Learning how to avoid consumer fraud is an important issue to consider. The purpose of consumer fraud is to deceive consumers into purchasing a faulty or fake product through misrepresentation.
False advertising and unfair business practices are prohibited under federal and state laws. Other consumer protection laws target more specific practices such as phishing scams or unauthorized use of confidential consumer information.
Consumer fraud can also be described as deceptive business practices that cause consumers to suffer financial losses.
The victims of consumer fraud are led to believe that they are engaging in a legal and valid business transaction when they are being defrauded. The term consumer fraud generally refers to false promises or inaccurate claims made to consumers, but it also includes practices that directly cheat consumers.
It is the Federal Trade Commission’s responsibility to accept complaints against businesses that may have committed consumer fraud. In addition to investigating fraud, they also investigate unfair business practices against consumers. Below, we will discuss the FTC in more detail.
What Are Some Examples of Consumer Fraud?
Consumer fraud schemes are usually based on current trends in consumer behavior. As a result, they can change every year or during different seasons. Here are a few examples of consumer fraud:
- Breach of a product warranty
- Fake or “rip-off” imitation products for sale
- Fraud in nursing homes or elderly care
- Mortgage and foreclosure fraud
- Bankruptcy fraud (for instance, offering inaccurate advice about bankruptcy)
- Faulty repairs of cars and other vehicles
- Misrepresentation of sales contracts and other financial documents
Since there are so many types of consumer fraud, consumer protection laws are constantly evolving. It is especially true for newer Internet and online fraud schemes. Some of the more common types of consumer fraud involve violations of consumer warranty rights.
What Is The Federal Trade Commission?
It has been previously mentioned that the Federal Trade Commission (“FTC”) is closely involved in consumer fraud. Therefore, it is useful to know what the Commission does.
In 1914, the Federal Trade Commission Act created the agency. It aims to protect consumers and prevent specific business practices that exploit and squeeze out other businesses. For example, the FTC regulates companies to prevent monopolies or market dominance; this is also known as antitrust regulation.
Consumers and businesses are both protected by the FTC. The FTC engages in the following activities:
- Making sure consumers are protected from false advertising and fraud;
- Enforcing a variety of laws associated with consumer credit;
- Regulating business marketing and warranty practices;
- Enforcing existing laws and trade regulations;
- Protecting the marketplace by developing new rules.
The FTC generally aims to ensure that markets are efficient, vigorous, and free of restrictions. Because of this, the FTC enforces consumer protection laws intended to prevent fraud, deception, and unfair business practices.
The FTC Bureau enforces FTC rules and laws enacted by Congress to protect consumers.
Some examples of its actions include:
- Collecting complaints;
- Conducting investigations;
- Suing companies and individuals who break the law;
- Creating rules intended to maintain a fair marketplace; and
- Educating consumers and businesses regarding their market rights and responsibilities.
How Can I Avoid Consumer Fraud?
Consumer fraud can be prevented in several ways. Among them are:
- Engaging a professional when needed (such as a home appraiser to determine a home’s value)
- Validating credentials and licenses
- Make sure everything is in writing, especially sales and return policies
A consumer fraud case may require filing a lawsuit in some instances. The victim is typically compensated for their losses through a damages award. Usually, the equipment, products, and documents used in the fraud will be confiscated.
Do I Need To Take Any Action if I Have Been A Victim Of Consumer Fraud?
Consumer fraud can be prevented by being aware of some common signs.
The following are some of the most common examples:
- Using high-pressure sales tactics such as not accepting “no” for an answer or pressing you to make an immediate purchase decision;
- You are asked to send money in advance;
- Unnecessary requests for personal information, such as credit card numbers;
- To obtain goods or a prize, you must dial “900” or a similar number; or
- Providing vague or evasive information about their company or name.
There are many different people and organizations that can help if you are a victim of consumer fraud. Complaints can be filed through consumer fraud hotlines and websites.
If you believe you have been the victim of criminal fraud, you should contact your local law enforcement as soon as possible. If there is sufficient evidence, the case will be sent to the local prosecutor or district attorney for prosecution. Records of all losses associated with the fraud should also be kept since restitution may be a potential punishment.
How Is Criminal Fraud Committed?
Consumer fraud is considered to be criminal fraud under specific circumstances. In consumer fraud, the victim is the consumer, while the perpetrator can be either a seller or advertiser. Fraud that is associated with services or goods can be considered consumer fraud.
A criminal fraud scheme involves cheating or deceiving another person or entity in order to gain financial or other benefits. It is considered to be a white-collar crime or a variety of non-violent crimes generally committed in a commercial or business context for financial gain. As a result, the federal government prosecutes many of these crimes.
Any act intended to deceive another person by falsely representing facts resulting in legal hardship for the person who relied on the information can be construed as criminal fraud. In other words, fraud occurs when someone knowingly lies about a key fact, and the other party relies on that misrepresentation to harm them. Fraud, however, does not occur when someone provides a fact they believe to be true, even if it is incorrect.
Both civil and criminal fraud cases share the same core elements. Criminal fraud convictions, however, usually result in fines or jail time. Additionally, criminal law requires a higher standard of proof for proving fraud, which is beyond a reasonable doubt. In order to be convicted of fraud, each element of the crime must be proven beyond a reasonable doubt.
Fraud causes are not determined by whether the fraud was successful. The mere act of attempting and intending to commit fraud is sufficient to constitute a fraud charge. Based on the jurisdiction, as well as the fact of each specific case, criminal fraud can be charged as either a misdemeanor or a felony crime.
Fraud victims must prove all fraud elements and that they have suffered damages as a result of the fraud in civil fraud cases.
Generally, the difference between civil and criminal fraud cases is that the victim must prove actual damages in a civil case. In contrast, in a criminal case, the prosecution must only prove that the defendant attempted fraud.
How Can I Get Help With Consumer Fraud Issues?
Consumer fraud is a major concern that shouldn’t be ignored. If you need assistance with any consumer fraud issues, you may wish to hire a qualified consumer lawyer for assistance. If you need to file a lawsuit, your attorney can provide you with legal advice and guidance and represent you in court.
