Consumer Fraud

Topics: Fraud, Credit card fraud, Credit card Pages: 7 (2428 words) Published: August 4, 2013
Consumer Fraud
Yolanda Garnett
Wilmington University

Consumer Fraud
Introduction
Consumer fraud is a purposeful, unlawful act that deceives, manipulates, or provides false statements to damage others. Fraud is described in the dictionary as “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage (fraud). Consumer fraud is usually associated with a person or group of people manipulating something to deceive others for his/her or their personal gain. In 2005 fraud cost U.S organizations more than $600 billion annually, and consumers lost more than $30 billion annually (Statistics). This paper will review how consumer fraud occurs, the victims of consumer fraud, the people who commit consumer fraud, and how consumer fraud relates to the Differential Association Theory. Identity Theft Consumer Fraud

Consumer fraud can occur many different ways. The three major categories of consumer fraud described by the U.S Department of Justice are identity theft, bank fraud, and internet fraud (Statistics). According to the 2010 Identity Fraud Survey Report, from javelin Strategy & Research, the number of identity theft fraud victims in the United States increased 12% to 11.1 million adults in 2009, with the total annual fraud amount increasing by 12.5% to $54 billion (Javelin Strategy & Research). The people who have learned who the person was that stole their identity reported that they gained their information from lost or stolen wallets, stolen mail, online or the suspect was a family member or friend. Once the suspect gains the true person’s personal information they obtain credit in his/her name, which usually becomes bad debit and ruins the true person’s credit history.

Bank Fraud
Another popular form of consumer fraud is bank fraud. Bank fraud is usually perpetrated by the true customer. Bank fraud consists of worthless checks, credit card bust out schemes, credit card fraud, and Automated Clearing House Transfer scams. Worthless checks are valid checks written by a customer who knowingly does not have the money available in the account; otherwise known as insufficient funds. Other worthless checks activities included writing checks off of closed accounts or depositing counterfeit checks. Typically when a consumer deposits a worthless check, he/she immediately withdrawals any available funds in the account; leaving the bank with a loss. Credit card bust out schemes are very similar. In this scenario a customer will apply for a credit card or line of credit and use the total available credit without ever having any intentions on repaying the loan. This too leaves the bank with a loss. Credit card fraud is probably the most recognized bank fraud. This is when a person’s credit card or credit card number is stolen and/or used without the customer’s permission. It was noted in an article, Credit Card Tricks, that Canada lost nearly $366 million in lost, stolen and compromised credit cards last year (Sorensen, 2011). Finally, Automated Clearing House Transfers is another form of bank fraud. Automated Clearing House transfer fraud occurs when a consumer has funds transferred to his/her account from another party’s account fraudulently. Typically when a consumer does this he/she will withdrawal all the money as quickly as possible. When the other party finds out his/her bank will request the funds back which will either leave the suspect’s bank with a loss or the other party’s bank with a loss. When bank fraud occurs usually the bank will take the loss, however some customers may be held responsible for a portion of the loss at some banks.

Internet Fraud
Internet Fraud has become increasingly popular since this is a time where the use of technology is rapidly growing. Internet fraud mostly consists of using the internet to gain personal information for identity theft purposes and scams. As stated previously, identity...


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