Based on a report by the Federal Trade Commission, there were over 2.1 million reported cases of consumer fraud in 2020. Consumer fraud is any deceptive or unfair business practice that causes financial or personal loss to a customer.
Criminals highly target the vulnerable population, especially the old and college students. Hackers and fraudsters continually improve their tactics, so even the savviest customer can be a target. It’s therefore important that you arm yourself with the right information so you don’t become the next victim. Watch out for the following consumer fraud types.
This type of fraud happens when someone uses your social security, bank account number, or name to seek loans, pay bills, or file tax returns to get a refund. About 7% to 10% of Americans experience identity theft each year. Most victims notice unexpected withdrawals from their banks, their bills and financial statements stop coming to the mail. Pay attention to IRS notifications of numerous tax returns by your name.
The Consumer Financial Protection Bureau is the government body that protects people from fraud by monitoring banks and other financial institutions’ operations. So, if you suspect identity theft, you can log into their website to know how you can recover your identity. Call your bank and request them to freeze your accounts. Change your passwords and report the issue to the credit bureaus and the local police.
Credit Card Fraud
The prevalence of eCommerce and online payments has created a loophole for credit card fraud. Someone can steal your card or number as you make online transactions, withdraw your cash, use the card to purchase goods or fund crime.
Criminals can also change your billing address, call the credit card company, and ask for a card replacement to the fake address. The Fair Credit Billing Act allows customers to dispute a fraudulent purchase worth over $50 made within 100 miles of their address. Some red flags of credit card fraud include phone calls requiring you to change your cards details and charges from places you haven’t visited.
Frequently check your credit and debit cards for any unusual activities. If you fall victim, alert your credit card company of the fraud, and ask them to freeze or close the accounts. Place a fraud alert on your accounts to signal your creditors so they can verify your identity before extending credit.
This is a form of deception, omission of real estate-related transaction facts, or information misinterpretations that fraudsters use to acquire mortgage loans. Criminals take advantage of distressed homeowners through loan modification, foreclosure rescue schemes, and property flipping. Before entrusting someone, make sure to make a background check first. Lookupinmate can help you conveniently search for someone’s criminal records.
The fraudsters are usually unethical real estate professionals who know your property, so they sound convincing. You might fall victim to this scam if you sign property-related papers without thoroughly reading and understanding the document. Be very suspicious of a real estate agent who evades or answers your questions unsatisfactorily.
Do not pay a fee before the company provides services, and don’t trust any caller who asks you to stop contacting your mortgage service provider or pay your mortgage to a different account. Walk away from high-pressure transactions and seek advice from a professional attorney in real estate matters.
Criminals create fake charities to take advantage of people’s generosity. They use tragedies and high-profile disasters to push people to help. The money may do little or no charity work, and the highest amount ends up to the organization’s creator. Charity scams may happen through fake websites, emails, social media, and crowdfunding platforms.
The FTC advises customers to search the charity organization online before donating. See what people are saying about the organization, and don’t ignore ‘scam’ comments. You can check the organization’s validity from BBB Wise Giving Alliance, CharityWatch, or Charity Navigator. Some warning signs of fake charities include pressure to make haste donations to a caller who can’t identify themselves or provide detailed information about the charity.
Be suspicious of thank you notes for contributions you didn’t make, and stay away from organizations that only accept cash or wire transfers. To avoid such scams, ask to visit the organization in-person to make donations.
Debt Collection Fraud
A scammer may call you demanding payments for outstanding debts. They will try to threaten or scare you into paying. Fraudsters also try to acquire your personal information and threaten to report you to family, employer, and friends. They call before 8:00 am and after 9:00 pm. Once you receive a suspicious phone call, contact your creditor and ask them for information about the assigned debt collector. Ask the caller to confirm the company name, address, and callback number. If you fall prey to the scam, file a consumer fraud claim with FTC or at the Attorney General’s office. Familiarize yourself with the right debt collection procedures to avoid this scam.
The government gave a statement to warn people of the emergence of various scams associated with the COVID-19 pandemic. Scammers set up pop-up clinics on the internet that guarantee quick access to COVID tests. They impersonate healthcare workers and try to collect your financial, personal, and medical information.
Others claim to sell protective products like masks. Report phone calls, emails, or texts implying to offer new testing kits or COVID-19 treatment. Do not make payments or click links claiming to represent the WHO.
A fraudster may contact you, implying that you have won a lot of money in lottery or competitions. They ask you to call an officer in the lottery company to claim your winnings as fast as possible.
If you call, the recipient will ask for personal information to confirm your win. Others ask you to pay a legal fee or tax charge before releasing the winnings. Never click or respond to notifications that you won competitions you didn’t participate in.
The Bottom Line
Fraud victims are usually more vulnerable to more scams in an attempt to recover their lost money. Scammers will always pretend to be from a company you know. They will say you are in trouble, pressure you to act immediately, and have specific payment requirements.
To avoid consumer fraud, don’t fall for easy money promises, never give out your personal information to unknown people, don’t send credit card numbers by email, and fully understand offers before finalizing transactions. If you get scammed, file a consumer fraud complaint to get help.