5 Ways That Consumers in America Are Getting Scammed

Source: iStock

Source: iStock

These days, Americans are bombarded not only with constant advertising but also fraudulent offers and scams. In many cases, the Internet only makes it easier for scammers to fool people. Consumers have to be on guard against fake charities, bogus health products, pyramid schemes, advance fee loans, mortgage fraud, shady televangelists, mystery shopper scams, and identity theft, just to name a few. Some schemes, like the notorious “Nigerian email scam,” try to capitalize on your sense of altruism. Others, such as the “grandparent scam,” target vulnerable populations like the elderly.

Your best defense against any type of fraud is awareness.

Thankfully, the FTC works to bring light to the most common types of consumer fraud. Once you familiarize yourself with the most pervasive types of fraud, you will be armed with the knowledge needed to identify and avoid those scams. That’s why the FTC publishes its consumer fraud surveys, most recently asking people about their experiences with 17 different types of fraud. The third and most recent report estimated nearly 11% of U.S. adults, or an estimated 25.6 million people, had paid for fraudulent products and services in 2011.

The Internet was the most-reported source of the promotion of fraudulent products, followed by print ads, television and radio, and telemarketing calls. Purchases of fraudulent items were most commonly made online as well. Consumers who experienced a negative life event, those more willing to take risks, and those who reported out-of-control debt were more likely to be victims of fraud. African Americans and Hispanic consumers were also at greater risk. In addition to the FTC’s useful tips on both avoiding and reporting consumer fraud, its 2011 survey revealed the most common scams plaguing Americans. Here are five types of fraud everyone should watch out for.

(Keep in mind the number of incidents of fraud can be greater than the number of victims, as some consumers were victims of more than one type of fraud or experienced the same type of fraud more than once in 2011.)

1. Weight-loss products (5.1 million estimated victims)

Source: iStock

Source: iStock

More American consumers were victims of fraudulent weight-loss products than any other type of fraud covered by the survey. An estimated 5.1 million adults, or 2.1% of American consumers, purchased bogus weight-loss products during 2011, according to the FTC. Overall, the estimated incidents of fraud in this category totaled 7.6 million. These products, which failed to deliver on promises of easy weight loss, included nonprescription drugs, dietary supplements, skin patches, creams, wraps, and even earrings.

2. Prize promotions (2.4 million estimated victims)

Source: iStock

Source: iStock

In the FTC’s study, prize promotions were considered fraudulent if consumers were told that after making a payment or purchase or attending a sales presentation they would be rewarded, yet they never received what was promised. These promotions were the second most common type of consumer fraud. According to FTC estimates, 1% of the population, or about 2.4 million adults, fell victim to prize promotion scams in 2011, with a total of 2.9 million specific incidents.

3. Unauthorized billing for buyers’ club memberships (1.9 million estimated victims)

Source: iStock

Source: iStock

If you ever received and paid a bill for a service you never agreed to purchase, you have been a victim of unauthorized billing fraud. Two types of unauthorized billing fraud made the top five list in 2011. An estimated 1.9 million victims (0.8% of U.S. adults) were billed without their permission for memberships to buyers’ clubs throughout the year. Buyers’ clubs are basically member-only groups designed to allow consumers to purchase products at a lower price than is generally available.

4. Unauthorized billing for Internet services (1.9 million estimated victims)

Source: iStock

Source: iStock

Tied with fraudulent bills for buyers’ clubs was the unauthorized billing of Internet services. The FTC estimated another 1.9 million victims of this type of consumer fraud in 2011. Unfortunately, Internet-based scams have grown more common, and consumers with out-of-control finances sometimes fail to notice or question unauthorized bills. If any company you have not agreed to do business with suddenly bills you for Internet-related services, such as Internet access or website hosting or development, report the scam to the FTC.

5. Work-at-home programs (1.8 million estimated victims)

Source: iStock

Source: iStock

As working remotely has grown in popularity, work-from-home scams have become more alluring, as well as more dangerous. The FTC defined these fraudulent programs as those in which purchasers paid for a program claiming to enable consumers to earn money working at home, while purchasers ended up earning less than half of the amount they were told they would earn. Work-from-home scams fooled an estimated 1.8 million victims, or 0.7% of the adult population. The victims of these scams were more likely to have purchased more than one such program, so work-at-home programs actually ranked third most common in terms of specific incidents. In 2011, there were an estimated 2.8 million cases of work-from-home fraud.

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