Consumer fraud is a broad term encompassing deceptive business practices resulting in consumers suffering financial losses. It includes identity theft, credit card fraud, unethical debt collection, and fake charities. Fraudsters are out to steal your money by stealing your identity, opening accounts or charging purchases in your name. Other common types of consumer fraud include phishing scams, bogus tech support, and investment scams.
Identity Theft
Identity theft occurs when someone makes unauthorized use of your data. The perpetrator can use it to access your bank accounts, create new credit cards and even make medical appointments under your name. This type of fraud can cause major financial losses and damage your credit score. Identity thieves usually obtain private information from data breaches or buy it on the dark web. A person’s Social Security number can sell for $1, and a credit card number for up to $110. Investment scams are another common form of consumer fraud. Fraudsters lure unsuspecting people into investing their money with promises of high returns on investments that do not exist or are too risky to be true. Lottery scams are consumer fraud involving fraudulent companies offering to pay you for winning a lottery or sweepstakes you did not enter. You can avoid this type of consumer fraud by not giving out your bank account information to anyone who claims to be a lottery official and by always checking the legitimacy of the contest or giveaway before you submit your entry.
Lottery Scams
Lottery scams are when fraudsters contact unsuspecting consumers via email, phone or social media to notify them that they have won a prize from a lottery or sweepstakes they never entered. These scammers then trick the victims into sending money or revealing personal information. The scammers will often claim that they need the fees for courier charges, bank costs or other fictitious fees to process the winnings. It is a classic example of “there is no such thing as a free lunch” and should always raise suspicions. Consumers should never send cash or pay by prepaid debit card to receive a prize. Real lottery companies do not charge for processing prizes; if you are ever contacted by someone who does, this is a scam.
Similarly, if you are contacted by a debt collector claiming you owe money, this is also likely a scam. If you have already been a victim of consumer fraud, be sure to report it. You can do this by contacting your consumer fraud lawyer or your local police department.
Phishing Scams
Phishing is a dishonest attempt to steal your personal information, money or something else of value. Fraudsters may contact you by telephone, email or text and impersonate a trusted source such as a bank, credit card company, investment professional, government agency or social media platform. Phishers typically send legitimate emails with the right logo, spelling and grammar to trick recipients into believing they receive official communications from a business partner or other trusted organization. They might include a link that directs victims to a fake website where they are asked to verify their account details or download malware. Cybercriminals also target business employees with a new phishing attack called business email compromise (BEC). They hack into an organization’s web server and include messages from the CEO or HR manager asking for urgent actions such as transferring funds or updating employee details. They can even impersonate a trusted supplier and request payment for goods or services rendered.
Credit Card Fraud
One of the most typical kinds of consumer fraud is credit card fraud. It involves someone stealing their credit or debit card information to make purchases or transfer money. It can happen in various ways, from physically stealing the card to hacking into personal accounts online. Criminals can also use a device known as a “skimmer” to illegally record a card’s information when it is swiped in places like ATMs and pay-at-the-pump gas stations. They can then use that stolen card number to clone the credit card and make fraudulent charges. Credit card fraud can be a very frustrating experience for victims. They may not always be able to recover their losses, and the crime can damage their credit score. Some victims, such as seniors or college students, are more vulnerable than others. Other reasons people fall victim to credit card fraud include naiveté, a desire to take advantage of lucrative offers, or depression or substance abuse that can affect their decision-making. By examining their statements, contacting the card issuer if they see any erroneous transactions or a sudden reduction in their balance, and routinely checking their credit reports, consumers may guard against credit card fraud.
Investment Scams
Investment scams involve false or deceptive investment opportunities that promise higher-than-normal returns. They can be promoted via email, message boards or social media. Fraudsters often use high-pressure sales tactics and may insist that you act now or risk missing out on a great opportunity. If you have questions about an investment, ask for references and do your research. You are contacting a provincial/territorial securities regulator before investing is always best. Fraudsters often target members of groups such as book clubs, civic groups and community associations to promote fake investment scams. They usually claim to be a group member and convince others to invest in their “secret” investment plan. The con artist will then take the money and disappear.