Beware! Consumer Fraud

1. Beware! Consumer Fraud Module 9.1

2. Vocabulary • Fraud: a criminal act where someone knowingly deceives you for their own gain

3. Common types of fraud: • Bait and switch: an illegal sales technique in which a business advertises a bargain product with the intent of persuading consumers to buy a more expensive product. • Fake sales: when a business advertises a big sales but keeps the item at the regular price. • Low-balling: a repair shop advertises a basic service at an unusually low price to lure customers in and then tells them that they need additional repairs or services. If the customer refuses the added repairs, the shop charges extra to reassemble.

4. Infomercials:lengthy paid TV ads that include testimonials, demonstrations, and introductory prices. Infomercials often contain gimmicks and in accepting the offer you may have signed up for additional shipments or other hidden commitments. • Health and medical product fraud: deceptive advertising for expensive “miracle” pills, creams, or devices to enhance health and beauty.

5. Pyramid schemes: an illegal multilevel marketing gimmick that promises people high commissions on their own sales and the sales of those they recruit. A cash investment is often required to become a “distributor” of the product. Those at the top make money by selling the products to the distributors and also earn commissions from the sales of their recruits. Many in the middle level make money on sales. However, those at the lower levels make little to no money.

6. Ponzi Scheme • A fraudulent investment operation in which money collected from new investors is used to pay off earlier investors. Investors give money to an “expert” investor who promises high returns from investments. No investments are made. High returns are paid out from the inflow of cash from new investments. The scheme works well as long as money comes in from new investors. When the scheme falls apart, investors suffer financial loses because their money cannot be recovered. If money can be recovered, it is only pennies on the dollar.

7. If it sounds to good to be true, it probably is!

8. Beware! Identity Theft Module 9.2

9. Vocabulary • Identity theft: the use of your personal information, without your permission, by someone else to commit fraud or other crimes

10. How Do They Do It? • Dumpster diving: searching garbage for papers with personal information • Skimming: stealing credit card number with a special device • Phishing: emails or letters asking for personal information from someone pretending to be a bank or other organization • Pretexting: someone pretending to be you to get your personal information then use it against you or sell it • Hacking: stealing information from a computer or computer system by gaining illegal access

11. How to Protect Yourself • Use passwords that are a combination of letters, numbers, and characters • Store important documents (birth certificates, passports, social security card, etc.) in a safe deposit box at your bank • Only enter personal data into a secure website (https://) • Shred through a cross-cut shredder any documents or mailings you need throw away • NEVER give out any personal information on the phone, through the mail, on the Internet, in an email, or in person unless you have initiated the contact and you are sure who you are dealing with • Get a copy of your credit report yearly from each of the credit bureaus

12. Anyone can be a victim of fraud or identity theft! If you find yourself a victim of fraud or identity theft, contact the Oklahoma Office of the Attorney General. They will be able to instruct you on what steps you need to take. Also contact your local law enforcement or the law enforcement agency in the city the fraud/identity theft took place.