annually by the National Consumers League (NCL), shows that scammers are gunning for those hit hardest by the economic recession in 2009 & 2010:
- Fake Checks: 29.67%
- Internet: General Merchandise: 27.24%
- Prizes/Sweepstakes/Free Gifts: 20.49%
- Phishing/Spoofing: 8.90%
- Advance Fee Loans, Credit Arrangers: 2.44%
- Timeshare Re-sales: 1.56%
- Nigerian Money Offers: 1.28%
- Internet: Auctions: 1.14%
- Friendship & Sweetheart Swindles: 0.99%
- Scholarship/Grants: 0.65%
As shown on the report, fake check scams are the most frequently reported scam to NCL's Fraud Center accounting for almost 30% of all complaints. With these types of scams, victims are lured by fake mystery shopper jobs or sweepstake "winnings" where the fraudulent party asks the victim to cash or deposit a check that appears to be real and then wire a portion of the proceeds back to the fraudulent party before the check bounces.
Fraudulent telemarketing is another area of particular recent concern. In these types of scams, fake telemarketers advertise bogus prizes and sweepstakes by phone and consumers are frequently complaining about these types of telemarketing scams. In fact, these scams increased by 19% this year, making telemarketing scams the most frequently reported scam of 2011. Because of the advent of technology such as smart phones, iPhones and iPads, phone related scams were projected to decrease but statistics have shown that scammers have not abandoned the telephone as a means to contact targeted victims: 23.67% (that's almost a quarter) of victims actually report being defrauded over the telephone.
While many consumers are making themselves more marketable by improving their education or skill level during this tough economy, scammers are doing the same thing in their own right by finding new and creative ways to advance fraudulent activity. Both state and federal consumer protection budgets have been cut significantly during the recession leaving consumers in extremely vulnerable positions. Because of this, it's more important than ever for consumers to be educated and aware of scams and frauds so that they can take avoid the financial danger posed by them.
