Photo (cc) by “Caveman Chuck” Coker
If you know where potential problems lie, they should be avoidable. That’s the apparent logic behind the Federal Trade Commission’s Report of Top Consumer Complaints. Every Spring, the FTC puts out a list of the top reported sources of consumer problems. But it normally doesn’t get a lot of national media attention, and that’s too bad. Because if we all took the time to understand the problems represented on this list, we’d be much less likely to become victims.
Watch the following short news story I did on the top five consumer complaints, but be sure to join me on the other side so I can give you more background and detail.
Here’s more information on the top five problems and how to avoid becoming a victim.
Problem: Foreign Money Offers and Counterfeit Check Scams
Complaints in 2009: 61,736
FTC description: Letters or e-mails offering the “opportunity” to share in a percentage of millions of dollars that a self-proclaimed government official is trying to transfer illegally out of a foreign country in return for money, bank account numbers, or other identifying information from the victim; fraudulent schemes involving foreign lotteries, mystery shoppers, or Internet purchases/classified ads in which a counterfeit check overpayment is received along with a request to wire back the difference immediately after check deposit, leaving the victim responsible
for the funds withdrawn; etc.
How to avoid it: This category encompasses two different but very common scams. The first is the infamous “Nigerian Letter” scam, named for the country in which this fraud started more than a decade ago. You’ve probably seen them, but just in case here’s an excerpt from one I got last week:
My Regards to you and Family,
Mr. Oliver Greene, hereinafter referred to as ‘my client’ who worked as an an oil merchant/contractor here in Thailand, On the 21st of April 2003, My client, his wife and their three children died in a car crash in east Thailand.
My late client, had Assets here in Thailand and had left behind a deposit of US$15 Million(Fifteen Million United States Dollars only) with a finance company here in Bangkok Thailand. After the death of my client, the finance company contacted me, as his attorney to provide his next of kin who should inherit his fortune, this according to them is their policy in sure circumstances.
I seek your consent to present you as the next of kin of the deceased so that the proceeds of this account can be paid to you and then both of us can share the money, 50% to me and 50% to you.
[Yada, yada, yada… give me your bank account number so I can clean you out and disappear.]
It’s amazing that anyone ever fell for this scam once, much less that’s it’s still prolific at least 10 years after it first appeared online. Obvious solution? Don’t respond to emails from strangers, especially those offering you millions of dollars.
The next common scam, “Counterfeit Checks”, most often entails you selling something, say in an online auction, then getting a cashiers check from the buyer for more than the amount owed. The thief asks you to deposit their check and wire them the difference. Surprise! That cashiers check was counterfeit. When your bank finds out… a process that could take weeks… the deposit is reversed and the crook is long gone. Solution? Don’t accept checks: Use Paypal, an ACH transfer from a bank, an escrow service or some other third-party intermediary. And try not to deal with people who you can’t vet in some way.
Problem: Shop-at-Home and Catalog Sales
Complaints in 2009: 74,581
FTC description: Problems, such as undisclosed costs, failure to deliver on time, non-delivery, and refusal to honor a guarantee, with purchases made via the Internet (not including auction sales), telephone, or mail.
How to avoid it: At first blush, this one sounds hard to avoid. After all, shopping via internet, phone or mail by definition requires some leap of faith when it comes to things like delivery, quality and guarantees. But there are things you can do to protect yourself. First, always use a credit card for added protection: A credit card company can refund your money if a product never arrives, or help mediate disputes if it’s not what was promised. Second, deal with stores you know and trust. Finally, before you buy anything from any company, go to the nearest search engine and type in this simple phrase: “Complaints [Store Name].” See what comes up. You can also check if any previous complaints have been filed with the BBB.
Problem: Internet Services
Complaints in 2009: 83,067
FTC description: Problems with trial offers from Internet Service Providers (“ISPs”); difficulty canceling an ISP account; issues with Internet entertainment services; undisclosed charges; website design and hosting services; spyware, adware, and malware issues; etc.
How to avoid it: If you ever give a company your credit card number for a monthly subscription and they won’t stop charging you after you quit, here’s what to do: If the usual (email, phone, etc.) doesn’t work, send a letter to the company canceling your service and demanding the charges stop. Send it certified mail, return receipt requested. If they charge you again, dispute the charge with your credit card company. Use your copy of the letter as proof the charge is erroneous along with your return receipt as proof it was delivered.
You should also try to avoid this situation in the first place by employing the method above: Deal with companies you know and/or check the BBB and complaint sites before signing up.
Problem: Third Party and Creditor Debt Collection
Complaints in 2009: 119,549
FTC description: Debt collector calls repeatedly or continuously; falsely represents the amount or status of debt; fails to send written notice of debt; falsely threatens suit; uses profane language; fails to identify self as debt collector; and/or violates other provisions of the Fair Debt Collection Practices Act.
How to avoid it: You have legal protection from these people! Understand your rights and exercise them. We just did a story on this: Abused By a Debt Collector? Get a Free Lawyer. If you’re dealing with a third party debt collector, or know someone who is, definitely check it out.
Problem: Identity Theft
Complaints in 2009: 278,078
FTC description: When someone appropriates your personal identifying information (like your Social Security number or credit card account number) to commit fraud or theft.
How to avoid it: Identity Theft isn’t just the number one source of consumer complaints, it’s number one by a long shot. In fact, identity theft was responsible for 21% of all consumer complaints last year.
Protecting yourself from identity theft involves a two-part process. First, keep private information private. Second, make life difficult for anyone who does successfully steal your information.
As for keeping your private information private, it’s mostly common sense. Whenever you’re about to throw away a piece of paper, imagine it was copied and posted on a billboard by the freeway or on the Internet. Would that be bad? Then shred it. And especially guard your social security number. Don’t carry your card with you and only provide your number to those who are entitled to ask for it: that’s people who pay you and report that income to the government (e.g., banks and your employer) and people you borrow from so they can check your credit history. That’s not a big list. The video store doesn’t need it. The dry cleaner doesn’t need it. The gym doesn’t need it. In other words, if someone asks for your social security number, don’t just hand it out. Challenge them.
If you want extra protection from identity theft, try step two: Put a fraud alert on your account. All that entails is going to the Equifax website and filling out a simple form. Once a fraud alert is on your credit file, anyone granting you credit is supposed to take extra steps to verify you are who you say you are.
Take a look at the form. It’s no big deal to fill out. The fraud alert lasts 90 days. The cost? Zip. And if you’re afraid you won’t remember to renew your fraud alert every 90 days, check out a story I did called Free ID Theft Protection. It features a website where you can sign up for free email reminders to renew your fraud alert every 90 days.
Well there you have it. The top consumer problems and how to avoid them. As a consumer reporter, I’m amazed that people are still getting ripped off by some of these things. The Nigerian letter scam, for example, is older than the Internet and warnings have appeared on air and in print many, many times. And yet, people are apparently still falling for it. So if you’re not the type to fall for scams, rather than being smug, reach out to those around you who aren’t so fortunate: naive people, older people, lonely people. Talk to them about these things. Show them this article. Encourage them to come to you before they send money to anyone for any reason.
At some point in life we’ve all been a victim. But if you can become just a little more vigilant, it will happen a lot less often, so do it. If not for you, do it so the sleazeballs who perpetrate this stuff will end up where they belong: either in jail or forced to make an honest living like the rest of us.