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Lies, damn lies and consumer fraud statistics

When you get scammed, when you get taken by a crook or a company, what do you do? You complain. You complain to the company, you complain to a friend, and if you are really, really mad, you complain to the government. It’s a good thing you complain.

This week, complainers get their day in the sun. The Federal Trade Commission is expected to release its annual list of the top 10 consumer complaints.  It's one of many lists you’ll see from government and private agencies describing the most frequent headaches consumers suffer, and how much they suffer. And without you complainers none of these groups would have anything to announce. 

Despite the fact that there is almost nothing the FTC can do to help resolve individual consumer issues, hundreds of thousands of people fill out FTC forms and air their concerns there anyway.  One of the FTC's main functions is to aggregate that data, then hold it up and shake it in front of the public and the government, as if to say, "Pay attention to this issue. Look at how many people are getting hurt here."

I have no advance knowledge of this year's list, but I can make a pretty good guess what'll be on it: identity theft, online auctions, advance-fee loans, sweepstakes, work-at-home business opportunities. I know this because the 2004 report was almost identical to the 2003 report.  Next year's report will probably be nearly the same, too. It makes you wonder what good such lists really do. 

But if you've been the victim of a scam, or even targeted by a misleading ad, knowing where to complain does really matter. And it's also important that there's an annual exercise in reminding consumers that, yes, people do fall for these things.

A skewed list

The FTC tends to get certain kinds of complaints. The agency has done a lot of work on Internet crime, telecommunications issues and identity theft, so the consumer complaints it receives skew heavily toward those areas. Other complaint lists reveal a wider swath of problems. 

The National Fraud Information Center recently released its top 10 list of crimes on its Web site. It’s similar to the FTC’s, though it adds fake check scams, travel discounts and phishing to the list.  The study was limited to about 4,500 consumers who self-reported their crime to the agency, but it provides an additional glimpse of the problems people are facing.

The National Association of Attorneys General has an even broader accounting of problems. That group releases its top 10 complaints in the middle of the year, compiled from complaints filed with state attorney general offices. Automobile purchases and home improvements dominate the list every year. It's rounded out by complaints that overlap very little with the FTC:

  • Telecommunications/Slamming/Cramming
  • Internet Goods and Services
  • Telemarketing/Do Not Call violations
  • Credit Reporting; Retail Sales
  • Financial/Investments
  • Contests/Sweepstakes/Prize Promotion
  • Furniture/Appliances/Home Furnishings

Crooks or just cheaters?

There's an important distinction here, according to Jim Hood, who runs Attorney generals often receive complaints about deceptive business practices from otherwise legitimate companies, as opposed to the outright crimes committed by scam artists against many FTC complainers. That makes the attorney generals' list more representative of consumer headaches.

There’s an even broader measure of consumer complaints, which in the past was published every year by the Consumer Federation of America and the National Association of Consumer Agency Administrators. Its most recent data, released in 2004, is similar to the attorneys general data, but adds a few more mundane categories:  Here are its top 10 complaints:

  • Automobile Sales
  • Home Improvement
  • Automotive Repairs
  • Credit
  • Advertising/Telemarketing
  • Collections/Billing Practices
  • Household Goods
  • Internet/E-Commerce
  • Telecommunications/Cable/Satellite
  • Real Estate /Landlord Tenant issues

Get to know your office of consumer protection

Jean Ann Fox, spokeswoman for the National Consumers League, says the list reflects how important it is for victims to know whom to tell about the crime.  People who complain about landlord issues to the FTC probably don't get anywhere; even a complaint to a state AG's office is probably wasted. 

But most states and many counties and even cities have offices of consumer protection, or similarly named agencies. Fox says workers there are trained to handle members of the public who have a problem and don't know where to turn.  A complete list of such helpful agencies is available at the ConsumerAction.Gov Web site. Complaints are often best handled locally. Normally, local officials will have a much better idea of how to handle a utility dispute, for example, than an FTC official in Washington. 

But even if no immediate resolution is found, Fox says consumer complaints are absolutely essential -- and so are annual reports of such complaints -- so policy makers know what's happening and what needs to change.

Complaining is like voting

"Complaining is to being a good consumer what voting is to being a good citizen," she said.  "If there are no complaints, there's no impetus for legislative change and the enforcement officers don’t know what's going on. If you only complain to friends but don't report something ... then nobody who can do something about it knows what happened to you."

If you can't find a local office of consumer protection to complain to, Fox recommends helpful publications at Federal Citizen Information Center, operated by the U.S. General Services Administration in Pueblo, Colo. At its Web site, the agency offers many books and booklets for free or a minimal charge.

When the FTC data is release later this week, identity theft will once again be in the news. Several studies recently have suggested that the rate of ID theft has flattened, or that concerns about it are overblown. It's likely the FTC data, and another upcoming study from industry watcher Javelin Research, will spur more debate on the topic. 

But at least there will be discussion, which former FTC Commissioner Orson Swindle says is really the best defense against con artists.

"There's no way we can solve the problem by catching bad guys," said Swindle, who now advises a think tank called the Progress and Freedom Foundation. "We have to put them out of business."

For that, we need more consumer education. And for that, we need to know what scams people are falling for. And for that, we need complainers. So to all those who turn their consumer anger into the energy need to fill out the proper complaint forms, I salute you. And I ask that you keep complaining.