This is on the level: An estimated 25.6 million American adults -- more than 10 percent of the nation's adults -- were swindled by fraudsters during 2011, according to a report issued Friday by the Federal Trade Commission.
You've probably seen promotions for the scams, even if you weren't a victim. Weight-loss products that didn't work. Prize promotions that fizzled out. Work at home scams that generated revenue only for the fraudsters. Unnecessary credit card insurance. Debt relief programs that offered little or no relief. And more, much more.
"When people are looking for the best deals for their scarce dollars, 'last-dollar' and 'easy money' scams are common," said Ed Mierzwinski, consumer program director for U.S. PIRG, a Washington, D.C.-based federation of state public interest research groups.
In fact, some people were so taken in by the appeals that they were hit multiple times. A total of 37.8 million incidents of fraud in 2011 were calculated by the FTC's experts, based on responses to a survey conducted for the agency in late 2011 and early 2012.
Consumer advocates said that, in many cases, budget-challenged authorities were becoming overwhelmed by the magnitude of fraud in the marketplace.
"The simple fact is that we are not putting enough emphasis and money into fighting fraud," said Walter Dartland, a former deputy attorney general of Florida and executive director of the Consumer Federation of the Southeast, a nonprofit consumer advocacy group. "It's about enforcement. If you don't fund enforcement, nothing happens. It's just a hollow thing to say, 'Oh, we're against fraud.' "
And, in many cases, it was the consumers' credit cards that bore the brunt of the abuse.
"Scammers steal account information and then run up charges or commit crimes in your name," the FTC advised consumers. "Dishonest merchants bill you for monthly 'membership fees' and other goods or services without your authorization. If you see charges you don't recognize or didn't OK, contact your bank, card issuer or other creditor immediately."
Fraudsters preyed with particularly evil intensity on minorities and the less-educated. More than 17 percent of African Americans and 13 percent of Hispanics fell victim to scams, compared to 9 percent of non-Hispanic whites. Those without high school degrees were far more likely to be defrauded, as were consumers of all races and educational levels who had recently endured a divorce, death in the family or similar setback, according to the survey.
Setbacks set you up for fraud
The association between substantial personal setbacks and debt-related fraud was particularly strong. "Those who had experienced a serious negative life event were 3.75 times as likely to have been a victim of debt-related fraud as were those who had not experienced a negative event," the report found.
Authorities said data points such as those should help the FTC and other agencies discover and root out scams that cost consumers many hundreds of millions of dollars every year.
"Studies like this one help us fine-tune both our enforcement and education efforts," Charles Harwood, acting director of the FTC's Bureau of Consumer Protection, said in a written statement.
But Dartland said that many consumer protection agencies, particularly at the state and local levels, have been undermined by budget cutbacks.
"A lot of consumer agencies are just dying on the vine," he said. "The bad guys know that nothing is going to happen to them. That encourages other people to get into the same business because they see so many others getting away with it."
Top fraud types
According to the survey, these were some of the top categories of fraud:
Weight-loss products, with an estimated 5.1 million incidents. No surprise here, with Americans so eager to shed so many extra pounds. But these scams mostly lightened the consumers' credit card limits and checking accounts. Consumers reported losing less than half of the weight they expected to lose.
"In these cases, although sellers said their products would help people lose a substantial amount of weight or lose weight without diet or exercise, the nonprescription drugs, dietary supplements, skin patches, creams and other products they bought didn't work as promised," Bridget Small, the FTC's assistant director of consumer and business education, said in a written statement.
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Prize promotions, with 2.4 million incidents. In these cases, people would have to buy a product -- generally using their credit cards -- to receive a prize or improve their odds of receiving a prize. You already know how this one ends.
Unauthorized billing for "buyers' club memberships" or other services or products these consumers did not agree to buy, with 1.9 million incidents. In the case of "club memberships," these offers often are made at the end of a telemarketing sale and are known in the fraudster community as "upsales" or "add ons."
Unauthorized billing for Internet services, with 1.9 million incidents. This involves fraudulent charges for Internet access or website hosting, a growing source of scams, according to the FTC.
Work-at-home programs, with 1.8 million incidents. Consumers who fell for this one earned less than half as much money as they expected.
Credit repair (1.7 million incidents), debt relief (1.5 million incidents) and credit card insurance (1.3 million incidents).
These schemes have one thing in common: They often target credit card customers.
"Sometimes the membership is offered as a negative option, whereby the credit card that the consumer used to make the initial purchase is automatically charged for the price of the membership unless the consumer cancels the membership by the end of the free trial period ...," the FTC said in its report. "Consumers may agree to accept the free trial offer believing that the membership will not continue beyond the free trial period unless the consumer affirmatively takes steps to continue the membership. Consequently, consumers are charged for the membership without their authorization."
The bad guys know that nothing is going to happen to them. That encourages other people to get into the same business because they see so many others getting away with it.
-- Walter Dartland
Consumer Federation of the Southeast
"Consumers are often interested in work that they can perform at home," the report noted. "Unfortunately, offers of such work often promise greater earnings than consumers can actually earn -- such as promising large payments to consumers who agree to stuff envelopes or construct craft items. Such fraudulent offers often require consumers to make payments to obtain the materials needed to perform the task."
"Perpetrators may suggest that they can get a consumer's creditors to settle outstanding debts for a fraction of the amount owed and then fail to obtain the promised results," according to the report. Alternatively, there may be a promise of a reduced interest rate on an existing credit card. Again, the promised rate reduction is not provided.
A plurality of fraudulent transactions -- nearly 40 percent of the total -- was conducted over the Internet, according to the survey. "A lot of scams are enabled by Internet tricks, where consumers buy a service or good on one site, but may be re-directed to a 'special offer' site that tricks them," Mierzwinski said.
Telemarking swindlers accounted for 30 percent of the total, with the rest coming from snail-mail offerings, at brick and mortar stores or through personal associations.
The FTC survey was conducted between Nov. 28, 2011, and Feb. 5, 2012. Interviews were conducted in English and Spanish with 3,638 respondents in all 50 states and the District of Columbia. It employed random digit dialing technology that included calls to cellphones. Analysts said comparisons between the latest survey and previous versions were difficult to make due to variations in some questions, but few differences appeared statistically significant.
To help Americans combat fraud, the FTC said it has worked up a list of 10 common-sense tips of things you should -- and should not -- do when it comes to doing business over the Internet, telephone or even in person.
Among those tips: Know who you are dealing with. Check with your doctor before ordering weight loss or other medical products. And carefully inspect every line on your monthly credit card bills.
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