Easy Guide to State Consumer Fraud Laws

Easy Guide to State Consumer Fraud Laws

 The Federal Trade Commission is primarily in charge of enforcing consumer fraud laws and protection statutes. The FTC uses industry guides and trade regulations to decide what is unfair or deceptive trade practices. The FTC places and regulates federal consumer fraud laws, while each state has jurisdiction over their own state’s laws and regulations regarding unfair or fraudulent activity. 

All states have common fraud laws that provide broad and general protection against business practices that would be considered to be fraudulent. To prove fraud one must provide evidence that:

The individual or company doing business with him/her made a false statement on material that was important to the sale.

The person who made the false statement knew or understood the statement was incorrect.

The buyer relied on the false statement to his/her detriment.

Some states have created more specific statutes based on what particular consumer product is involved with the claim. States have established agencies to enforce these consumer fraud laws within their state’s jurisdiction.

Each state has an attorney general who often enforces consumer law through these specialized agencies, known as consumer affairs departments. States also have business-specific statutes that cover specialized kinds of business practices in different industries. Some of these statutes include health club contracts, travel agencies and vehicle repair and sales. 

As noted, individual states have legally passed acts which more specifically help protect the interests of consumers when dealing with fraud laws and deceptive sales practices. For instance, the New Jersey Consumer Fraud Act was put in place to protect consumers from fraudulent business practices. The Consumer Fraud Act covers a wide range of sales including limits on going-out-of-business sales, specific requirements regarding posted refund policies and clear price marking and advertising.

Any sales practice that misrepresents, makes false promises or otherwise is deceptive to consumers with the intent of getting them to buy something is a violation of the Consumer Fraud Act. The New Jersey attorney general has the power to enforce the Consumer Fraud Act, and any consumer who believes they were deceived and lost money can sue to recover their monetary losses.

When an individual sues for monetary damages, the court is mandated to reward the individual with three times the damages and the attorney fee must be paid by the other party. In all though, each of the 50 states has their own specific guidelines and regulations when dealing with fraud laws and some have their own consumer fraud act in place to further the rights of consumers. 

What You Need to Know About Telephone Mail Fraud

What You Need to Know About Telephone Mail Fraud

Perpetrators of elder fraud contact their targets in many ways, with the most common being by telephone or mail messages. By using these two platforms, criminals can hide their identity from their victims. Certainly, there are many ways that telephone fraud and mail fraud may be conducted. However, the main message that virtually every scam copies that the person who receives the message has won a prize or cash winnings.

The “winner” is then instructed to follow a list of steps to take in order to access his or her prize, which usually includes him or her sending some kind of fee or tax as a processing or holding charge. If the chosen target follows these instructions and sends money or bank account information, he or she will likely not receive his or her “winnings” and fall victim of telephone fraud or mail fraud instead. 

Those in charge of telephone fraud schemes contact people at random who are listed in a phone book. These criminals continue to solicit the person who answers the phone until they can hook him or her into believing their sales pitch, convincing the individual that he or she has randomly been selected to receive a cash prize or some other reward.

Dangling a large sum of money in front of people looking to make money quickly can prove quite an effective tool for schemers. People who have been found most likely to fall victim of these scams are young adults and elderly persons. Elders who are afraid of not having enough money to last them or pass on to their families will be yet more likely to believe these instances of telephone fraud. 

Mail fraud is very similar to telephone fraud in that defrauders will announce to targets that they have won a sweepstakes or lottery with a large prize that needs to be collected. Most of these mail messages will come from organizations or companies with names that seem very similar to large, well-known organizations designed to try to confuse their targets by seeming like legitimate companies. Of course, by doing this, people will be more likely to believe that they have won.

These fraudulent plans will instruct their “winners” to send money or bank account information to an off-shore or out-of-country bank, telling them that by paying a processing fee or tax, it will allow them to have access to their large sum of winnings and that the fee will be reimbursed.

These criminals will receive this “fee” into their account and then cease any communication with their target. Telephone fraud and mail fraud scammers will pressure their targets into quickly sending the fees by saying their offer will expire or that they will lose out on their prize. 

Being pressured into acting on a prize is one sign that an individual could be in the crosshairs of a telephone or mail fraud plan. Other signs to look out for: 

Not recognizing the sweepstakes, lottery or competition the powers-that-be claim one has won. You can not win a competition if you have not entered.

 Suspicious organization name. If they sound too familiar, check trusted resources and do research.

Being required to pay a processing fee for winnings. More than likely these fees will be kept and no prize will be sent, especially if there is a P.O. box or out-of-country bank involved.

Health Care Health Insurance Fraud

Health Care Health Insurance Fraud

Health care and health insurance fraud vary in the types
of schemes and plans employed. Such setups include: individuals obtaining
fully-paid or subsidized prescriptions, receiving those medications, and
selling them illegally to make profits, individuals billing practitioners when
they never used their care, altering descriptions or dates and lengths of visits
and billing a service that isn’t covered by insurance, among many
others. Providing false information when applying for health care or
health services, forging prescription drugs and reselling them for profit, and
loaning people or using others’ health insurance cards all are violations and
examples of health care fraud or health insurance fraud. When health care fraud
or health insurance fraud is committed, companies pass along monies lost
through charges to their users. The customers then have to pay more for
prescriptions and visits to doctors. Statistics now show that 10 cents of every
dollar spent on health care goes to paying off the fees from the apparently
vast amounts of fraudulent activities in health care and health insurance
claims. 


Health care insurance companies have 30 days to pay a
legitimate claim, as current congressional legislation states. The FBI, U.S.
Postal Service and the Office of the Inspector General are responsible for the
investigations of health care fraud and health insurance fraud. These agencies
rarely have enough time to conduct a full investigation in those 30 days to be
able to prevent and protect against fraudulent activities before an insurance
company has to pay the claim. Parties indeed found guilty of health care
fraud or health insurance fraud, though, depending on their identity, are
subject to punishment of incarceration, large fines and possibly the loss of
right to practice in the medical field in the future. Violations of health care
fraud are not taken lightly and those who commit these crimes will be punish
ed accordingly.  

Quick Glance At The Background on Elder Fraud

Quick Glance At The Background on Elder Fraud

Though it would seem to be indicative
of generalizations and AARP        
Many
elders have valuable assets including homes, proceeds from appraised real
estates and retirement funds.

        
Elders
may be concerned with losing money and could be looking for a quick
money-generating plan.

        
Many
elderly people have memory issues, whether by product of disease or simple loss
of memory, which makes it easier for them to fall victim of elderly fraud.

        
Elders
may be lonely and in need of companionship, even from people they don’t know,
which could make them more vulnerable to financial elder fraud/exploitation.

        
Older
people have traditional values which could lead to them being more generous to
charitable offers.

        
The
fear of losing their independence keeps elders from reporting elderly fraud
when it happens.


The factors above combine for just some of the ways by which frauds target
elderly people when trying to scam money from them. Some warning signs of
potential elder fraud and the like:

        
Winning
a special gift/prize or being selected to receive a special offer when no entry
in a sweepstakes was ever made

        
Being
urged to “act immediately” and pay for your prize

        
Being
told there is a secret loophole to receive a cash prize

        
Being
prompted for Social Security number, bank number, or credit card number by a
company unfamiliar to the individual

        
Being
asked to donate money to a foundation whose name sounds similar to a
well-known, established charity

        
Being
pressured to allow mail service to be ordered and pick up one’s payment

        
Being
informed of a purchase made from a company that one does not remember or have
statements for

For seniors, being aware of the people who contact them
over E-mail and the phone will help them save their money and prevent them from
falling for one of these elderly fraud schemes. Indeed, there are many ways to
protect one’s money and other assets. If you are concerned about elder fraud,
to make sure your assets are as safe as possible, follow these guidelines:

        
Keep
all bank numbers, credit card numbers and Social Security numbers private.

        
Never
allow strangers to come into your home or ask about your assets.

        
Be
critical of the sales pitches used, especially if a salesperson says your
proceeds will go to a good cause.

        
Do
not sign a         
Never
sign contracts with blank spots; people can fill these in after you sign.

        
Have
a knowledgeable third party look over all home loans.

Elderly fraud happens frequently because criminals
understand the easy-going and good-willed nature of many elders. These
criminals will be relentless in their efforts to persuade elders into buying
into their scheme or plan. To the consumer, stay aware of who is behind these
suspect calls or E-mails, and always check the sources before following through
with any action. 


Understanding Elder Fraud

Understanding Elder Fraud

Elderly people are prime targets for fraudulent activity and scams. The criminals who target elders do so because of their vulnerability, their needs for companionship and financial stability, and their tendency to be caring and giving people. 

Fraudulent schemes are created and employed disguised as popular programs or organizations. Fake companies present themselves as reliable entities in which the elderly can trust for their services. These people model their schemes closely after the operations of legitimate corporations or activities with slight changes where the ringleaders create an opportunity for themselves to turn a profit.

By contacting older people through telephone calls, mailing or even door-to-door campaigns, they try to convince them that their cause is legitimate and that they should do what they are being told. In reality, their phone calls and mail messages can falsely tell people they have won a competition with a large cash prize, or door-to-door sales persons can be trying to get their targets to pay for a service they will never receive. Federal and state laws have been created to protect the interest of the consumer when dealing with false sales information and other fraudulent sources. 

Telephone/Mail Fraud

Being contacted through phone calls or mail messages that explain that an individual has won a sweepstakes, lottery or some other competition may be tantamount to dealing with a fraudulent criminal. These calls or messages will inform targets that they have won a large cash prize and need to act quickly in order to receive their prize or their opportunity will be lost.

These scams will require their “winners” to pay a processing fee or transfer charge in order to receive their winnings. These charges or taxes, instead, are to be sent to an out-of-country bank account, and the scammer will keep this sum of money. Targets will never hear from the fraudulent contest organizers again, their money effectively stolen. Being aware of whom one is contacted by and being cautious of these get-money-quick schemes will help individuals avoid becoming victim to one of these plans.  

Health Care/Health Care Insurance Fraud

Practicing health care or health care insurance fraud is punishable by incarceration, heavy fines and even the loss of license to practice health services. 

Home Repair Fraud

Door-to-door campaigns can include contractors coming to elderly people’s houses and providing them information to try to convince people to use their business. These contractors or builders are often frauds and are trying to scam money from people who will fall prey to their scheme. They offer immediate services at a discount price, raw materials that are special to their practice and they offer a “one-time’ opportunity. Any company that uses these strategies are most likely fraudulent businesses.

They can try to force their targets into acting quickly on their services by saying that this opportunity is only good that day or that they are lucky winner in their campaign. Elders contemplating home repair should consult with professionals by contacting them through referrals from people they trust and read reviews online or in the papers. One should always do research to check the credentials of any company offering to do a service.

Reverse Mortgage Fraud

The Housing and Urban Development organization (HUD) created reverse mortgage programs from those people who were having trouble meeting the payments for their houses. With the installation of new programs, it opened the door for fraudulent criminals to take advantage of a newly established program that was new to the public.

Reverse mortgage fraud scams convinced people, mostly elders, that by doing a reverse mortgage with their company, they will be safe and have financial stability in the future. They were also convinced to buy insurance and other programs and services from the same program, which ended up taking their targets payment for these services and never fulfilled the promised service. HUD and AARP have established newer programs that will try to limit and eliminate reverse mortgage fraud schemes. 

State Consumer Fraud Laws

The Federal Trade Commission (FTC) has jurisdiction over monitoring consumer fraud and establishing fraud laws for the entire United States. They decide which practices are fair and unfair to the consumer. Common law, or judge-made laws, effect a broad and spectrum for governing over misrepresented sales between businesses and consumers.

Each state has their own restrictions and regulations when deciding over consumer fraud laws and issues. Some states have established specialized agencies and branches of law whose sole purpose is to monitor over fraud laws and consumer fraud. Some states, such as New Jersey, have taken it a step further and created acts and laws in how to deal with deceptive sales practices within their state. 

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