by Mark Huffman
ConsumerAffairs.Com
A stroll through the Scam Alerts archives finds it's been Christmastime all year for the world's scam artists. The Federal Trade Commission tells us that scams hit 30.2 million adults -- 13.5 percent of the adult population -- during the last year for which it has added up its complaints.
While the FTC's latest figures are for 2006, there's certainly no reason to think the number declined in 2007. Human ingenuity is constantly on the prowl, after all, seeking new ways to fleece the unwary, the gullible and those looking to get rich quickly.
But of course it's not just the greedy and the gullible who get taken. The poor and desperate are also falling victim to modern-day bandits – those in grimy boiler rooms as well as corporate board rooms.
The dictionary definition of a “scam” is “a fraudulent business scheme designed to make a quick profit.” In making our list and checking it twice, we combed our database of nearly 300,000 consumer complaints to find the scams that made great strides forward, roping in new victims and increasing their take in 2007.
So, here they are -- ConsumerAffairs.com's Top 10 Scams of 2007:
With America’s mushrooming obesity problem, perhaps it’s only natural that scammers would dream up all manner of bogus weight loss schemes, in an effort to separate overweight Americans from their money. In 2007 there seemed to be no limit to how outlandish these scams could be.
For example, Transdermal Products International marketed a patch that was supposed to make the wearer lose weight. The FTC said the company provided about two dozen domestic and foreign retailers with sample deceptive advertising and bogus substantiation materials, including purported expert endorsements and cooked-up clinical studies. Among the bogus claims, the FTC noted, was that sea kelp contained in the patch had been approved for weight loss by the Food and Drug Administration.
And, of course, marketing maestro Kevin Trudeau got in on the act. The FTC accused Trudeau and marketers of his book, “The Weight Loss Cure They Don’t Want You to Know About,” of misrepresenting the book’s contents in their infomercial. The ad claims that the weight-loss plan outlined in the book is easy to do, can be done at home, and ultimately allows readers to eat whatever they want.
However, when consumers purchased the book, they found instead a complex, grueling plan that requires severe dieting, daily injections of a prescription drug that consumers cannot easily obtain, and lifelong dietary restrictions.
The FTC sued the same defendants in 2004, alleging that they made deceptive advertising claims for two dietary supplements and billed consumers’ credit cards without authorization.
The FTC also took legal action against the marketers of various Hoodia products, including companies in Canada, and Australia. The companies claimed their pills would not only help consumers lose weight, but reverse the aging process.
2. Work At Home Scams
The unemployment rate may be low, but Americans increasingly long to fire their boss, bail out of the rat race and work from home. That mood set up one of this year’s ripest growth areas for scammers marketing bogus “business opportunities” and work at home schemes. According to an FTC survey, many victims fell for more than one of these scams.
Not all of these are envelope-stuffing schemes. Robert, of Durham, North Carolina, signed up with a company that promised to train him and give him a technical job working from his home.
“[The] company guaranteed employment and technical training materials,” he told ConsumerAffairs.com. “It took our money, provided nothing, then offered refund checks which bounced.”
Randy, of Springfield, Oregon, found his work-at-home directions very unappealing: “They needed $32.95 to send the materials I would need. What I got was a letter telling me to basically do the same thing to other people.”
Others lost much larger sums of money. Two people faced federal charges of tricking more than 1,300 consumers into paying between $5,000 and $25,000 for a bogus franchise to sell business cards. Using Internet and classified ads, telemarketers, and income projection spreadsheets, the pair claimed that consumers could earn $150,000 in their first year and recoup their initial investments within three to five months.
Others seeking employment on online job sites like Careerbuilder.com continued to get lured into home-based jobs, presented not only as highly paid but also incredibly easy. All they had to do is receive large checks – donations to feed the world’s orphans, for example – and deposit them in their personal bank account before wiring the money out of the country. The checks, of course, were counterfeit. The victims had to repay the money that had been wired to the scammer.
Meanwhile, the tried-and-true envelope stuffing scam is still reeling in victims. An Arkansas court fined a woman $1.3 million for running an envelope stuffing scam from that state. Customers paid $99 to be part of the program and were led to believe they would receive $10 for every advertisement they mailed out for the company. Arkansas Attorney General Dustin McDaniel said “work at home” schemes are becoming an increasing problem and urged consumers to use caution when considering any such “offer.”
