What is Consumer Fraud?
There are many different manners in which a consumer may be harmed by consumer fraud. Consumer fraud lawsuits are typically filed over alleged unfair and deceptive tactics that are used by various entities for their financial gain. Consumer fraud occurs at the expense of consumers and includes bait and switch schemes, false disclosure of corrupt bookkeeping, charging for services that were not provided, false or misleading advertising, and unfair pricing.
If you buy something that does not operate as advertised, or if you are intentionally overcharged for the item, this may constitute consumer fraud. A fraud scheme, including paying for sweepstakes winnings or internet actions and receiving nothing in return is also consumer fraud, as is identity theft.
Consumer fraud not only harms individuals, consumer fraud harms the marketplace by allowing fraudulent businesses to continually offset a competitive marketplace, as well as by gaining an unfair advantage over ethical competitors.
In the context of a business transaction, consumer fraud occurs when: False statements of fact are made, the person or entity making the false statements of fact was aware that the statements were bogus at the time that they were made, and the other party involved in the transaction relied on the deceitful statements to his or her harm.
Parker Waichman LLP is a national law firm that is well versed in the various ways in which to help consumers who may have been defrauded.
Who Is At Risk for Consumer Fraud?
Consumer fraud scammers often target specific demographics, including senior citizens, individuals carrying large amounts of debt, and novice entrepreneurs; however, anyone may become the victim of a scam. While telemarketing and mail were often used in consumer fraud schemes, the internet now enables an array of fraudulent business practices and schemes to scam consumers.
It is not uncommon for banks, insurance companies, other financial institutions, drug makers, medical device makers, consumer product manufacturers, and other companies to violate the law. These laws may concern lending, sales, manufacturing, or other business practices.
Companies may sell a poorly manufactured or a defective product that leads to consumer injuries or death or businesses may engage in deceptive advertising and/or fail to reveal certain fees, to name just two examples.
Every state in the country has one or more laws that prohibit businesses from engaging in unfair or deceptive acts and practices. If you have been the victim of bank fraud, a faulty product or false advertising, you may be able to seek recourse in court by filing a consumer fraud claim.
Parker Waichman has decades of successful experience in helping consumers who may have been the victims of consumer fraud.
Common Types of Consumer Fraud
The United States Federal Trade Commission (FTC) indicates that an estimated 25 million people in America are the victims of some form of consumer fraud annually. Despite state and federal laws to protect consumers against business scams and schemes, unfair or deceptive business practices continue.
The most common types of consumer fraud include:
- Advanced fee loans: This is the most common type of consumer fraud and occurs when a consumer is asked to pay money in advance to secure a loan or a credit card.
- Automobile fraud: When an automobile dealership misrepresents or fails to reveal the true condition of a used vehicle; falsifies mileage by tampering with the automobile’s odometer; or falsely promises financing options, while also declining down payment and trade-in options.
- Breach of contract: Including when involved in the purchase of a home, vehicle, or construction contract.
- Buyer’s club membership fraud: This occurs when a consumer has not agreed to join, but is asked to pay for, a buyer’s club membership or a buyer’s publication.
- Construction disputes.
- Credit card insurance fraud: When a company asks for money in exchange for preventing the misuse of a credit card. Note: Consumers are already protected for this potential misuse via federal laws.
- Credit repair fraud: When consumers pay companies to remove any negative portion of their credit history from their credit report records.
- Deceptive and Unfair Trade Practices Act violations.
- Defective product fraud: When consumers buy products that do not work or that do not perform as advertised.
- Illegal Bank Fees
- Insurance fraud: When insurance companies are expected to provide for their policyholders who have become injured, have suffered property loss, or have suffered other injury or disaster, but indicate that the claims are unwarranted or not covered and refuse to pay the policyholders.
- Investor fraud: May include misrepresentations and omissions, unauthorized trading, and recommending unsuitable investments.
- Multi-level marketing: A strategy some direct sales companies use to encourage existing distributors to recruit new distributors by paying the existing distributors a percentage of their recruits’ sale. Recruits are known as a distributor’s so-called “downline.”
- Prize promotion fraud: When consumers are scammed into paying money to become eligible for a prize.
- Pyramid schemes: When consumers are asked to pay a fee in advance and must then recruit others to pay a similar fee with no products or services involved.
- Truth-In-Lending Act violations.
- Unauthorized Contract Auto Renewals and Cancellation Fees.
- Unauthorized purchases on credit and debit Cards.
- Unfair repair practices.
Why File a Consumer Fraud Lawsuit?
Although there are estimates concerning the number of Americans scammed each year by companies engaging in unfair practices or deception, many individuals who have been the victim of a consumer fraud scheme are often ashamed to admit having been taken advantage of or having lost money to a scam.
When victims of consumer fraud do not speak out about being scammed, the company or individual who ran the scam will continue defrauding other consumers and there will be no way of recovering their losses.
Talking to a consumer fraud attorney at Parker Waichman LLP may help you understand your options for recovering your losses and for assisting in shutting down the business that allegedly committed the fraud.
Questions Concerning Consumer Fraud
The attorneys Parker Waichman have a long history of successfully fighting consumer fraud cases for their clients. If you or someone you know has been injured or suffered losses that fall under consumer fraud, the firm offers legal consultations to individuals, business, and entities with questions about filing a lawsuit.
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