Under consumer protection and fraud laws, consumer fraud refers to a specific type of criminal fraud. The victim is a consumer, while the perpetrator is either a seller or advertiser of merchandise. Generally speaking, so long as the fraud involves some type of services or goods, it could be considered consumer fraud.
The definition of consumer fraud encompasses a wide range of activities. Some examples of a few of the more common scams include:
- Sellers not providing merchandise in an adequate fashion, such as a car dealer selling lemon cars;
- Sending merchandise to people without their knowledge, and then forcing them to pay for it by threatening legal action or to ruin their credit ratings;
- Sweepstakes and lotteries in the form of offering you a prize if you pay a “fee,” and then failing to deliver the prize; and
- Charities that are only pretending to be working for a good cause, and ask you for a donation.
Some specific types of consumer fraud include:
- False Advertising: False advertising refers to intentionally misleading a consumer about some aspect of a product. This factor was instrumental in the consumer’s decision to buy the product;
- Bait and Switch: Bait and switch is the process of luring the consumer in with an unbeatable deal that is no longer available. Then, only different products are offered; and
- Pyramid Schemes: Pyramid schemes refer to any sort of promotion or unrealistic return, when the only money made is the return on the funds of people newly recruited to the system. Pyramid schemes may also be referred to as multi level marketing, or MLM.
In terms of specific consumer fraud scams, there are many different ways in which a person may be a victim of fraud. Some examples of the most common consumer fraud scams are:
What Is the Process for Filing a Consumer Fraud Complaint? What Are Some Additional Consumer Rights?
Consumer protection laws are in place in order to protect consumer’s rights, and give them the ability to file a consumer fraud complaint. Before discussing how best to file a consumer fraud complaint, it is helpful to understand these laws and what rights a consumer has.
The Federal Trade and Commissions Act (“FTCA”) outlines industry standards for businesses. Essentially, the Act prevents businesses from making statements that could be misleading or confusing to the average consumer. Another consumer protection law would be the Fair Packaging and Labeling Act, which regulates information presented on the packages of retail products.
Some examples of other issues that consumer protection laws may cover include:
- False advertising and false business claims, as previously mentioned;
- Breaches of consumer contracts;
- Health and safety codes; and
- Dangerous products and products liability issues.
It is not uncommon for consumer claims to involve a violation of more than one consumer protection law.
Some examples of additional consumer rights include:
Cooling Off Period: Most states give consumers until midnight on the third business day after the product or service was purchased in order to cancel the contract, for whatever reason. This is known as the cooling off period and gives the consumer the chance to change their mind, if they made the purchase without much thought;
Shipping Requirements: If a consumer orders something to be shipped, the seller must ship to the consumer in the amount of time stated. If the seller cannot ship the items within the specified timeframe, they must provide the consumer with notice and the option to cancel, or accept either a refund or a new delivery date;
Used Car Rule: According to the used car rule, a dealer is required to post a buyer’s guide on each vehicle. This guide is to disclose warranty and other important information about the vehicle so that the consumer may make the most informed purchasing decision; and
Mail Fraud Schemes: Companies are prohibited from sending consumers an item in the mail that they did not order, and then expect the consumer to pay for it.
One component of consumer fraud protection is filing a complaint for consumer fraud. The first step in this process is to contact the business that sold the item or performed the services, and inform them of your issue. In order to assist your case, it is important that you keep a record of all communication regarding the matter. If the business takes no action, your next step would be to write a letter of complaint to the business, and forward a copy on to your local Consumer Protection Agency.
Alternatively, you may forward a copy to the Better Business Bureau. Finally, if no action is taken by any party you have contacted, you may consider hiring an attorney to represent you and resolve your consumer fraud issues.
What Is the Role of the Consumer Protection Agency?
As was just mentioned, part of the process of filing a consumer fraud complaint is involving the Consumer Protection Agency (“CPA”). Simply put, the CPA is an agency responsible for the regulation of the consumer industry. Some examples of what the Consumer Protection Agency does include:
- License and regulate professionals;
- Conduct investigations into consumer and financial scams; and
- Criminally prosecute those scammers who are found to be guilty.
Additionally, the CPA can help injured parties bring civil lawsuits against fraudulent businesses or professionals. Generally speaking, the Consumer Protection Agency conducts an investigation into the alleged fraudulent business misconduct. Once the investigation is complete, the Agency will make a determination as to whether the business was fraudulent.
Depending on each specific case, a consumer may file an individual lawsuit against the fraudulent business in order to recover personal losses. Many consumer protection laws, especially state laws as opposed to federal laws, encourage consumers to report any cases of consumer fraud or abuse.
A consumer may be asked to participate in a class action lawsuit on behalf of a class of consumers who have been injured by the same company. In a consumer protection lawsuit, the following issues will generally be addressed and resolved:
- Whether the law applies to the specific issue at hand;
- If the defendant actually engaged in misconduct as prohibited by the law; and
- Whether the plaintiff actually qualifies as a consumer.
Consumers involved in a lawsuit may be able to recover damages for any injuries or lost profits caused by the violation of a consumer protection law. Another resolution would be that a judge may issue an injunction, which orders the defendant to cease any dangerous or illegal activities that have occurred.
Do I Need an Attorney for My Consumer Fraud Case?
There are numerous benefits to working with a lawyer for consumer protection issues. They will most likely be aware of any class action lawsuits that you could join. Thus, if you are dealing with consumer fraud issues, you should consult with an experienced and local consumer lawyer.
As state laws may vary in terms of consumer protection laws, a local consumer lawyer will be best suited to understanding how your state’s specific laws will affect your legal options. An attorney can also help you file a legal complaint and gather the necessary evidence to support your claim. Finally, an attorney can also represent you in court, as needed, should you need to file a lawsuit against the fraudulent business.
Jose Rivera, J.D.
Managing Editor
Editor
Last Updated: May 17, 2021
