In 2010, the Federal Trade Commission (FTC) received more than 1.3 million consumer complaints in more than 30 categories. Many consumers cited abusive or exploitive business practices. More than half alleged outright fraud.
See also: Protect yourself from telemarketing fraud.
Just so you know who's out their trying to take you to the cleaners, here are the top 10 ways the FTC says you are most likely to be financially abused, cheated or exploited.
10. Credit cards. Complaints included account and billing issues, unexpected interest rate changes, late fees and overcharges. The only surprise here is that the category is so low on the list. Credit card complaints used to be in the top three in past years. However, the industry may be getting a little help from new congressional legislation limiting credit card companies' ability to impose outrageous fees and interest rates. (You might want to check how your legislators voted on that one before heading to the polls next year.)
9. Telephone and mobile services. Consumer complaints included charges for calls to toll-free numbers, unauthorized switching of services (slamming), and misleading prepaid phone card offers. I think the number of complaints in this category would be much higher, but the FTC doesn't include complaints about outrageous termination fees, which are unfortunately legal.
8. Foreign money offers and counterfeit check scams. The FTC describes this as "letters or emails 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." Our response? There is no money for you in Nigeria!
7. Internet auctions. Reports included nondelivery or late delivery of goods, goods that are less valuable than advertised, and failure to disclose all the relevant information about the product or terms of the sale. You could just call this the eBay or Craigslist scam. Before you click to purchase one of these offers, just remember the AARP member who wrote to us about the $7,000 she wired to get a car that apparently never existed from a seller who's nowhere to be found.
6. Impostor scams. Scammers pretend to be with a government agency or related to the consumer in order to lure them into a scam such as a foreign lottery or a prize/sweepstakes offer. If you didn't catch it the first time: THERE IS STILL NO MONEY FOR YOU IN NIGERIA!
5. Shop-at-home and catalog sales. Consumers reported various problems, such as undisclosed costs, failure to deliver on time, nondelivery, and refusal to honor guarantees. Many of these situations could be avoided with a little online research. Shop somewhere else if you find more than two unresolved complaints with the Better Business Bureau or below a 90 percent rating on Amazon, Yelp! or Bizrate. RipOffReport.com is also a good place to check.
4. Prizes, sweepstakes and lotteries. In this category, the FTC includes "promotions for 'free' prizes for a fee; foreign lotteries and sweepstakes offered through the phone, fax, email or mail; etc." Are you beginning to see a pattern here? This is the third category dealing with what are basically get-something-for-nothing scams. The abbreviation TANSTAAFL first appeared in the 1930s. It stands for "There Ain't No Such Thing as a Free Lunch." It's as true today as it was then.
3. Internet services. Problems with Internet service providers (ISPs) involve trial offers, account issues, undisclosed charges, spyware, adware, malware and social networking services. In our experience, the biggest problem for consumers dealing with Internet companies is that there is often no storefront or place to go to complain in person. Always, always, always pay with a credit card from a bank with which you have a great customer relationship, so that the bank will be more likely to believe you than the vendor.
2. Debt collection. Consumers reported debt collectors for all kinds of illegal and unethical behavior, including calling continually, misrepresenting the amount or status of debt, failure to send written notice, and even profane language. Kicking a guy when he's down is unkind and, in many cases, illegal. If you're being harassed, get familiar with the Fair Debt Collection Practices Act and quote it next time you're called. You'll sleep better at night.
And, the most reported consumer complaint to the FTC is (drum roll please):
1. Identity theft. The FTC describes this as "when someone appropriates your personal identifying information (like your Social Security number or credit card account number) to commit fraud or theft. Hey, wait a minute! How is this a consumer problem? After all, identity theft is really your financial institution giving general funds to the wrong person but deducting it from your account. That person might be claiming to be you, but isn't "giving money to the right person" a bank's basic job description? If they can't do that, what good are they? And why does it become your problem to fix if the bank doesn't have a method to make sure they give your money to you? I advise keeping track of all expenses incurred as a result of any "identity theft" incident and demanding compensation from the failing institution. By the way, the FTC reported that your financial institution is more likely to give your money to the wrong person if you live in Florida, Arizona or California.
Ron Burley is the author of Unscrewed: The Consumer's Guide to Getting What You Paid for.
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