Consumer fraud comes in many different shapes and forms.

However, the official

definition describes it as deceptive practices that result in financial or other losses for consumers in
the course of seemingly legitimate business transactions.
Basically, this means that goods or services are sold using some form of deception. The goal is to
make consumers pay more than would be reasonable, sometimes for products or services they will
never receive. The practices are deceptive and unlawful and unsuspecting customers are conned
out of a lot of money. As technology evolves, consumer scams evolve as well. This is why many now
originate on the internet.
A lot of people believe that only unwitting people who are naive will be duped. In reality, however,
anyone can be victimized by consumer fraud. For instance, you may be paying too much for a
magazine subscription. This is something minor, but it can also be as bad as having your identity
stolen.
The Federal Trade Commission has stated that, in 2002, there were $343 million worth of losses due
to fraud. Some of these were victims of fraud, others were people who committed fraud, sometimes
unwittingly so. In other cases, it may have been done on purpose. For instance, someone may
purchase a new Social Security Number, which is illegal.
Consumer fraud can happen over the telephone, in person, by mail or via the internet. Internet fraud
is rising particularly quickly. However, regardless of technology, there are things that you can do in
order to protect yourself. One of those ways is to know the types of consumer fraud that exist.

"An educated consumer is the con-man's worst enemy," says financial coach Todd R. Tresidder,
founder of FinancialMentor.com. Here are some of the most common frauds victimizing
consumers right now and how to protect yourself.
Mortgage Fraud
Just last year, the FBI opened 599 mortgage fraud cases and had 1,089 mortgage fraud
convictions. Still, the agency had 2,590 pending mortgage fraud investigations at year end.
Today's mortgage scams are often aimed at distressed homeowners, states the FBI's Financial
Institution Fraud Unit. These scams include foreclosure rescue schemes, loan modification
schemes and equity skimming, among others. They are often carried out by real estate and
mortgage professionals enabled by their specialized knowledge and/or authority. The FBI
recommends that consumers protect themselves against mortgage fraud by seeking referrals
and avoiding unsolicited relationships, checking licenses, walking away from any transaction
that is high pressure or seems too good to be true, and not signing any paperwork that they
don't understand.

Debit Card Fraud

If a Certified Fraud Examiner (CFE) like Ken Stalcup can become a victim of debit card fraud, it
can happen to anyone. Stalcup, who works for Somerset CPAs in Indianapolis, used his debit
card to pay the bill at a local restaurant.
"My waitress took my card and walked to the register, out of my sight, and returned with my
receipt and the card. I signed the copy and even added a nice tip," he says.
Two days later, his bank contacted him to let him know they were shutting down his account and
his debit card because it suspected they had been compromised. His card was used to
purchase a computer and office supplies at a store 600 miles from his home.
"By allowing my waitress to carry my card off, she was able to swipe my card and sell my
account information to other people who were able to steal from my account," he says.
Though his bank caught the fraud quickly, he recommends that consumers avoid letting their
debit cards out of sight and check their accounts daily.
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. Ignore high-pressure pitches, don't give cash and be
especially careful in the wake of natural disasters, which is when con artists prey on the
sympathetic and the generous. Get the charity's contact information and check out the
organization before you give. Make sure the organization is legitimate, uses donations for its
intended purpose and is an IRS-approved nonprofit.
Fake Lotteries
The typical lottery fraud targets the elderly and originates with a phone call or post card from
Jamaica, the AP reported recently. The FTC received 30,000 complaints about this type of fraud
in 2011. Because many victims don't report being scammed, officials estimate the problem's
scope is actually much larger.
These fake international lottery scams ask the "winner" to send money to cover taxes on the
prize. Victims who pay are then harassed for more money. The stolen money is rarely
recovered. Furthermore, victims' names and contact information may get placed on "sucker lists"
that are sold to fraudsters who will target the same victims for further scams. The FTC says

consumers should never pay money to collect on a lottery or other prize. Be especially skeptical
if you're told you've won a prize for a lottery or sweepstakes you don't recall entering. Don't
share your credit card or bank account numbers or send money, even if the "organization"
awarding the "prize" sends you a check first. Also, since U.S. law does not allow the crossborder purchase or sale of lottery tickets by mail or phone, assume anything claiming to be an
international lottery is illegitimate.
The Bottom Line
"Although consumers are protected by a number of consumer protection laws, including
the Consumer Credit Protection Act, there are still many opportunities for people to be taken
advantage of by unethical professionals and corporations," says Steven Wolf, Executive Director
and Forensic Accountant in the Washington, D.C., office of Capstone Advisory Group.