Consumer fraud is any technique used to mislead, put at risk, or harm consumers. Consumer fraud can be intentional or result from reckless neglect of customer needs. Major financial institutions commit consumer fraud as do individuals from the comfort of their own home. Consumer fraud is rampant, affecting senior citizens and college students alike.
Fraudsters are relentless and in many cases, our reliance on technology enables fraudsters. They prey on unsuspecting people who want to trust the companies with which they do business. Protecting against fraud requires the ability to spot fraudulent and untrustworthy behavior. If you recognize any of the below consumer fraud techniques, you may be a victim.
Forms Of Consumer Fraud
Consumer fraud comes in many forms. In addition to the fraudulent techniques already in practice, information technology has fraudsters constantly seeking new vulnerabilities. Some most common occurrences of consumer fraud include deceptive marketing, false advertising, identity fraud, fraudulent fees, and uninsured securities.
Marketing is so widely deployed across every business sector because it works. Good marketers use evidence-based psychology research to predict and guide consumer behavior and decision-making. Consumers benefit by easily finding the products and services that improve their lives.
Unfortunately, there are unethical or misguided companies who abuse marketing techniques to deceive consumers. This is known as deceptive marketing and it is a form of consumer fraud. Deceptive marketing either intentionally or unintentionally misleads consumers and causes them to act against their own best interest.
Deceptive marketing is not limited to misleading branding and messaging. As consumer protection agencies continue to fight for consumer privacy rights, unscrupulous companies continue to dig for information using deceptive marketing practices. Fraudsters may use forms to collect personal data under false assumptions.
Marketing is a broad field, but advertising is much more specific. Advertising is openly sponsored messaging that promotes a product or service. Advertisements are prevalent through the internet, on television, and on radio and streaming services.
False advertising is advertising that is misleading or inaccurate. The Better Business Bureau defines false advertising as occurring when “in the promotion of a product or any business interest, a representation is made to the public that is false or materially misleading.”
One famous example is Airborne, a dietary supplement which raised controversy in 2008. The former owners of Airborne had claimed through advertising that the supplement had therapeutic benefits that it in fact did not. After scrutiny from the FTC, the company was fined $23.3 million for false advertising.
Identity fraud, also referred to as identity theft, is when one person engages in the unauthorized use of another person’s information and data. Individuals will commit identity fraud for a number of reasons, but most often due to financial motivations.
Identity fraud doesn’t need to cause irreversible harm to another person to be considered a crime. In fact, many people may be the victim of identity theft without ever knowing it. But identity fraud has the power to ruin lives if not effectively combated. New Account Fraud — fraudsters opening accounts under victim’s names — cost victims $3.4 billion in 2018 alone according to Javelin Strategy research.
A common example of identity fraud is credit card fraud. One form of credit card fraud is when one person opens a credit card account under someone else’s name. This leaves the victim exposed to bills they cannot afford and damages their credit rating.
Another popular method of theft among identity criminals is mobile subscriber fraud. Using someone else’s personal information, fraudsters will open accounts with cell providers to rid themselves of any financial burden should they fail to pay their bill. They may also use mobile subscriber fraud to quickly obtain a high-end device like a new iPhone and sell it on secondary markets.
Other Forms Of Consumer Fraud
- A fraudulent fee is any charge on an account that is illegitimate. Companies involved in consumer credit are often put under scrutiny for fraudulent fees.
- Uninsured securities are securities distributed without proper insurance from a government or financial institution such as the FDIC.
- Telemarketing fraud, which can include robotic calls, is when fraudsters contact you over the phone to solicit illegitimate payments. Many times this occurs when a telemarketer falsely claims to represent a respectable organization.
- Lottery fraud convinces victims they have won a cash prize and must first pay taxes or fees to receive the sum of money.
Victims Need To Act Fast
Consumer fraud has the potential to destroy lives. Fraudsters could use your information to open their own cell phone line or they could use it to request a $20,000 credit loan. Untrustworthy companies may charge you hidden fees for months or even years without your knowledge. Because of the limitless damage consumer fraud may cause, victims need to take quick and effective action to protect themselves.
Speak With Parnall & Adams For Immediate Assistance
If you know or suspect that you are a victim of consumer fraud, our team of legal experts want to hear from you. We can help you determine if you are a victim and what you are entitled to for your personal damages from fraud. Reach out to Parnall and Adams Law today for a consultation.