They don’t use a gun, but scammers and dishonest business operators can steal significantly more money than any bank robber. The following consumer horror stories took place last year.
- An elderly couple in Sacramento hires a shady contractor to remodel their house. They pay him a quarter-million dollars. The California Department of Consumer Affairs estimates the value of the work done before he abandons the job at just $72,000.
- An Arizona couple wins a “free” vacation that includes three days in Florida and a cruise to the Bahamas. The caller says he needs to charge $538 to their credit card to “hold” the package. They foolishly say yes. When their trip itinerary arrives, there are additional hotel and rental car charges. They find out later they could have taken the same cruise for about $100 each.
- A woman in Massachusetts is promised a $5,000 loan if she wires $817 as collateral to a company in Canada. She borrows the money from friends and family only to be told a second payment is required. The loan never comes.
Rip-offs and scams happen all the time. Anyone can become a victim. But right now, many con artists and swindlers are using the poor economy to target people in financial trouble.
“When times are hard, consumers are more vulnerable to false promises of easy ways to make or borrow money,” says Anna Huddelston-Aycock, president of the National Association of Consumer Protection Investigators.
As consumer complaints have increased, so have the size of crimes committed by scammers says Elizabeth Owen, executive director of the National Association of Consumer Agency Administrators.
“People are now losing their cars, houses and sometimes their life savings to these scams,” she said.
The just-released “2009 Consumer Complaint Report” prepared by three major consumer groups shows how scammers are taking advantage of financially squeezed people.
According to the report, the fastest-growing complaint last year was bogus offers to help people save their homes from foreclosure. Complaints about credit and debt — including fraudulent credit repair and debt relief services — also jumped significantly. Not all of these complaints deal with scams, but as you can see, many of them do.
Top consumer complaints for 2009
Misrepresentations in advertising or sales of new and used cars; lemons; faulty repairs; leasing and towing disputes.
Billing and fee disputes; mortgage-related fraud; credit repair; debt relief services; predatory lending; illegal or abusive debt collection tactics.
3. Home Improvement/Construction
Shoddy work; failure to start or complete the job.
Service problems or billing disputes with phone, cable, satellite, Internet, electric and gas providers.
5. Retail Sales
False advertising and other deceptive practices; defective merchandise; problems with rebates, coupons, gift cards and gift certificates; failure to deliver.
Misrepresentations; shoddy work; failure to have required licenses; failure to perform.
7. Internet Sales
Misrepresentations or other deceptive practices; failure to deliver online purchases.
8. Household Goods
Misrepresentations; failure to deliver; faulty repairs in connection with furniture or appliances.
Unhealthy or unsafe conditions; failure to make repairs or provide promised amenities; deposit and rent disputes; illegal eviction tactics.
Misrepresentations or failure to deliver in door-to-door, telemarketing or mail solicitations; do-not-call violations.
10. Health Products/Services
Misleading claims; unlicensed practitioners; failure to deliver.
Consumer agencies feel the squeeze, too
Just when they’re needed most, consumer protection agencies are getting hit with massive budget cuts. As a result, fewer watchdogs are on the beat to go after the bad guys.That means now, more than ever, you need to be on guard and watch for the warning signs of a scam.
“Stop and think,” advises Susan Grant, director of consumer protection at the Consumer Federation of America. “Take the time to do your homework. If you have any questions about an offer, get advice from someone you trust before you do anything.”
The Consumer Federation of America, the National Association of Consumer Agency Administrators and the North American Consumer Protection Investigators have prepared a tip sheet: Ten Ways to Protect Yourself from Scams and Rip-Offs.