Introduction to Consumer Fraud

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Introduction to Consumer Fraud

• or
• Have I got a deal for you

Jennifer Abel Virginia Cooperative Extension
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Simple Economics

• Rule 1 Youve got to give up something to get
  something!
• Life is a series of trade-offs
• Rule 2 If it costs more than its worth, dont
  buy it!
• You determine the worth!
• Rule 3 Just because you can pay for it doesnt
  mean you can afford it!
• Look at all costs involved

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What is Consumer Fraud?

• Lies, tricks, or deceitful methods
• Intended to make you part with your money for
  goods services with little to no value
• Con Artists are
• Intelligent
• Creative
• Believable
• A 10 Billion/year industry

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Internet Fraud Top 10 of 2001

• Internet Auctions
• General merchandise sales
• Nigerian money offers
• Internet access services
• Adult information services
• Computer equipment and software sales
• Work-at-home schemes
• Advance fee loans
• Credit card issuing
• Business opportunities/franchise schemes

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Internet Auctions

• The Bait Shop for a large variety of products at
  deep discounts
• The Catch After sending money, consumers get
  shoddy merchandise or sometimes nothing at all.
• The Safety Net Check out the seller and insist
  on using a credit card.

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Travel and Vacation fraud on-line

• The Bait Get a great trip with tons of extras at
  a bargain basement price.
• The Catch Some companies deliver lower quality
  services than advertised or no trip at all. Some
  consumers get hit with additional charges after
  theyve paid.
• The Safety Net Get references on the company and
  details of the trip in writing, including
  cancellation policy, before signing on.

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Investment Fraud on-line

• The Bait Make an initial investment in a day
  trading service and youll quickly get big .
• The Catch Big profits always equal big risks.
  Consumers have lost money to programs claiming to
  predict market with 100 accuracy.
• The Safety Net Check out the promoter with state
  and federal securities and commodities
  regulators, and talk to others who invested in
  the program.

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General on-line protection tips

• Use a single use credit card number
• Download free software from www.mbna.com or
  www.discover.com. More info at www.orbiscom.com
• Print out order information
• You have no automatic cancellation rights
• Dont get ripped off at an internet auction
• Dont fall for the Nigerian money deal
• Understand what recourse you have if you have
  problems with your purchase

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More Tips

• Buy from secure sites
• Closed padlock in bottom right corner
• shttp or https instead of http
• Privacy policy
• Understand the details of an offer before you
  accept it
• Check the track record of the company or
  individual
• Dont be pressured into making a purchase

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Still More Tips

• Dont judge reliability by how flashy a web site
  is
• Make sure the site will encrypt your information
• Never give your bank account or credit account
  numbers if youre not confident of your security
• Dont shop at a site with no contact information

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Other Criteria for Secure Site

• Seals of approval
• BBB on-line reliability
• Authorized to display BBB Reliability seal
• Meets Better Business Bureau Membership Standards
• Bizrate certified (www.bizrate.com)\
• Report card store ratings on ease of ordering,
  price, product, customer support, order tracking,
  etc.
• Verisign Secure site
• Concerned about keeping information private
  on-line
• View information about vendor before purchase to
  ensure consistency of web site info

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Beware of Cookies

• Small text file that can collect info on your web
  activities
• No warnings that cookies are coming
• Prevention set your browser to alert you when a
  website tries to place a cookie on your machine.

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Caution loading software

• By loading an .exe file nearly anything can be
  read from hard drive
• Files can be read, hidden programs loaded,
  programs that allow others to run your computer
  over the Internet

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12 Scams arriving via bulk e-mail

• Business opportunities
• List services
• Chain letters
• Work-at-home schemes
• Health and diet scams
• Effortless income
• Free goods
• Investment opportunities
• Cable descrambler kits
• Guaranteed loans or credit
• Credit repair
• Vacation prize promotions

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Telemarketing Fraud

• Telemarketing Fraud
• Congratulations, youve just won a valuable .
• You only pay SH, taxes, and other fees to
  collect
• Offers of valuable gems or sure thing
  investments or miracle products
• Often target elderly
• Telemarketing Travel/Vacation Fraud
• Congratulations, youve won a free trip .
• Only pay service charges, or purchase membership
• Fees involved for making reservations, .