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Home » Consumer Information » Defective Products

Consumer Fraud

Consumer fraud occurs when a buyer purchases goods, services, or property that does not meet the specifications as advertised (e.g., defective merchandise, a real estate con, a phony charity event). In other words, a consumer is deliberately deceived with the intention of attacking that person’s financial well-being. Consumer fraud protection defends customers from falling into these traps through federal and state consumer protection and product safety legislation. There is an abundance of categories of consumer fraud including:

  • Credit card fraud
  • Movie ticket fraud
  • Bank fraud
  • Phone company fraud
  • Internet services/usage fraud
  • Dry cleaner fraud
  • Prize/sweepstakes fraud
  • Shop-at-home/catalog sales fraud
Consumer fraud on a national scale

Consumer fraud is addressed at the national level by the Federal Trade Commission (FTC) and its Consumer Sentinel program, which was founded in 1997. Consumers across the country are able to file consumer fraud grievances with the Consumer Sentinel database.

By December 2005, the database contained over 3 million consumer fraud and identity theft complaints. More than 14,000 law enforcement outfits along with each state’s attorney general’s office have access to these files. The Consumer Sentinel database is also accessible to 19 countries since consumer fraud is often conducted internationally; this way, various nations have the ability to work together to pursue perpetrators.

Over the course of 2005, in excess of 685,000 instances of consumer fraud and identity theft costing consumers approximately $680 million were reported to the Consumer Sentinel program. Of those complaints, 63 percent of them dealt with consumer fraud, while the other 37 percent were concerned with identity theft.

According to statistics amassed by the Consumer Sentinel program, people living in certain areas of the US are more vulnerable to consumer fraud. The highest per capita rate of consumer fraud can be found in:

  • Tampa, St. Petersburg, and Clearwater, Florida
  • Seattle, Tacoma, and Bellevue, Washington
  • Washington D.C.
Consumer fraud on a local scale

Florida residents reported just under 25,000 accusations of consumer fraud to the Consumer Sentinel in 2005 at a total loss greater than $33.4 million. Further analysis showed that average consumer fraud victim lost over $2,000 per case. Taking into account the national average of $350 per victim, Florida residents were taken for almost six times as much. In 2005, these Florida cities were home to the highest number of fraud reports:

  • Miami – 1,693
  • Tampa – 1,128
  • Orlando – 1,088
  • Jacksonville – 1,060
  • St. Petersburg – 588
Consumer fraud online

In 2005, consumer fraud on the Internet occurred at a greater rate than any other type of fraud reported to the Consumer Sentinel program; more than 46 percent of the 431,118 cases were Internet-related and responsible for the loss of almost $340 million. As more and more Americans obtain Internet savvy, online consumer fraud can only be expected to mount. Since 2002, complaints linked to “wire transfer” payment services (e.g., PayPal) that are commonly used with auction websites (e.g., eBay) have more than tripled. Other Internet users also contend that they are being overcharged by sites selling tickets, while others have been targeted by email scams attempting to swindle innocent people of their money.

Consumer fraud victims

Discovering that you have been ripped off by a scam or fraud can be difficult to comprehend. Even worse, it is even harder for them to voice their complaint and be taken seriously. Victims of consumer fraud should contact an attorney immediately to provide them with the advice and hopefully receive compensation that they rightfully deserve.