Fighting Consumer Fraud

The CPA Journal, April 1997 | Go to article overview

Fighting Consumer Fraud


In February 1997, the Federal Trade Commission issued a report setting forth its efforts to protect consumers from four types of fraud: telemarketing fraud against older Americans, investment fraud, business opportunity and job placement scams, and consumer finance scams.

As background, the FTC notes that marketing and telecommunications advances in the Information Age give everyone, even con artists, the power to boost the sophistication and reach of a sales pitch. Fraud promoters now masquerade as national sales firms, using telemarketing, direct mail, television, and the Internet to reach consumers nationwide. Thanks to personal computers, desktop publishing software, and affordable video equipment, bogus sales pitches have the look of legitimacy, and lure millions of consumers to take the bait. In sum, fraud promoters pose a significant threat to average consumers and to the economy.

Fraud against older consumers. Deceptive telemarketers target older consumers with a variety of scams and schemes. Prize promotion scams offer prizes in connection with promotions of services or subscriptions to magazines. According to the report, fraudulent prize promoters never deliver any worthwhile goods or services to consumers, let alone any prizes, for their money.

Telefunding and other mimicry fraud is perpetrated by claiming to raise money on behalf of a charity with the promise of sending a prize in return for the contribution. Little or nothing goes to actual charities; most money remains with the con artist.

Investment fraud Again often based upon mimicry, the con artist seeks to sell an investment that looks and sounds like the real thing, often based upon news stories and current events. …

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