Fraud and Scams Cost Money

UNP-0039, March 2003, Bernice B. Wilson, Extension Urban Specialist, Resource management, Alabama A&M University

According to the American Association of Retired Persons, Americans lose an estimated $40 billion dollars a year due to fraudulent sales of goods and services over the telephone. In addition, consumers lost more than $3.2 million to Internet fraud in 1999 as documented in incident reports to the National Consumer League's Internet Fraud Watch.

Fraud occurs when consumers realize they have spent their money for something that was clearly "too good to be true." Greed or bargain shopping often causes a consumer to fall victim to fraud because they may want something for nothing or the chance to get goods or services paying very little money. When this happens, consumers are too embarrassed to complain, particularly men.

The average duration of a scam business is around 30 to 90 days. People who are usually wealthy, well educated, and well-informed are led to believe that they are getting a really good bargain or something free of charge. Many kinds of scams appeal to those who need money. Some frauds make an individual feel stupid if he/she does not go for the deal that is being offered. Scams often send a false message such as the notion of financial security.

Crooks prefer the quick method of payments for their fraudulent transactions and often flee in a hurry. For example, automatic debit (a withdrawal) from a checking account, credit card, personal check picked up by courier, or overnight mail of cash are quick ways to obtain money. Crooks place pressure on their victims to buy and generally refuse to put their offer in writing.

The FTC (Federal Trade Commission) regulations on telemarketing include:

• Caller identification by company and product that is being sold.
• If a prize is being offered, a consumer must be told that "no purchase/payment" is needed to win.
• Consumers cannot be asked to pay in advance for such telemarketing services.
• Consumers cannot be called before 8:00 a.m. or after 9:00 p.m. (local time).

Important Telephone Numbers

While many callers make their offers sound really good, even too good to pass up, consumers should not be afraid to take time to make up their mind.

For Internet, telemarketing or fraud referrals, contact:

• National Fraud Information Center
  1-800-876-7060
• Alabama Attorney General's Consumer Affairs
  1-800-392-5658
• Alabama Public Service Commission
  1-877-727-8200

Call and ask to be put on the do not call list, so that tele-marketers cease contacting you. This service may require a fee.

For unwanted mail, contact:

For phone resources to fight fraud, contact:

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References

Garman, E.T. (2000) Consumer economic issues in America, 6th edition. Cincinnati, Ohio: Dame.

National Consumers League (1999). They can't hang up: Help for elderly people targeted by fraud. Retrieved March 17, 2003.

National Consumers League (1999). Tips for seniors. Retrieved March 17, 2003.

National Consumers League (1999). Helping seniors targeted for telemarketing fraud. Retrieved March 17, 2003.

For more information, contact your county Extension office. Visit http://www.aces.edu/counties or look in your telephone directory under your county's name to find contact information. Issued in furtherance of Cooperative Extension work in agriculture and home economics, Acts of May 8 and June 30, 1914, and other related acts, in cooperation with the U.S. Department of Agriculture. The Alabama Cooperative Extension System (Alabama A&M University and Auburn University) offers educational programs, materials, and equal opportunity employment to all people without regard to race, color, national origin, religion, sex, age, veteran status, or disability.