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How to Avoid The Most Common Frauds

Kimberly Palmer

Americans, especially those who are most vulnerable like the elderly, are falling victim to increasingly sophisticated scam artists, according to a new report from the Consumer Federation of America and the North American Consumer Protection Investigators. The survey, released last month, is based on complaints filed with dozens of agencies across the country. The findings suggest that protecting yourself often depends on treating any solicitations skeptically, verifying information about major purchases and following up on any problems with the appropriate state agencies and consumer organizations.

Despite widespread use of the do-not-call registry, consumers continue to receive unwanted and even fraudulent solicitations, the study found. Problems include the fact that fraudsters auto-dial from outside the United States and use prepaid cellphones that make tracing the calls very difficult, if not impossible.

[Read: How to Avoid Online Ticket Scammers.]

The most common complaints lodged in 2013 included car-related advertising or sales, home improvement or construction complaints, credit and debt-related disputes and false advertising. Disputes between landlords and tenants, utility problems and frauds such as fake lotteries or work-at-home schemes also made the top 10 list. Telemarketing abuses, home improvement problems and used car sales topped the list of the fastest growing complaints.

Based on the number of consumers affected, their vulnerability and dollar amounts involved, CFA and NACPI singled out scams against the elderly and business closings that "left consumers in the lurch" as among the worst complaints. The report also highlighted an outbreak of new types of complaints, including trouble with concert tickets purchased online, private information about people being published online and synthetic marijuana sales.

In one example detailed in the report, a consumer in Ohio purchased a used car only to later discover that the dealer did not disclose a previous accident involving the car, which had caused significant damage. The consumer was only able to get a refund after taking his case to his local county office of consumer affairs. The report suggests that consumers get information about used car histories through the National Motor Vehicle Administration or companies listed at vehiclehistory.gov. It also suggests getting used cars checked out by a reputable mechanic before making a purchase.

Another disturbing example featured in the report tells the story of an elderly woman who received a postcard solicitation that said she could earn money online. After putting up $11,000 of her own money, she discovered that the whole scheme was a fraud. The Ohio Attorney General's Office was not able to catch the scam artists involved and urged the woman to be more wary of unsolicited offers she receives in the mail.

[Read: The Best Way to Lodge a Customer Service Complaint.]

Another common scam, dubbed the "grandparent scam," involves a con artist posing as someone's real-life grandchild, claiming that he or she is in serious trouble and needs money wired immediately. The entire scenario is fabricated and the actual grandchild is usually unaware of the impersonation taking place. The con artist is relying on the fact that grandparents will often do anything for their grandchildren, without taking the time to verify their identity.

Many of the examples in the report are heartbreaking; they show, over and over again, that scam artists often prey on the most vulnerable among us: the elderly; people suffering from major medical illnesses; people who are not Web savvy; people who do not have the financial means to hire a lawyer; people who are already financially strained to their limits. The state agencies charged with protecting consumers are frequently overwhelmed with complaints and low on the resources needed to pursue every claim.

Since scammers are constantly taking advantage of new technology and ways of targeting their victims, it's hard for consumer agencies and state-based groups to stay on top of the latest frauds being perpetrated. In the report, CFA and NACPI also call on payment processors, telecom companies and other industry groups to dedicate resources to protecting consumers. Phone service providers, for example, could potentially offer ways to block robocalls (automated phone calls), or to overcome fraudsters' techniques that allow them to circumvent caller ID programs.

[See: 10 Ways Companies Annoy Customers.]

If you're a victim of a scam artist or shady company, you don't have to suffer in silence. In fact, making a lot of noise is often one of the best ways to get the problem solved. In addition to filing complaints with local consumer agencies, consumers can file complaints (and research companies in advance) through the Better Business Bureau or the Federal Trade Commission. For complaints related to financial products or services, the Consumer Financial Protection Bureau makes it easy to submit a complaint online.

Being a victim of a scam can often feel like a very lonely and isolating event, but these consumer protection organizations can often help you get your money back -- and feel like someone has your back.

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