Everything You Need To Know About Consumer Frauds and Its Types

One of the constant thorns to the side of society until now is fraud. As consumers, we should all be wary of it because of the harm it can do. But, unfortunately, many still fall victim to plenty of fraud schemes worldwide every year.

As the year's pass, fraudsters continued to adapt to the times, which enabled them to prey on many consumers. They were able to come up with different fraudulent activities that steal money from everyone. Not even people who you think are equipped to protect themselves are safe from those individuals and groups.

However, we mustn’t be deferred and continue to learn to protect ourselves. It all starts with the basic knowledge of consumer fraud because having the right information is key to avoiding it. Here’s everything you need to know about consumer fraud and its types to educate consumers like yourself.

Everything You Need To Know About Consumer Frauds and Its Types

What is Consumer Fraud?

Consumer fraud is any instance in which an individual suffers a financial or personal loss. It usually involves deceptive, false, misleading, and unfair business practices. People who commit fraud target those who don’t have enough knowledge of different business transactions and mechanisms, including the elderly and students.

The Federal Trade Commission (FTC) is the government agency responsible for protecting consumers against deceptive business practices in the United States. Last year, the FTC received 2.2 million fraud reports and reports of financial losses greater than $3.3 billion, up from $1.8 billion in 2019. These numbers prove that scammers always find ways to steal consumer’s hard-earned money.

Consumers should stay informed to avoid being a statistic. You should educate yourself on how fraud can happen, your consumer rights, and how to exercise them to strip fraudsters of their power over you. You can start by learning stuff like “how to start a class action lawsuit” to know how the law can help you against fraud.

Types of Consumer Frauds

Many types of consumer fraud have been reported throughout history, but the common ones remain a threat to most consumers. Here are the common types of consumer fraud:

● Identity Theft

Identity theft occurs when someone steals your personal information and then uses it to assume your identity to commit more fraudulent activities or other crimes such as theft. One of the most common forms of this type of consumer fraud is the unauthorized use of credit cards or bank accounts.

What makes this dangerous is that victims only find out about identity theft once the damage is done. By the time they’re made aware of what happened, the victim’s credit score has been ruined, or purchases amounting to hundreds of thousands have been made.

Once you notice something fishy about your bank accounts or credit cards, the most you can do is change your login passwords and PINs. Other than that, you can also freeze the accounts in question or even close them.

●  Credit Card Fraud

Many credit card fraud activities have stolen millions from all over the world. It can occur when someone steals your card or card information to purchase goods or commit other fraudulent activities.

Similar to identity theft, victims only notice credit card fraud after it’s done. Red flags of credit card fraud include charges from a company you don’t recognize or when you see several small charges from your account.

Fortunately for you, your bank will be the one to shoulder the loss you incur from credit card fraud. Also, banks and credit card companies have begun using improved technology such as EMV chips to prevent losing money via credit card fraud.

●  Internet Fraud

There are several different schemes of internet fraud used by fraudsters. Since nearly everyone in the world uses the internet for several purposes, most scams are carried out online. Scammers use online services and software connected to the internet to take advantage of consumers.

Different internet fraud attacks include phishing using email or online messaging services to dupe consumers into sharing their login credentials and other information. Other criminals also use hacking by utilizing ransomware, a type of computer virus that only leaves a device once its demands are met.

To avoid falling victim to internet fraud, always ensure that you trust the source before giving personal information online. Double-check before agreeing to anything online and process the information given to you before advancing further with a transaction with a  business you’re dealing with for the first time.

●  Mortgage Fraud

Mortgage fraud happens after a misrepresentation or omission of facts in a real estate transaction. The Federal Bureau of Investigation (FBI) in the United States found that most mortgage fraudsters nowadays often target distressed homeowners.

Mortgage fraud includes foreclosure rescue schemes, loan modification schemes, condo conversion, and equity skimming, among other things. These scams are often committed by knowledgeable people such as mortgage professionals who misuse their specialized knowledge to steal money.

• Mortgage fraud red flags include but aren’t limited to:

• The demand for advanced fees for services from the mortgage company.

• Advise to stop making mortgage payments.

• The promise of loan modification or foreclosure cancellation.

The FBI recommends consumers protect themselves from mortgage fraud by seeking referrals and avoiding unsolicited contacts when endeavoring in any real estate deal. Other simple recommendations include not signing paperwork you don’t clearly understand and shying away from anything too good to be true.

●  Fake Charities

Scammers would go as low as faking charities to steal your money. They set up websites that look like a credible charity to dupe you, or they create a page on social media and send constructed messages containing fabricated information to phish for your credentials.

Crooks who use charities for fraud do the same things a legitimate charity would do to raise funds, which is why you should be careful. Some telltale signs of fake charities include only accepting cash, wire transfers, or gift cards and receiving a ‘thank you” message to make you think you already support their cause.

Wrap up

Consumer fraud can come from different sources and can be carried out through various means. The best way to reduce consumer fraud is to equip yourself with the necessary information to determine if you’re being fooled. Stay vigilant and informed about these things to help society fight fraud.