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Mid-year report: Internet merchandise scams topping complaints to NCL’s Fraud Center

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Release Date: July 15, 2010 
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Washington, DC — For the first time in several years, fake check scams were no longer the most-reported scam to the National Consumers League’s Fraud Center during the first six months of 2010. Internet merchandise scams, where consumers are conned into buying non-existent or misrepresented products online, have had the dubious “distinction” of being the most-frequently-reported scam at the mid-year point.

The League’s Mid-year Top Ten Scams report, released today, found that while fake checks continue to make up more than a quarter of the overall scams reported to NCL’s Fraud Center, consumers are more often falling prey to Internet Merchandise scams, which made up 24.87 percent of total complaints, an increase of 4.82 percent over 2009.

In total, consumers reported more than $3.6 million in losses to the Fraud Center, with an average reported loss of $810. The average loss for Internet merchandise scams, the most popular scam of 2010, was a bit higher, at $931. Average loss for fake check scams was $371, and, for scams involving prizes, sweepstakes and free gifts, it was $403.

“Despite our growing comfort and familiarity with buying online, consumers must continue to keep their guard up and follow good Internet purchasing practices in order to protect themselves from con artists who make a living by duping consumers with bogus sales,” said NCL Executive Director Sally Greenberg. “Shop from retailers you know and trust, take advantage of consumer reviews and feedback forums, and use a credit card, which is the safest way to pay online. There is an element of risk with any online transaction, but consumers can take simple steps to dramatically decrease the likelihood of becoming a Fraud Center statistic.”

The report, which is compiled from consumer complaints submitted to NCL’s Fraud Center, examines trends in Internet and telemarketing fraud, including most popular scams, contact and payment methods, and victim profiles.

Other trends noted at the mid-year analysis include a dramatic increase in complaints about bogus prizes, sweepstakes, and free gifts, a category which saw the largest increase (7.82 percent vs. 2009) and now make up 17 percent of total complaints. Prizes, sweepstakes, and free gift scams, in which “winning” consumers agree to pay upfront fees to collect prizes that do not exist, are now the most common telemarketing thus far in 2010.

Fraudsters are professional con-men who play on consumers’ hopes and fears,” said Director of NCL’s Fraud Center John Breyault. “In a weak economy, scammers are preying on exactly those consumers who can least afford to lose even a portion of their diminished income to a fraudster.”

New to the top ten overall scams this period are Timeshare Resale scams. In a typical scam of this type, an unscrupulous agent convinces a victim that the resale market is “hot” or even that the agent has a buyer waiting in the wings. In exchange for a large up-front fee, the scam artist offers to assist in the sale of the property. The scammer rarely is able to sell the property and may request additional “fees” to “help” complete the sale process for an increasingly desperate owner.

An additional notable trend in the NCL report is an increase in scams perpetrated against the oldest age group, those over 65; this age group saw the largest increase in complaints, a more than 5 percent increase vs. 2009).

NCL’s Fraud Center warns that older consumers may not be as skeptical about bogus offers, and may be ashamed when they begin to suspect that they have fallen victim to a scam. Signs that an older loved one may be involved in a fraud include: a sudden inability to pay monthly bills, unusually heavy volumes of junk mail or telemarketing calls, or a reluctance to discuss repeated large payments to “a friend.“ Consumers concerned that an elderly friend or relative is a fraud victim should contact their local consumer protection office or state attorney general.

For more information on NCL’s 2010 Mid-Year Top Ten Scams report, click here.

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About the National Consumers League

Founded in 1899, the National Consumers League is America’s pioneer consumer organization. Its mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. NCL is a private, nonprofit membership organization. For more information, visit www.nclnet.org.