ITS 4450 - Fraud Risk Assessment Tools and Investigation
Chapter 15, Consumer Fraud
This lesson presents material from chapter 15. Objectives important
to this lesson:
Type of consumer frauds
text begins this chapter with an explanation that consumer fraud concerns
schemes to take money away from individual investors, like the schemes
that were run by Charles Ponzi. The fraud perpetrator seems to be after
a much smaller target, but the reality is that the scam is conducted against
a large number of targets, making the scheme attractive to the scam artist.
The text quotes a survery of fraud victims conducted by the FTC in 2013. It
makes several observations about victims, such as their being more likely
to have experienced a serious negative life event. The implication seems
to be that a person who has had hard luck will be more open to a scheme
that offers to change their luck. Consider the list of frauds on page
535. These were the top five frauds identified in the survey:
weight loss products - worthless products are sold to desperate people
prize promotions - if you will just send us a small fee, we can award
you the grand prize
buyers clubs - the victim is talked into joining a club to save money,
then bills are generated in the victim's name
Internet charges - purchases are made in the victim's name, and the
perpetrator collects the goods
work at home scams - as this
site explains, scams about remote work often lead to a pyramid scheme
or identity theft
This link will take you to the FTC's page about scams
in 2018. The list seems shorter, but each item contains a lot of variety.
The next major topic is identity theft, which can mean several different
things. The most common feature may be impersonation. The scammer obtains
personally identifying information (PII) about the victim. The scammer
then applies for credit cards, loans, mortgages and more in the victim's
name. The victim is usually unaware of the crimes being committed until
the scammer is done with the stolen identity.
Starting on page 538, the text presents examples of actions an identity
thief might take to profit from stolen PII. As you can see, an identity
thief must know other scams to actually generate profit from the theft.
Of course, if the thief is only good at stealing PII, the stolen information
can still be sold to others who will use it. In either case, the victim's
credit rating and reputation are typically ruined.
The text has a good introduction to the concept of skimming. Unlike the definition in the previous chapter, this time a skimmer
is a device that collects credit/debit card information. No personal contact with the victim
is needed by the criminal. The video below shows one kind of device used
to skim card information. Be aware that the concept could be applied to
any terminal that accepts payment cards.
The text continues with several bits of advice about guarding your PII.
They are all good, and you may avoid trouble by following them. Or you
may not. Are you afraid yet?
In case you don't get it yet, the author provides a victim's story that
starts on page 545 and continues for several pages. Read that, then imagine
it happening to a million people in just this country each year. There are many cases
in the book about stealing money from a company that takes years to notice
the theft. They feel very different from the ones about ruining the lives of people
who can't afford the personal disaster that an identity thief delivers.
Continue the reading assignments for the course.
Complete the assignments and class discussion made in this module.