Fort Bliss Monitor

High debt, bad credit increase incidence of fraud

DANIEL P. MCKERNAN
Legal Assistance Office

Recently, the Federal Trade Com-mission released a statistical survey of fraud in the United States that shows that nearly 25 million adults – 11.2 percent of the adult population – were victims of fraud during the year studied. The survey shows that consumers with high levels of debt were more likely to be victims of fraud. Three of the top four categories of fraud related to credit, including credit-repair scams often targeted at those carrying high debt loads or having bad credit.

The most frequently reported type of consumer fraud, affecting 4.5 million consumers, was advance-fee loan scams, in which consumers pay a fee for a “guaranteed” loan or credit card but never receive the promised loan or card. Some consumers fell victim to this particular type of fraud more than once.

Paying a membership for a buyers’ club or bills for unordered publications was the second most commonly reported fraud category in the survey. Some four million consumers fell victim to these fraudulent scams.

Credit card insurance scams and credit repair were the third and fourth most common frauds. Even though federal law limits consumers’ credit card fraud liability to $50, scam artists continue to sell credit card insurance by claiming that card holders face significant financial risk if their credit cards are misused. Roughly 3.3 million consumers bought unnecessary insurance against the unauthorized use of their credit cards.

Some fraudsters convince consumers they can help them remove truthful, negative information from their credit report or establish a new credit record. Even though “credit repair” services are illegal, two million consumers paid for “credit repair” services and the truthful, negative information was not removed from the credit report.

Obviously, fraud is a serious problem. About 33 percent of fraud victims learned about a fraudulent service or product from advertising in newspapers, magazines, direct mail, catalogs, or posters. Roughly 17 percent of consumers taken in by fraud were contacted by telemarketers. Electronic mediums, such as television and radio accounted just under 11 percent while 14 percent were promoted using Internet and e-mail.

The FTC survey also found that roughly 13.9 million consumers were victims of telephone “slamming” - unauthorized and illegal changes in long distance telephone service. The FTC has publications to help consumers spot and avoid scams. They include: Just When You Thought It Was Safe ... Advance-Fee Loan “Sharks” Alert, Credit Card Loss Protection Offers: They’re the Real Steal, and, Credit Repair: Self-Help May Be Best.

For more information or for a copy of the survey, you can go to the FTC’s Web site at http://www.ftc.gov. The FTC can also be contacted by mail at the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC mission is to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. If you have questions or concerns regarding consumer fraud, you can call the Legal Assistance Office, 568-4704/6513, and obtain an appointment to talk with an attorney.

Top 10 fraud scams

Advance-fee loan scams - 4.55 million victims
Buyers clubs - 4.05 million victims
Credit card insurance - 3.35 million victims
Credit repair - 2 million victims
Prize promotions - 1.8 million victims
Internet services - 1.75 million victims
Pyramid schemes - 1.55 million victims
Information services - .8 million victims
Government job offers - .65 million victims
Business opportunities - .45 million victims.



www.bliss.army.mil	Published for the Fort Bliss/El Paso, Texas Community	April 21, 2005

<map name="boxmap-b4"> <area shape="rect" coords="0, 589, 120, 600" href="http://rcm.amazon.com/e/cm/privacy-policy.html?o=1" > <area coords="0,0,10000,10000" href="http://www.amazon.com/exec/obidos/redirect?tag=&creative=92501&camp=8117&link_code=dl1&path=subst/misc/amazon-cobrand-cc/v3/marketing-from-associates-step1.html/ref%3Db1_assoc_29" > </map>	High debt, bad credit increase incidence of fraud DANIEL P. MCKERNAN Legal Assistance Office Recently, the Federal Trade Com-mission released a statistical survey of fraud in the United States that shows that nearly 25 million adults – 11.2 percent of the adult population – were victims of fraud during the year studied. The survey shows that consumers with high levels of debt were more likely to be victims of fraud. Three of the top four categories of fraud related to credit, including credit-repair scams often targeted at those carrying high debt loads or having bad credit. The most frequently reported type of consumer fraud, affecting 4.5 million consumers, was advance-fee loan scams, in which consumers pay a fee for a “guaranteed” loan or credit card but never receive the promised loan or card. Some consumers fell victim to this particular type of fraud more than once. Paying a membership for a buyers’ club or bills for unordered publications was the second most commonly reported fraud category in the survey. Some four million consumers fell victim to these fraudulent scams. Credit card insurance scams and credit repair were the third and fourth most common frauds. Even though federal law limits consumers’ credit card fraud liability to $50, scam artists continue to sell credit card insurance by claiming that card holders face significant financial risk if their credit cards are misused. Roughly 3.3 million consumers bought unnecessary insurance against the unauthorized use of their credit cards. Some fraudsters convince consumers they can help them remove truthful, negative information from their credit report or establish a new credit record. Even though “credit repair” services are illegal, two million consumers paid for “credit repair” services and the truthful, negative information was not removed from the credit report. Obviously, fraud is a serious problem. About 33 percent of fraud victims learned about a fraudulent service or product from advertising in newspapers, magazines, direct mail, catalogs, or posters. Roughly 17 percent of consumers taken in by fraud were contacted by telemarketers. Electronic mediums, such as television and radio accounted just under 11 percent while 14 percent were promoted using Internet and e-mail. The FTC survey also found that roughly 13.9 million consumers were victims of telephone “slamming” - unauthorized and illegal changes in long distance telephone service. The FTC has publications to help consumers spot and avoid scams. They include: Just When You Thought It Was Safe ... Advance-Fee Loan “Sharks” Alert, Credit Card Loss Protection Offers: They’re the Real Steal, and, Credit Repair: Self-Help May Be Best. For more information or for a copy of the survey, you can go to the FTC’s Web site at http://www.ftc.gov. The FTC can also be contacted by mail at the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC mission is to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. If you have questions or concerns regarding consumer fraud, you can call the Legal Assistance Office, 568-4704/6513, and obtain an appointment to talk with an attorney. Top 10 fraud scams Advance-fee loan scams - 4.55 million victims Buyers clubs - 4.05 million victims Credit card insurance - 3.35 million victims Credit repair - 2 million victims Prize promotions - 1.8 million victims Internet services - 1.75 million victims Pyramid schemes - 1.55 million victims Information services - .8 million victims Government job offers - .65 million victims Business opportunities - .45 million victims.