Consumer fraud occurs when a person suffers from a financial or personal loss. The fraud can involve the use of deceptive, unfair, misleading, or false business practices. The fraudsters typically target senior citizens, and college students but all consumers are at risk of fraud. The Consumer Financial Protection Bureau (CFPB) is a government agency that protects consumers from financial fraud and scams by making sure banks and financial companies treat consumers fairly.
“Scammers are constantly finding new ways to steal your money. You can protect yourself by knowing what to look out for.”—the CFPB.
Here are some of the most common frauds that victimize consumers and tips on how to protect yourself from becoming affected.
1. Identity Theft
Identity theft occurs when someone steals your personal information—which can include your name, bank account number, and credit card information. The goal of the thieves is to use your personal information to assume your identity to access your bank account and drain funds, open and use credit cards in your name, take out loans.
Signs of Identify Theft
You may be a victim of identity theft if one or more of the following occurs:
- Unexpected withdrawals are made from your bank accounts.
- Bills and financial statements you normally receive in the mail stop coming—a sign criminals changed your address so they can open financial products in your name.
- You notice unfamiliar accounts on your credit report.
- You receive bills from medical providers for treatments you didn’t have.
- You receive notices, or hear news about, a data breach at a company where you do business.
What You Can Do
If you believe you are a victim of identity theft, start by going to IdentityTheft.gov, a website administered by the Federal Trade Commission (FTC). The site provides directions on how to help you recover your identity and repair any damage you have experienced. In addition, the FTC urges you to:
- Call companies where you expect fraud occurred to report the fraud, close or freeze accounts, and change login passwords and PINS.
- Place a free fraud alert with credit bureaus and obtain free credit reports.
- Report the theft to local police for local monitoring.
2. Credit and Debit Card Fraud
Credit and debit card fraud is when someone takes your information off the card and makes purchases or offers to lower your credit card interest rate. This can occur when someone steals or finds your card or manages to obtain the information from the card to purchase goods, withdraw cash, or otherwise use your card in a fraudulent manner.
Signs of Credit and Debit Card Fraud
Although credit and debit card fraud are among the most common types of consumer fraud, any of the following signs should set off red flags for you:
- Your statement contains charges you don’t recognize.
- You notice several small amount charges from your account—a signal someone could be testing your card in advance of a major purchase.
- You don’t recognize the name of the company attached to the charge.
- Charges appear from unfamiliar or distant locations you haven’t visited.
- You experience a significant and unexpected drop in your available credit balance.
- You receive phone calls requesting credit or debit card information.
What You Can Do
Fight against credit and debit card fraud by doing the following;
- Check accounts daily and report unusual activity to your bank.
- Complain to the CFPB if the bank’s response is not satisfactory.
- Have the card canceled or your account frozen.
- Don’t respond to telephone calls with information the caller should already have.
- If you decide to follow up on a call, do so by contacting your bank at a known number.
3. Fake Charities
Fake charities use the same techniques to steal your money that legitimate charities use to raise funds, according to the Federal Trade Commission (FTC). Before you donate, make sure you know where your money is going.
Signs of a Fake Charity
Several tell-tale warning signs suggest you are dealing with a fake charity:
- You are pressured to give now even to the point a courier will come to your door to collect your contribution.
- The charity only accepts cash, gift cards, or wire transfers.
- You receive a thank you for a donation you didn’t make—an attempt to make you think you already support the organization.
- The group goes by a familiar-sounding name that doesn’t quite match the organization it reminds you of.
- The caller or solicitor won’t (or can’t) provide detailed information about the organization.
- You are told you must donate to be included in a sweepstakes.
What You Can Do
FTC and the EFCC guidances on not falling victim to a fake charity includes doing the following:
Get the charity’s contact information and check out the organisation before you give using one or more of the following:
- Ignore high-pressure pitches including pressure to pay now.
- Avoid making cash donations.
- Be careful about donating in the wake of natural disasters. This is when con artists come out of the woodwork.
- Don’t provide personal information such as Social Security number or bank account information.
- Be proactive and make your annual giving plan ahead of time. Offer to add the charity’s name to your list for consideration.
4. Prize and Lottery Fraud
Prize and lottery fraud come under many names—sweepstakes, drawings, foreign lotteries and more. This type of fraud often targets the elderly and originates with a phone call or postcard. The FTC receives tens of thousands of complaints about prize and lottery fraud each year. Because many victims don’t report being scammed, officials estimate the problem’s scope is far greater.
Signs of a Fake Lottery
Fake lottery scams, many of which are foreign, exhibit well-known signs that something is wrong:
- You receive notification that you are a “winner” but need to send money to the lottery or sweepstakes office to cover taxes or administrative costs.
- Your winner notification arrives by bulk mail.
- You are required to attend a meeting to collect your prize.
- You don’t remember entering the lottery or sweepstakes.
- Any payments you make are followed by more requests for cash or you are contacted by other organizations claiming you won their lottery as well.
What You Can Do
There are a number of steps you can take to protect yourself:
- Never pay money to collect on a lottery or sweepstakes. Legitimate taxes can be taken out of your winnings.
- Don’t share your credit card or bank account numbers or send money even if the organization sends you a check—which is probably bogus.
- If you think the prize might be real, research the name of the company or organization and contact it at a known phone number.
- Report all suspected scams to the FTC.