Define Consumer Fraud

There are several kinds of consumer fraud.

There are many different kinds of consumer fraud. Consumer fraud is generally defined as any instance in which an individual suffers a financial or other personal loss as a direct result of deceptive or intentionally misleading business practices. The best way to protect oneself against fraud is to research a business prior to issuing any personal information or funds.

Identity Theft

One of the most prevalent forms of consumer fraud is identity theft. This occurs when personal information is used by an individual who is not lawfully authorized to posses or use that information. Examples include the illegal acquisition of a credit card or bank account number. When an individual other than the lawful owner of an account or line of credit obtains information that allows him to access funds within those accounts, identity theft has occurred. This individual may use information to transfer money from a victim's account to one previously established and held by the perpetrator of the theft. Such funds can be extremely difficult to track down once the theft has occurred.

Telephone and Mail Fraud

Many times, a person will receive a letter or phone call from someone who claims to represent a company or financial institution. This individual may offer products or services such as sweepstakes or credit cards that promise high financial returns to all participants. Most of these types of offers are designed to lure the victim into providing the solicitor with personal information or payment designed to ensure their enrollment into the offered program. In many cases the information is improperly used and the victim never receives whatever service or product they believe they have ordered or purchased.

Internet Fraud

With the growing number of people who bank, shop or pay bills online, the Internet has become a key hunting ground for fraudulent business opportunities. Like mail or telephone solicitation, many advertisements online may promise high returns for certain services or products that do not actually exist. The aim of these ads is to lure victims into handing over personal data or funds. Other scams may include emails that offer business opportunities for governments or private agencies who require assistance in exchanging or converting certain funds. These offers may imply that by allowing these individuals to temporarily store funds in the victim's bank account, the victim will be awarded or allowed to keep a certain percentage of the funds they store. This scam is simply a way to acquire bank account numbers for the purpose of illegally transferring funds out of the victim's account.

Tax Fraud

Income tax fraud occurs when a company offers to help minimize tax obligations or guarantees higher tax refunds in order to obtain personal data or fees. Companies may offer tax credits or incentives that do not actually exist.

Income tax fraud may also be committed by an individual when she provides the IRS with false information. This may include using a invalid Social Security number or by intentionally neglecting to report certain incomes or tax liabilities.

Prevention

The Federal Trade Commission is the primary source of information regarding protection against all forms of consumer fraud. They offer a wide range of brochures or guidelines for consumer protection, including tips on how to educate children about guarding personal data or how to avoid being targeted on social networking sites. The Better Business Bureau is a good source for consumer reports that may offer insight into which companies are reputable in their consumer relations.

Solution

If you believe you have become a victim of personal fraud, here are the steps you should take. First, contact any agency that holds an account you believe has been compromised, such as a bank or credit union. By freezing the account and flagging it for fraud the financial institution that holds the account will stop all transactions until the matter has been resolved.

Second, contact local police and inform them that you have become a victim of personal fraud. Only by initiating a legal investigation can fraudulent companies be caught and stopped.

Next, close the affected accounts. Once account information has been obtained by a disreputable entity that account will no longer be a safe place to store financial or personal data. open new accounts and take all possible precautions to safeguard your new account information.

Finally, file a complaint with the Federal Trade Commission. This is a national agency whose primary function is to protect consumers from personal fraud. By filing a online report you may be notifying the FTC of a potential threat to other consumers and thereby enable the FTC to better warn and protect consumers about possible fraud.

References

• The Free Dictionary: Consumer Fraud
• Federal Trade Commission: Deter Identity Theft
• Federal Trade Commission: Defend: Recover From Identity Theft