MF2228 Be a Winner, Avoid Consumer Fraud-Fact Sheet

Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. HEALTHIER FUTURES FOR OUR FAMILIES FACT SHEET Be a Winner Avoid Consumer Fraud “...alert con- “You Definitely Have Won .....!” says the • Learn about the agencies, regulations and postcard in your mail box or the caller on the laws that have jurisdiction over fraudulent sumers are telephone. activities. Many frauds and deceptions use the mail their own and telephone, as well as newspaper, Reasons Consumers Fall best protec- magazine, and television advertisements, to Victim to Schemes reach unwary consumers. Frauds and deceptions continue to exist in Others use personal contacts, such as sales tion against the marketplace because of talks, either in a rented space or a regular fraud.” store, or through door-to-door sales. • Consumers’ vulnerability. Whatever the method, alert consumers are • Tactics of unscrupulous sellers. their own best protection against fraud. • Problems in proving deception and enforc- Remember the saying: “If it sounds too good ing laws and regulations against fraud. to be true, it probably is.” Why Consumers are Vulnerable Consumer fraud is a continuing problem in In deceptive situations, greed is perhaps our society. Some con games and swindles the most common motivation on the part of have been around for many years, while consumers. others have developed as telemarketing, The feeling that you can get a lot for a little computerized information, and advertising or even something for nothing has great methods have expanded. appeal. This can be described as the It is harder than ever to distinguish “sweepstakes mentality,” the feeling that “it’s between somewhat exaggerated claims my turn to win, to get a good deal.” (known as puffery), deception, persuasive Other reasons are advertising, and actual fraud. Prevention is especially important in the • Consumers who lack specific knowledge area of fraud and deception, because it is about a product or service are more likely difficult to legally prove fraud. to be deceived than others who are better Even if a seller is proven to have broken informed. In today’s market, it is difficult the law, finding that person or business and/ for consumers to be well informed in all or collecting money for damages is often areas of purchasing. impossible. • Some people are vulnerable because of Although most businesses are legitimate, a personal problems and changes in their small number of sellers practice fraud and lives. If you are worried, lonely, or upset cause problems for consumers. for any reason, you are more apt to hand This fact sheet will help you: over your money without careful thought and study. • Recognize the warning signs of fraud and • Some consumers are too trusting and do deception in the marketplace. not ask enough questions. They may be • Learn about some of the most common too sympathetic to the stories told by areas where fraud is prevalent. deceptive sellers. Some of the most com- • Follow techniques to avoid being taken mon frauds are presented in ways that advantage of. COOPERATIVE EXTENSION SERVICE • KANSAS STATE UNIVERSITY 1 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. “...fraud make you feel stupid if you don't accept The average life of a fraudulent sales the deal being offered to you. It requires scheme is only thirty to ninety days. occurs when some assertiveness to be a careful con- Deceptive sellers often escape from state sumer. law by moving beyond the state boundaries a seller • Sometimes people are too busy. They opt and set up similar businesses under different knowingly for convenience, often via telephone or names. computer, rather than taking time to The Kansas Consumer Protection Act is misrepre- check things out or shop in person. the primary state law governing consumer • Inaccurate beliefs about laws and busi- transactions. This act is administered by the sents an ness practices are also prevalent. For Consumer Protection Division of the State important example, believing that newspapers or Attorney General’s Office. magazines who accept ads screen them The Attorney General’s Office can get fact or fails for reliability or that infomercials on conflicts resolved on a voluntary basis, as television are regulated more closely than well as prosecute when illegal acts have been to tell the they actually are can reduce a consumer’s committed. consumer motivation to check things out before buying. Targets for the Con Artist about an Infomercials are presented in a Many scams and schemes are aimed at manner similar to regular programs. They consumers in general, although some sellers important may be designed to sell legitimate prod- and con artists target certain groups of fact.” ucts, but often promote useless items. people. • People who lack knowledge about Particularly vulnerable to deceptions are deceptions and scams often fall victim to the pressures to “act now,” not recognizing • Elderly the warning signs of fraud. • Widows • People who have recently become unem- Marketplace Problems ployed A few deceptions are nearly impossible for • Parents of new babies consumers to recognize because of the • Students complexity of the marketplace. Price fixing • Military personnel and control of supplies are examples. • Recent immigrants Other problems are • Hard selling or high pressure sales tactics What Is Consumer Fraud? means that the consumer is being “sold” Consumer fraud involves “the making of by highly persuasive practices. a false statement of a past or existing fact • Sometimes these techniques border on with knowledge of its falsity, or with a misrepresentation without becoming reckless indifference as to its truth, with the actual frauds. People who promote frauds intent to cause someone to rely on such a are experts at outright lies and exaggera- statement.” tions, as well as at staying just within the In other words, fraud occurs when a seller law. knowingly misrepresents an important fact or • Lack of understandable, easily accessible fails to tell the consumer about an important information is a problem. To much fact. information can also be a major problem Several elements must be proven to show when it is not well organized or docu- fraud. This is why it is so difficult to prove a mented. case of consumer fraud in a court of law. To prove that fraud occurred, one must show: Legal and Enforcement Problems Most consumers who are swindled do not • False representation. complain because they feel embarrassed. • Knowledge that the facts stated were Estimates indicate that only two to ten untrue. percent register their complaints with • Intention to deceive the victim. relevant agencies. • Actual belief by the victim, who is igno- Con artists can make a lot of money before rant of the falsity of the representation, complaints are received and authorities are that the false representations are true. able to investigate and prosecute. • Damages were suffered by reliance on the untruths. 2 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. A List of Probable Deceptions and Frauds Deception Description Scheme Degree Mills Sell diplomas for a price with a minimum of on- Such diplomas do not meet the standards of the site educational experiences. genuine accrediting associations. Look-a-like Checks The check made out to you, Can only be used to purchase over-priced products and stamped “This is not a check” from a catalog. or “non-negotiable.” False Platinum and High membership fee for a Can only be used to purchase over-priced products Gold Credit Cards “similar” looking card. from a catalog. Going Out of Busi- Sign looks legitimate and the Lots of poor quality merchandise brought in when ness Sales store seems full of goods. liquidating a legitimate business; must be licensed. Health Club Spas, Consumer signs a contract for a series of services Firm often cannot deliver what was promised; Weight-loss Centers, and some success is quickly achieved. many companies go bankrupt. Martial Arts Facili- ties, Dance Lessons Home Improvements Promises high-quality work. A substantial cash Unlicensed repair persons and Repairs amount must be paid in advance. take the money and run; or do shoddy work with poor materials. Magazines Young people sell magazines pretending that they Either one overpays for the are working their way through school or high subscription or the “salesperson” disappears with pressure telemarketers convince you to place the money. order. Phony Bank Examin- Asks for help in identifying teller who is embez- The receipt from the “bank examiner” is worthless ers zling funds by having consumer make withdrawal because he really does not work for the bank. from that teller. Phony Bills Bill comes in the mail, perhaps for a deceased A likely fraud; ask for a copy relative. of a signature on the order form. Song Writing and Promise to publish your work Firm collects a substantial up-front fee that pays Vanity Publishing and you can expect to make the cost of production; consumer never receives a royalties on the sales. profit. Term Papers Sell term papers on any topic. Poorly written and referenced essays that will result in disciplinary action if turned in to a school. Unclaimed Funds Letter on official-looking stationery saying a The consumer sends in the fee, but never hears “routine audit” has determined that you are owed anything more. money; send $35 for processing fees. Unordered Merchan- Company mails something with the hope that You do not have to pay. You may keep anything dise receiving party will pay. shipped to you as a gift if you have not ordered it. Work at Home Advertisements for huge profits for at-home tasks. Products completed at home are often refused by the seller; sometimes the “deal” requires consumer to pay a lot for supplies or run similar ads to get Source: Adapted from Garman, Ripoffs and Frauds money from other consumers.

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