1. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Fraud Examination Chapter 15 Consumer Fraud

2. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. To the Student  So far, all the topics in the book have related to fraud in general and frauds where organizations and shareholders are victims.  In this chapter, we turn our attention to frauds where consumers (people like you and us) are victims. These types of frauds are called consumer frauds, named after their victims. Consumer frauds include such fraudulent schemes as identity theft, investment scams, and other schemes where perpetrators try to earn your trust to get you to transfer money to them.  The material in this chapter will be extremely useful to you as you navigate life, enter into financial transactions, and try to protect your identity.

3. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Objectives  Define what consumer fraud is and understand its seriousness.  Understand identity theft.  Classify the various types of investment and consumer frauds.

4. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Consumer Fraud  Consumer fraud is any fraud that targets individuals as victims.  Consumer fraud is a very serious problem in the United States and elsewhere in the world.  A 2007 United States FTC survey of consumer fraud estimated that over 30 million adults-13.5 percent of the adult population-were victims of fraud during 2005.

5. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Consumer Fraud  Two Primary Types of Consumer Fraud  Identity Theft  Consumer Scams

6. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Consumer Fraud  Seriousness of the Problem  The US Federal Trade Commission released a statistical survey in 2005 with the following findings:  20% of African American were victims  18% of Hispanics were victims  12% of non-Hispanic, whites were victims

7. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Identity Theft  Definition  Circumstances when someone uses another person’s name, address, Social Security number, bank or credit card account number, or other identifying information to commit fraud or other crimes

8. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Identity Theft Cycle

9. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Identity Theft  Minimizing the Risk  Guard your mail from theft  Opt out of preapproved credit cards  Check you personal credit information at least annually  Guard Social Security card and number  Safeguard all personal information  Guard trash from theft  Protect wallet and other valuables  Protect the home, computer, passwords

10. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Investment/Consumer Scams  Work-at-Home Schemes  Multilevel Marketing  Pyramid Scheme  Chain Letter, Mail Stuffing, Product Testing, and Craft Assembly

11. Albrecht, Albrecht, Albrecht, Zimbelman © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Investment/Consumer Scams  Symptoms associated with Investment Scams  Unreasonable high or promised rates of return  Investments that do not make sound business sense  Pressure to get in early on the investment  Use of a special tax loophole or a tax avoidance scheme  A business with a history of bankruptcy or scandals  Pressure to put all your savings into a particular investment