Swindlers' List: Dieters, Debtors and You

By Michelle Singletary
Thursday, November 8, 2007

One would think that consumers would have become hip to most frauds thanks to the constant warnings by consumer groups and federal agencies.

And yet, the victimization continues.

For example, the Internal Revenue Service has issued warnings over the last several months urging people to ignore bogus e-mails that, at first glance, appear to have been sent from the agency. The most recent advisory cautioned about a scam e-mail asking for charitable contributions to victims of the Southern California wildfires. The e-mail contains a link that sends recipients to a Web site that looks similar to the IRS site. The scam is set up to steal personal and financial information.

Another fraudulent e-mail told taxpayers that they were eligible to receive a tax refund.

You're probably saying to yourself: Who in their right mind would respond to fake e-mails, lottery scams or bogus business ventures?

Well, millions of people do.

The Federal Trade Commission reported recently that in 2005, 30.2 million adults -- 13.5 percent of the adult population in the United States -- were victims of fraud.

It shouldn't be surprising (wasn't to me) that people in debt are more likely to believe a lying, low-down crook. Desperate, debt-ridden consumers are most often snared by three types of scams: advance-fee loans, credit repair and debt consolidation.

But overall, the FTC survey found that more people -- an estimated 4.8 million -- were victims of fraudulent weight-loss products than of any other scheme covered in the survey.

Maybe in this case, victim isn't the right word. Gullible might better describe the people who pay lots of money for weight-loss products that include nonprescription drugs, dietary supplements, skin patches, creams, wraps and the like. None of the products delivers on the promise that the user can lose a substantial amount of weight.

The FTC reported that fraudulent foreign lottery offers and buyers-club memberships tied for second place, with an estimated 3.2 million victims for these two scams.

If you have an e-mail address, you've probably gotten a lottery scam e-mail. I get them almost daily. This scam mostly works by getting people to send money (a fee, they are told, or to pay taxes) in order to collect their winnings. In the case of buyers clubs, unsuspecting people are billed for memberships for which they never signed up.

Also ranking high on the FTC's fraud list were work-at-home schemes, victimizing an estimated 2.4 million individuals.

Hispanics and African Americans were more likely to experience one or more of the frauds covered by the survey than non-Hispanic whites. However, the difference in victimization wasn't statistically significant after adjusting for factors such as age, education and debt level, according to the FTC report.

Still, the increase in scams targeting Hispanics resulted in the FTC launching a special initiative three years ago to fight fraud aimed at Spanish-speaking consumers. The agency created a Web site with consumer information in Spanish ( http://www.ftc.gov/espanol).

Recently, the FTC won a $3 million judgment against a company airing infomercials nationwide in Spanish claiming it had a cancer treatment and prevention product.

As part of its Hispanic initiative, the FTC led a nationwide project to review 314 Spanish language work-at-home advertisements in print and on the Internet. Two-thirds of the ads made some claim that the officials said indicated fraud. Among other things, the ads promised that people could earn significant amounts of money stuffing envelopes.

It's useful to review these annual lists of top frauds. They are reminders that we are all vulnerable.

And, as always, the list comes with suggestions on how to best protect yourself.

For instance, consumers are told to verify any unsolicited information they are given. I know you hear this all the time. But I can't tell you how many fraud victims I've interviewed who hadn't made a single call to check out anything they were told.

If you regularly surf the Internet, checking out things that have no real impact on your life, at least make a stop at http://www.ftc.gov to read the agency's consumer releases and warnings.

I don't think telling folks "If it's too good to be true, it probably is" works. Desperation or greed often results in people suspending common sense.

What might work is calling the biggest cynic you know. I'm serious about this.

Trust the skeptic's mistrust of everything. Make it a personal rule before responding to an unsolicited e-mail or business opportunity to talk it over with a cynic. That person will probably pepper you with questions you can't answer. Use this to your advantage. Perhaps the person's doubt will motivate you do some research.

Finally, don't be so arrogant as to think you are immune to fraud. Fraudsters work full-time trying to find ways to swindle you. Consumers don't get a lot of practice fighting back.

¿ On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

¿ By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

¿ By e-mail:singletarym@washpost.com.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.