Consumer Fraud

Consumer fraud embodies a variety of misleading practices related to advertising, marketing, or purchase & sales of goods and services. It is an illicit activity that involves deceit and is perpetrated against an unsuspecting individual or group resulting in a financial loss. Consumer fraud is an international concern with millions of consumer complaints received by consumer-fraud agencies around the world yearly.

Consumer fraud schemes involve a range of fraudulent conducts mostly committed by professional scammers against unsuspecting victims. They are skilled fraudsters that continuously develop strategies, select targets, and use an appropriate means of delivery to lure their victims. Often, the scammers act alone, but it is not uncommon to find them in groups for more complex activities. Their target audience are dispersed geographically and can range from old to young, male to female, wealthy to poor, and knowledgeable to naïve segments of people.

Some examples of the consumer fraud scheme include:

  • Advance-Fee Schemes
  • Debt Consolidation Schemes
  • Diploma Mills
  • Investment Fraud
  • Identity Theft
  • Phishing
  • Ponzi and Pyramid Scheme
  • Personal Improvement Frauds
  • Dietary and Health Cure Schemes
  • Cosmetic Surgery Schemes
  • Modeling and Acting Schemes
  • Automatic Debit Program Schemes
  • Equity-Skimming Schemes
  • Fundraising, Nonprofits, and Religious Schemes
  • Home-Based Businesses
  • Home Improvements
  • Money Manager or Financial Planner
  • Scavenger or Revenge Scheme
  • Sweepstakes, Giveaways, and Prizes
  • Advance-Fee sweeps
  • v Credit Card Schemes
  • Airline Ticket Schemes
  • Immigration Schemes

All the above are examples of the consumer fraud scheme. It is worthy to note that the consumer fraud scheme can take any form from the most minute things to very huge activities. Stated below are relevant tips to avoid falling victim to consumer fraud schemes.

1.     Block unwanted calls and text messages

2.     Avoid giving out personal/financial information especially to unexpected requests.

3.     Always resist the pressure to act immediately- Critically think, research, and analyze the situations. Avoid any situation that requires you to react immediately

4.     Familiarize yourself with fraud scheme methods especially the popular ones

5.     Talk to trusted people and agencies to be certain of the validity of the request or process

6.     Do not pay upfront for a promised prize or reward

7.     Compare sales price/offer after hearing a pitch/proposal

8.     Avoid the too good situations- if it is too good to be true, it is probably untrue.

A lot of consumer fraud schemes now involve a wire transaction due to the continuous enhancement of technology. Highlighted below are a few steps that can be taken should you fall victim to any of the fraud schemes.

1.     Change all required passwords and access codes

2.     Collate records and evidence of both conversations and payment details

3.     When you think you’ve been deceived, contact the appropriate law enforcement agency right away. This will allow you to acquire a police report, which may assist you in recovering your losses. It will also help law enforcement to get started on their investigation as soon as possible. At the absolute least, your report will enable them to properly warn others about such scams.

4.     Notify your family and friends so that they are aware of the situation and can protect themselves from being duped into making any transaction on your behalf by a fraudster.

5.     If you provided a scammer with your bank information or they were able to steal funds from your account, you need to contact your financial institution(s) immediately. Depending on the situation, your bank will help you determine the best course of action. This could include getting a new account number and new credit/debit card, stopping payment on a cheque, or possibly rescinding a wire transfer.

6.     If the scammer was able to obtain your personal identifying information (social security number, Date of Birth, etc.) then you need to contact all three credit bureaus (Experian, TransUnion, and Equifax) and place a free 90-day fraud alert on your credit reports. This will reduce the risk of the scammer using your information to obtain new lines of credit, such as loan or credit card. You can also place a freeze on your credit to completely prevent anyone from accessing your credit report.

Finally, consumer fraud schemes are extremely rampant, but a major tip to avoiding them is to ensure that you walk away from it the minute it doesn’t seem right. Scammers would always want you to take quick decisions without thinking about it. Ensure you complete your research on transactions before going ahead to initiate/complete such transactions.

Article by Aisha Elegbede, CFE



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