FTC says minorities hit hardest by fraud

A new survey released Thursday by the Federal Trade Commission reveals that 25 million Americans have been hit by fraud in the past year -- and minority groups are far more likely to be victims. Hispanics are twice as likely as non-Hispanic whites to be victims, according to the telephone survey results. Blacks are three times as likely. And a stunning 34 percent of American Indians had been hit by fraud, a rate 6 times greater than non-Hispanic whites.

About 6 percent of white consumers reported being victimized in during a one-year span, according to the survey of 2,500 randomly chosen consumers.

"The results of our survey indicate that fraud in the U.S. is a serious problem," said Howard Beales, Director of the FTC Bureau of Consumer Protection. "We have brought many enforcement actions against these types of scams in the past, and we will bring more in the future."

Beales said the agency will fine-tune its Hispanic Law Enforcement and Outreach Initiative as a result of the findings, and "explore additional opportunities to target frauds aimed at communities which are at risk."

The survey -- which was taken in May and June of 2003 but just released Thursday -- shows that consumers with high levels of debt were more likely to be victims of fraud. Three of the top four categories of fraud related to credit, including credit-repair scams often targeting those with high debt loads or bad credit.

The most frequently reported type of consumer fraud was advance-fee loan scams, in which consumers pay a fee for a guaranteed loan or credit card. About 4.5 million consumers paid advance fees but did not receive the promised loan or card. In fact, some consumers reported that more than once during the last year they paid fees to get loans or credit cards they did not get. Buyers' club memberships or bills for unordered publications was the second-most commonly reported fraud category in the survey. Some four million consumers complained about being billed for unwanted services in the past year.

Credit card insurance scams and credit repair were also near the top of the list. While federal law limits consumers' credit card fraud liability to $50, fraudsters sell credit card insurance by falsely claiming that card holders face significant financial risk if their credit cards are misused. An estimated 3.3 million consumers bought unnecessary insurance against the unauthorized use of their credit cards, the FTC says.

Some con artists convince consumers that they can help them remove accurate, negative information from their credit report, or establish a new credit record. They can't, and credit repair schemes are illegal, but two million consumers paid for "credit repair" services the year prior to the survey.

In addition to the fraud categories, the FTC report also found that nearly 14 million consumers were victims of telephone "slamming" - unauthorized and illegal changes to their long distance telephone service.

The con artists used a number of means to connect with their victims. For about 1 in 5 victims, the con began with a telemarketing phone call. About 14 percent of the time, fraudsters used e-mail or the Internet to reel in victims, and 10 percent of the time, radio or television advertisements.

MORE FROM PERSONAL FINANCE

Personal finance Section Front

10 Tips: Furniture shopping on the cheap Social Security unveils new earnings calculator Answer Desk: How safe are banks? Senate panel hears about European tax havens Ugly economic times can lead to ugly divorces 10 Tips: Watch out for TV pitchmen Workers raiding retirement piggy bank Answer Desk: Time to tap U.S. oil reserves? What if your bank fails? 10 Tips: Stay cool and save money Personal finance Section Front   Add Personal finance headlines to your news reader: