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Outdated Publication, for historical use.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

“...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 and 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 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 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 , The feeling that you can get a lot for a little computerized information, and 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 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 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 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 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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Mail fraud involves the use of the mail for legal obligation to make payments on “Scare any scheme to defraud or obtain money or many. techniques, property under false or fraudulent pretense. • Scare techniques, rush deals and secrecy Health fraud or quackery is the are common techniques used by con rush deals promotion or sale of a medical remedy that artists. These techniques warn of impend- doesn’t work or hasn’t been proven to work. ing disaster, often to health, home, or and secrecy refers to the use of finances, or of missing out on the last are common telephone communications to fraudulently chance to benefit from a great opportu- promote goods or services. nity. Speed and secrecy prevent many techniques frauds from being detected in a timely The Many Dimensions of Fraud manner. used by con We can look at consumer fraud from • Contracts, order forms, or other forms artists.” several different perspectives. with blank spaces are also a common • One is to examine the types of products technique. The seller later fills the spaces or services most often associated with in above the signature, and the consumer fraud and deception. Remember that may be legally obligated to pay for more most businesses are honest and only a few than expected. create problems. • Another is to think about the methods Common Methods of most often used—telephone, mail, Fraud internet, media advertising, door-to-door The next sections provide more sales, or other personal contacts. explanation of several common methods No publication can provide a often used by deceptive sellers. Again, comprehensive list of all possible frauds. It is remember that careful study is required to not easy to distinguish between deliberate distinguish between fraud and persuasive fraud or deception and the situation where sales techniques. consumers pay a higher price for a product or service rather than getting their money’s Mail Fraud worth. Mail fraud is one of the top areas of The chart on the previous page lists a consumer complaints to government variety of areas where deception and fraud agencies. Most schemes work because people are frequent don’t recognize them as frauds or deceptions until it is too late. Warning Signs of Fraud Deceptive mail order schemes seem to be a Deceptive schemes and scams have several good deal, an excellent opportunity, an characteristics in common. apparent bargain, or a chance to make a fast • Misleading advertising is frequently used buck. to lure consumers into deceptive The most familiar mail fraud tactic is schemes. People are led to believe they are misleading or . Consumers getting a really good deal, maybe even are led to believe they are getting a good deal something for free. or receiving something for free. • Consumers are often fooled into putting Distance and lack of physical contact make up money for a product or service of identifying and apprehending mail order inferior quality and overpriced. This is sellers difficult and expensive. because the offer “will soon expire” or the Prizes: Prizes are offered to interest con- choice items are almost all gone. sumers in buying anything from vitamins to • Consumers are enticed into going into a water treatment systems, from home security sales office to listen to a sales pitch. They systems to land for investment purposes. may be subjected to hours of pressure Nearly all consumers in the United States sales tactics including many false promises have received—and will receive—official and then be pressured into making a looking notices or telephone calls stating that major purchase. Appeals to vanity are they are the “guaranteed winners” of one of common. the following prizes—a vacation, a new car, • Many schemes have contractual obliga- jewelry, or cameras—worth thousands of tions. Consumers may be able to get out of dollars. some contracts but may have a continuing Such claims are rarely true. They are simply come-ons to get you to buy something

4 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. else. Most “winners” will receive a very On the other hand, telemarketing calls cheap prize. are often made from “boiler rooms.” “Fraudulent In some frauds, they may be told to Historically, a has been a sweepstakes provide numbers or a fee to room in a basement next to the heating unit. verify their winning. The space was rented at a low cost and set operators Sweepstakes: Sweepstakes prizes are up with desks and telephones. awarded to participating consumers by A number of people used high pressure call chance with no purchase or entry fee sales techniques to sell a variety of products consumers required. One’s chances of winning are or services (such as investments, land, determined by the number of participants business ventures, travel bargains, and many telling them and the number of prizes to be awarded. other “opportunities,”) as well as donations A sweepstakes is very effective in to “charities” or purchases to benefit they have generating attention for the sponsoring disabled persons. won but companies. It is often an effective form of Almost anything can be sold by legitimate advertising. unscrupulous sellers over the phone. must submit To be legitimate Telemarketers often start with friendly cash or a • The company generally puts up the questions and conversations, trying to money itself. establish rapport with the consumer before certified • A sweepstakes sponsor must disclose the embarking on the sales pitch. This makes it odds of winning. hard for the potential customer to ask check to • The consumer must not have to make a searching questions or to just hang up. cover the purchase to participate. Many telemarketers use similar techniques to those used in mail fraud. They involve expenses...” Fraudulent sweepstakes operators call prizes, sweepstakes, and contest winnings. consumers telling them they have won but New regulations require telemarketers to must submit cash or a certified check to state up-front that this is a sales call. You cover the expenses of shipping, handling, are under no obligation to continue and/or taxes or to “guarantee” the money listening. will be awarded. They volunteer to have the Most consumers assume that all 800- money picked up by a courier to “speed number (and more recently an 888- things up.” number) calls are free. However, some 800- Contests: A variety of legitimate compa- number services use techniques which nies offer prizes or premiums to promote charge for calls to access “adult” talk lines, their products. Most contests have easy, dating services, psychic advice, or other simple solutions, and the consumer receives programs. a small prize for sending in a winning entry. Questionable telephone information “You’re a winner” on a postcard or an services often advertise on late-night official looking document is often the key television or cable, in tabloids, and in to a scam. The directions ask you to send in classified or personal ads. money. Deceptive companies may try to: Some contest scams require that you call a 900 number to collect your prize. To verify • Automatically transfer you to 900 num- or redeem your prize may require another bers. payment. • Make collect calls back to you. A common ploy is that “as a credit card • Charge you simply for completing the holder, you have won.” You are asked to give call. a card number for “verification.” The result • Charge for information or entertainment can be unauthorized charges made to your provided during the call, unless you: card. —use a credit card for payment, or —have already contracted with the 800 Telemarketing Fraud number service to be billed. Telemarketing is selling a product or These are warning signs that potential service over the telephone. Many deceptions are possible. Remember that worthwhile products are marketed this both legitimate services and those that way, and a great majority of companies violate the law may advertise in the same involved in telemarketing are reputable firms places. which use the telephone to sell products and Some companies promote information services. or entertainment services you can obtain

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by calling an international telephone lifetime are often that, but the opportunity is “Pyramid number. These calls are billed at all too frequent for the consumer to lose investment international long-distance rates and can money. Most such offers promise high profits result in expensive charges on your with little or no business experience needed. schemes rely telephone bill. Among the many types of investments that are often subject to deception are: on new Investment Swindles • Collectibles such as rare coins. Consumers looking for investments • Art. investors typically want to achieve two things: • Precious metals. to pay • A high rate of return (in interest, • Gold and silver contracts. commis- dividends, and/or appreciation of the • Oil and gas lease programs. investment). • Invention or patent promotion. sions, • Safety. • Land sales. Many consumers are lured into • Gumball, popcorn, or similar vending returns, or investments that are poor deals for them but machines. bonuses. great for the sales persons. Some of these • Greeting card sales. are actual swindles, while others are There is an legitimate business opportunities and Pyramid Schemes investments that are just not suited for the Pyramid schemes are based on the absence of a people who buy them. assumption that many investors can make legitimate A swindler is an unscrupulous promoter money by selling “distributorships” to others who creates an investment scheme which over a period of time. product or brings profit only to the swindler. In this scheme, an investor buys a They are smooth talking salespersons franchise or distributorship, which includes service being who the right to sell additional franchises to others. When sales are made, profits are sold.” • Present dazzling statistics; great prom- shared with the original promoter. ises of wealth in a hurry, without risk; The problem is that the pyramid soon and impressive references that seem to collapses because there are not enough new confirm the illusions they present. people available to continue making • Provide seemingly logical answers to investments or purchases. It is mathematically questions that potential investors ask. impossible for all investors to succeed. • Reach their victims in the same ways Pyramid investment schemes rely on new used by legitimate firms—telephone, investors to pay commissions, returns, or direct mail, referrals, advertisements, or bonuses. There is an absence of a legitimate on-line investment bulletin boards. product or service being sold. • Give the appearance of being reputable Chain letters that involve sending money firms, running large, expensive adver- through the mail with the chance that tisements in publications and on radio nothing will be received in return are a and television. variation of pyramid schemes. Deceptive investment or business It is often hard to distinguish between a opportunities emphasize such and legitimate multilevel characteristics as: network. In the marketing • A very high return or yield with little network, income does come from product risk. sales (frequently cosmetics and household • A quick return. cleaning products). • A “secured principal” is guaranteed. Legitimate companies sell quality products • Approved by someone (such as the and do repeat business with customers. Start- Internal Revenue Service). up fees for legitimate businesses are • A once-in-a-lifetime opportunity. reasonable and companies that require • No experience necessary. inventory purchases will usually repurchase • The chance to “get in on the ground any unsold items. floor.” Recovery Scams • The opportunity to make money without Consumers who have lost money through leaving home. prize promotions, merchandise sales, Offers for the financial opportunity of a investment swindles, and charity drives often

6 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. have their names put on a “sucker’s list.” most common type is envelope-stuffing. The list is then sold to other telemarketers Promoters of these programs usually “Home who call with promises to recover part of advertise that for a “small” fee they will employment the lost money. tell you how to earn money stuffing A recovery fee scam falsely promises envelopes at home. Only when it is too schemes are that, for a fee or donation, they will late, you find out the promoter really has recover the consumer’s lost investment no employment to offer. one of the money or the product that was never What you are likely to receive for your oldest kinds received. fee is a letter telling you to place that same For example, the con artist—often ad in newspapers or magazines or to send of classified claiming to represent a government agency the ad to friends and relatives. or consumer organization—calls a consumer The only way you will earn money is advertising saying that, “the thieves have been caught from the people who respond to your fraud.” and their assets frozen. For a fee, we can work-at-home ad. recover at least half of the money you • Assembly or craft work. Assembly or craft originally lost and perhaps all of it.” No real work is another common type of work-at- effort is made to aid the consumer. home scheme. These programs often require you to Work-at-Home Schemes invest hundreds of dollars in equipment or Various methods of making money at supplies or many hours of time to produce home are advertised in newspapers and goods for a company who has promised to magazines around the country. buy them. You may see ads like this: For example, you might be required “Would you like to earn hundreds of to buy from the company a sewing dollars a week at home in your leisure time? machine, a sign-making machine, or Many people are supplementing their materials to make items such as aprons, income in a very easy way. Let us tell you baby shoes, or plastic signs. how....” However, in fraudulent schemes, after An offer like this may sound very you have purchased the supplies or attractive, particularly if you are unable to equipment and performed the required leave your home to work. tasks, the company does not pay you for While some work-at-home plans are your efforts. legitimate, many are not. Home Many consumers, for example, have employment schemes are one of the oldest had companies refuse to pay for their kinds of classified advertising fraud. work because it did not meet “quality What many of these ads do not say is that standards.” Unfortunately, no work is ever • You may have to work many hours “up to standard.” Thus you are left with without pay. relatively expensive equipment and • There may be hidden costs. supplies, and no income. • You may be required to spend your own In reality, those who produce goods money to place ads in newspapers, make in response to such ads must usually find photocopies, or buy the envelopes, their own customers. paper, stamps, and other supplies or • Reading and reviewing manuscripts or equipment needed to do the job. books. Another common scheme suggests • The company may demand that you pay a that you can make money by reading at membership fee or make regular home. payments in order to get continued These ads are not really from instructions or materials. publishers looking for reviewers. The Consumers deceived by these ads have promoters’ format is similar to the lost thousands of dollars, as well as wasted envelope-stuffing scheme. their time and energy. For a fee, you receive a letter telling Work-at-home ads often advertise these you to contact publishers yourself and ask types of employment: about working for them. Or, the suggestion is made that you place a similar • Envelope-stuffing. Work-at-home ad yourself and hope others will respond schemes come in many varieties, but the with a fee.

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“A flashy Health Frauds Using classified ads or television Health and fitness are major concerns of commercials, credit repair companies internet web many consumers today. However, many guarantee that they can “fix your credit schemes promise success, but result in history, improve your credit rating, or get you site does not unfilled wishes and hope, wasted dollars, and out of debt.” guarantee sometimes even endangered health. They charge a large fee up front for Quacks sometimes lure the seriously ill services which they do not provide or which that the into buying a bogus cure instead of getting you can obtain at low or no cost from a the most reliable medical care available. legitimate nonprofit credit counselling seller is “Money back guarantees” are unavailable if service. legitimate.” the company cannot be located. Other frauds related to credit involve In simple terms, quackery or health • “Advance fee” payments to guarantee fraud is the promotion and sale of a you a loan in advance. Legitimate lenders medical remedy that doesn’t work or hasn’t charge a processing fee for loan applica- been proven to work. tions but don't guarantee that you will Some ineffective products are fairly easy to qualify. identify—like magic pills that promise to • Advertisements that tell you to call a keep you young. More often, the deception is 900 number to arrange for guaranteed less obvious. credit cards or loans. The call may be Sometimes they are vaguely based on a expensive ($50 or more) and it’s unlikely medical report that has been in the news or that you’ll get credit as a result. in a generally reliable magazine. • Second mortgages, often at very high Quackery usually fits in one of three rates, advertised as a quick and easy categories: way to get credit. Many consumers do not • False claims about drugs or cosmetics. realize they are providing their house as • Unsubstantiated food fads and diets. collateral for these loans. • Unjustified food supplements and Fraudulent Sales Practices ineffective medical devices, such as Fraudulent sales practices include a mittens, bracelets, or special shoes. variety of techniques which usually involve Medical con artists sell their wares through offering products or services at fictitiously magazines, newspapers, television and radio, low prices combined with high pressure or making their products available by mail or sales technigues. by calling a toll-free number. Bait and Switch: Bait and switch Common schemes are: advertising is the offer of goods or services at • Arthritis cures bargain prices when the seller has no • Quick weight-loss plans intention of selling the advertised products. • Fitness devices Such advertising is illegal. The goal is to • Cancer treatments lure the consumer into the store. The bait involves a product advertised at a very low Marketing products as food supplements, price. The switch is when the consumer tries rather than as medicines, may enable the to make the purchase and the salesperson promoter to avoid Food and Drug says the advertised product is not available, Administration testing and labeling of poor quality, or not worth the money. requirements. The buyer is talked into selecting a much These unproven products are marketed as more expensive item. foods or dietary supplements with no This should not be confused with trading curative claims included in the label. up, where the consumer decides to purchase The “wonder cures” are advertised a higher quality model without being separately by flyers or media announcements pressured. that claim to cure various physical problems. Door-to-Door Sales: Door-to-door sales are By the time the fraudulent practices are a continuing source of fraud. A few legitimate recognized, the swindlers have moved on to sellers, primarily in the cosmetics field, still other scams. use the door-to-door salesperson as their Credit Schemes primary method of selling. One of the most prevalent frauds today is Household repairs, such as roof the credit repair scheme. replacement, driveway repairs, and

8 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. magazine sales are often poor buys at best The consumer who is too trusting, who and fraudulent schemes at their worst. does not ask detailed questions,who does not “Do not Home-repair-related frauds frequently check references and information for make quick involve a visit from someone who says they accuracy, and who makes decisions without have just finished paving a driveway, careful consideration is vulnerable to con decisions repairing a roof, or installing siding down the artists. street. They have leftover materials and can Frauds and deceptions can generally be about buying give you a good price if you’ll arrange to have avoided by following these guidelines: or investing.” them start work (with a cash payment in • Realize first that nothing is free. It is advance) immediately. almost impossible to get something for Other scams use fear tactics. Persons nothing. posing as “official” inspectors suggest the • Avoid putting yourself in situations home owner is in danger of carbon where you are setting yourself up to be monoxide, water, or termite damage if the deceived. Don’t listen to sales pitches on problem is not taken care of immediately. the telephone or go to motel rooms to hear sales pitches. Don’t let unknown door-to- Fraud on the Internet door salespeople into your home. The internet enables people to communi- • Try not to be overly sympathetic to sales cate faster than ever before. Unfortunately, it representatives. This will help you avoid also enables con-artists to milk people out of becoming a victim of a hard-luck-story- cash just as easily. type of sales tactic. Fraudulent activity on the internet and • Be careful about buying things over the “on-line” services is a potential problem as telephone. A useful guideline is not to buy services expand. anything over the phone unless you One common problem is ordering software initiated the call or know the caller. Ask on-line from vendors who disappear. telephone solicitors to mail information Reputable vendors will offer a demo or a trial rather than discussing it over the phone. review period before requiring payment. You can call back if you’re interested after Deceptive sellers will not. reviewing the information. Deceptive internet sales also include the • Never give out credit card, checking same types of activities and come-ons account, or social security numbers for described under telemarketing or mail identification or verification purposes. schemes. • Never send cash. Don’t send money orders A company whose only address is a post or checks to a post office box unless you office box or an electronic address, is are sure about the company’s reputation, difficult or impossible to track down once have its street address, and know about the address is closed. the product. When you subscribe to an online service, • Don’t send money by a courier service you may be asked for credit card information that picks up at your home or work as the method of payment. When you enter place. an interactive service site, beware of con • Be aware that high-pressure sales tactics artists who may ask you to confirm your are a warning. Some sellers push hard enrollment by disclosing passwords or because they earn commission or want to account numbers. win a contest. Even if not dishonest, they Internet addresses ending with a “.com” do not have your best interests in mind. indicate a commercial or business address. • Do not make quick decisions about A flashy internet web site does not buying or investing. Read the . guarantee that the seller is legitimate. Get help from an important third person. How to Prevent being Don't assume you always have three days to cancel a transaction or that you can Conned always get out of a contract. Uninformed or misinformed consumers • Watch out for planted people posing as often lose in marketplace transactions. They real users. When you check references, often pay too much for products and you can use on-line forums, news groups, services, purchase goods of inferior quality, etc. to talk to other customers about the and sometimes suffer the consequences of product and company. unsafe products and illegal discrimination.

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“...letting Think You Have Been a Postal inspectors Call your local post office and ask for the consumer Victim of Fraud? inspector-in-charge if you suspect mail fraud. • First try to resolve your dispute with the agencies seller. Make sure you act quickly. Some Direct Marketing Association (DMA) companies may not accept responsibility Contact them only for mail and telephone know about if you fail to complain within a certain orders. problems period of time. Write: DMA, 1111 19th Street, NW, • Send a letter of complaint. A letter is Washington, DC 20036. helps protect important because it puts your complaint Direct Selling Association (DSA) on record and lets the company know you Contact them only for door-to-door sales. others.” are serious about pursuing the dispute. The association can assist you with your • Clearly identify the problem, document complaint if the door--to-door seller is a it, and explain how you want your member. complaint resolved. Be sure you keep a Write: DSA, 1776 K Street, NW, copy of the letter for your records. Washington, DC 20006. • Keep the original and send copies of the Private attorney receipts, etc., by certified mail. Certified Your controversy may involve rights and mail records the postmark date and liabilities that include aspects of the law, such ensures that the seller receives your letter. as breach of contract, in addition to Many people are embarrassed about being consumer protection. In these cases, your deceived or conned. No one likes to admit private attorney or legal clinic should be that they have been taken advantage of. But contacted. letting consumer agencies know about problems helps protect others. National Fraud Information Center Consider contacting the following The center provides information, referral organizations for further information and services, and assistance in filing complaints. assistance. Their Internet site provides timely warnings of current fraudulent activities. You can call State consumer protection offices 1-800=876-7060 to register a complaint or to The Kansas Consumer Protection Act is the ask for information. basic statute enacted to protect Kansans The Federal Trade Commission (FTC) against deceptive and unconscionable business practices. It is the primary duty of Although the FTC does not intervene in the Attorney General’s Office to enforce the individual disputes, the information you act. provide may show a pattern of possible law Complaints made to this office are often violations requiring action by the FTC. voluntarily resolved, but they can lead to Write: Correspondence Branch, Federal action before a court of law. Violations of the Trade Commission, Washington, DC 20580. act can result in injunctions prohibiting a Other governmental agencies violator from doing business in Kansas, the If your complaint is against a business that recovery of actual damages for consumers, is licensed or regulated by another government and civil penalties. agency it may be necessary for you to contact Write to the Consumer Protection Office, that office for assistance with your problem. 301 W. 10th Street, Topeka, KS 66612, or call 1-800-432-2310 Summary Nearest Better Business Bureau (BBB) Remember that careful decision making is Information about complaints against the key to satisfaction with your purchases of businesses can be obtained there, but the products and services. Decide in advance bureau does not make recommendations which features of a product or service you about specific businesses. need. Be alert to signs of deception and fraud. Action line and consumer reporters Lack of knowledge about deceptions and Check with your local newspaper or schemes and about specific products and television and radio stations for a contact. services is one reason people become victims of fraud.

10 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete.

Many frauds work because people References frequently do not recognize them as deceitful Consumer Affairs Fact Sheet Series. until it is too late. Fraudulent sellers use Washington, DC: AARP, 1994-96. phony prizes, cheap products, high-pressure Consumer Corner Series. Topeka: Office of sales tactics, and many other methods to the Attorney General, Consumer defraud unsuspecting consumers. Protection Division, 1995-96. Several factors account for the vulnerability Facts for Consumers: How to Right a Wrong. of some consumers. Sometimes you think it’s Washington D.C.: Federal Trade your turn to be lucky or that you deserve a Commission, 1994. free gift or tremendous bargain. You may Garman, E. Thomas. Ripoffs and Frauds. think that problems only happen to other Houston: Dame Publications, revised people. edition, 1996. Emotional reasons—when you’re worried, Miller, Roger Leroy. Economic Issues for lonely, or feeling overwhelmed—can lower Consumers. St. Paul: West Publishing your resistance to high pressure tactics. Just Company, 1988. being too busy to check information can also National Fraud Center Daily Reports. be a factor. Internet Complaint Intake System, June Become aware of the many ways you can 1996. lose your money. Stop, think, find out, and get Quackery. U.S. Department of Health and help if you need it. Human Services, Public Health Service, HHS Publication # 85 4200. “You are your own best Swindlers Are Calling. Chicago: Alliance against Fraud in Telemarketing, National protection!” Futures Association, 1990. Too Good to be True. Chicago: National Futures Association. Reviewers Appreciation is expressed to the following reviewers: Consumer Protection Division, Kansas Attorney General’s Office, Topeka, Kansas Janice Frahm, Kansas Association for Family and Community Education, Colby, Kansas Joyce Jones, Extension Specialist, Family Financial Management, Kansas State University, Manhattan, Kansas Emily Mark, Extension Specialist, Family and Consumer Sciences, Northeast Area, Kansas State University, Manhattan, Kansas Lynn White, Extension Specialist, Family Resource Management, Texas A&M University

11 Outdated Publication, for historical use. CAUTION: Recommendations in this publication may be obsolete. Consumer Con Questionnaire

The following is a list of “Common Cons.” Can you match the name of the scheme with its description?

_____ 1. Free vacations _____ 4. Driveway repairs

_____ 2. Envelope stuffing _____ 5. Bait and switch

_____ 3. Pyramid scheme _____ 6. Money recovery

A. Schemes in which consumers who have lost money through fraud are called with offers to recover their money if they pay a large fee in advance. The caller accepts their money but does not recover anything. Such consumers usually lose money twice, both in the initial fraud and in the recovery fraud.

B. The consumer comes to a store that has advertised a product at an extremely low bargain price. The product is not available and the seller convinces the consumer to buy a more expensive item.

C. Consumers get a post card, letter, or telephone call saying that have been specially selected to receive a free vacation. To qualify, they must give their credit card number for “verifica- tion” or pay a high fee for handling or special services. The vacation is not really free, and charges may be made using their credit card.

D. Door-to-door sellers tell the homeowner they can give a low price on driveway repairs or paving because they are in the neighborhood and have leftover materials. The consumer must pay most of the cost in advance. The repair persons typically use poor materials or do not complete the job.

E. A scheme in which people answer advertisements to work at home and be paid for stuffing envelops or similar work. The company does not offer them work but suggests they place similar ads in local papers.

F. This scheme operates in a manner similar to a chain letter. Quick, high profits are the motivation for people to invest. The original investors make money as new people buy distributorships or franchises, often for pay telephones, vending machines, or oil and mineral rights. The plan does not generate enough money in actual product sales to main-

tain the profits. Answers: (1C; 2E; 3F; 4D; 5B; 6A) 5B; 4D; 3F; 2E; (1C; Answers:

Reprinted through funding provided by PATH, Personal Actions to Health, an initiative of the Kansas Health Foundation and K-State Research and Extension.

Kansas State University Agricultural Experiment Station and Prepared by Doris “Katey” Walker, Extension Cooperative Extension Service, Manhattan Specialist, Family Resources and Public Policy, MF-2228 October 1996 School of Family Studies and Human Services, Issued in furtherance of Cooperative Extension Work, acts of May 8 and June 30, 1914, as Kansas State University. amended. Kansas State University, County Extension Councils, Extension Districts, and United States Department of Agriculture Cooperating, Richard D. Wootton, Associate Developed in consultation with the Kansas Director. All educational programs and materials available without discrimination on the Association for Family and Community Educa- basis of race, color, national origin, sex, age, or disability. tion Educational Committee. File Code: Consumer Education—5 JR 10-96—15M; JR 1/97—5M

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