Consumer Protection Consumer Fraud Types, Filing Reports & Complaints

  1. Consumer Fraud is defined as an illegal act of deception in order to obtain an unlawful financial gain at the expense of another person or entity. It can be committed by one or more persons at the expense of others.

    Consumer fraud is often referred to as white collar crime, generally committed in areas that will defraud the consumer of money via deceptive practices. Examples of white collar crime include fraudulent dealings with insurance policies, securities, credit card scams, fraudulent banking policies, etc. The methods of consumer fraud are numerous and can include the use of the telephone, mail, Internet web sites, email and many others.

    Credit Card Fraud

    Credit card fraud is on the rise. Anyone who obtains your credit card information can quickly charge huge amounts of debt in your name and destroy your credit worthiness. Consumers who are victims of credit card fraud can spend countless hours and a significant expenditure of money trying to clear up false credit card charges. Consumers need to monitor their credit report regularly and contact the credit bureaus if there are any charges on their report that are in error. In such an instance, you will need to file an identity theft complaint. The Federal Trade Commission (FTC) provides detailed information on how to get your free credit report. All illegal or unauthorized use of an individual’s credit card should be reported as soon as it is detected. Failure to contest credit card fraud can result in the consumer being unable to obtain credit for purchases of their own, such as for a home or vehicle.

    Bank Fraud

    Bank fraud is usually a deception practiced by a bank to cause a person to voluntarily relinquish his or her property. It can also be committed in the form of overcharges and unnecessary fees or deceptive practices that are unknown to the account holder. While domestic banks are regulated and can be prosecuted for bank fraud, international bank fraud is extremely difficult to prosecute. If you have been a victim of bank fraud, you should consider contacting an attorney if it seems that the fraud might have happened to other victims and not just yourself. It is possible to put together a class of people to file a class action lawsuit against the bank, which would typically be financed by the team of lawyers and not the victims.

    Insurance Fraud

    Insurance fraud is typically perpetrated by insured people trying to deceive an insurance company with a false claim in order to wrongfully receive benefits. Internal insurance fraud is committed when an insurance company, its employees or a group of insurers, attempts to defraud it’s customers by means of deception. Frequently it takes the form of selling fake insurance policies with the insurance company pocketing the premiums where no policy actually exists. Some disreputable insurance companies will accept your premiums but, when it comes time to pay out for a claim, they will deny the claim.

    Insurance fraud is the second most expensive white collar crime in the United States. The National Insurance Crime Bureau statistics indicate that United States citizens lose over $100 billion annually to insurance fraud. If you suspect you may be a victim, you can contact a consumer fraud lawyer for help in filing a claim.

    Internet Fraud

    Internet fraud is on the rise and victims fall prey to it almost daily. Federal Trade Commission statistics show that over $200 million in losses were reported back in 2003 alone due to internet fraud. That number has increased dramatically since that time. Half of the complaints to the FTC about internet fraud reportedly involve online auctions. Numerous complaints have also been filed with the FTC about online identity theft, auction fraud, investment fraud and so called “Nigerian money scams” involving cross border Internet fraud where an unsuspecting victim is convinced to advance sums of money in order to realize a much larger gain. Senior citizens are targeted frequently for Internet fraud scams given their lack of online experience and typically being more naive than the average web surfer. For the most part, it is not easy to recover money due to Internet fraud, a crime which should always be reported to the FTC.

    Mail Fraud

    Any scam used through the United States Post Office to gain money by deceitful practices from a consumer is called Mail Fraud. Around one-third of all consumer fraud is committed through mail fraud. Mail fraud consists of a perpetrator making the promise to deliver certain goods and then not following through on it or delivering something other than what you were led to believe that it was. Common examples include discounted magazine subscriptions and entering a prize eligibility contest. Mail fraud perpetrators may ask for personal information and charge ridiculous amounts for products in hidden fees. They can steal your identity or open accounts by using your information. Like the case with Internet fraud, it is not easy to recover money due to mail fraud, a crime which should always be reported to the FTC. A government investigation may ensue with some greater likelhood given the use of the US Postal Service to carry out the crime.

    Identity Theft: What to do, Where to Report

    Almost all of the following acts of fraud involve identity theft, stealing information that allows one person to misrepresent themselves as another. The FTC (Federal Trade Commission) website has a page dedicated to Identity Theft Recovery Steps, which is probably a great first place to start. You'll also want to report the identity theft crime to the FTC and there are links on the page to do so. Steps there include:
    • Contact the companies where the fraud occurred or concerned them;
    • Contact credit agencies to have a fraud alert placed;
    • Contact any banks or financial institutions that may be of concern (such as your credit card company if credit card fraud occurred);
    • Report the identity theft to the FTC;
    • File a police report at your local precinct;
    • Review your financial statements closely over time and report any fraudulent activity;

    Where to File Consumer Fraud Complaints

    If you have been the victim of consumer fraud:
    When fraud is large enough, either individual in act or in the aggregate, victims may also consider a consultation with a consumer fraud attorney. In some cases where the fraud affects many like persons, class action lawsuits may be filed. In this way, attorneys assist the justice system in providing a disincentive to commit fraud while providing a reasonable recovery to victims.
    Personal Finance & Consumer Law:
    Consumer Fraud

    Michael Wechsler

    Michael Wechsler
    Michael M. Wechsler is an experienced attorney, founder of, A. Research Scholar at Columbia Business School and of-counsel to Kaplan, Williams & Graffeo, LLC. He was also an SVP and chief Internet strategist at and legal consultant at Kroll Ontrack, a leading service e-discovery and computer forensics service provider.


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