Consumer Scams of 2015: A Year-End Review

George White


From our content partner New America Media:


The Federal Trade Commission and its consumer watchdog partners closed 2015 by shutting down alleged fraud in high-complaint categories such as debt collection, home shopping, and services related to employment and immigration.


This is a seven-city digest of initiatives that the FTC, the Better Business Bureau, and state authorities launched or completed in December to halt these kinds of consumer fraud – scams that often victimize immigrants and communities of color.


Seattle, WA: False advertising by “notarius”


Washington State Attorney General Bob Ferguson capped a 2015 campaign against immigration services fraud by filing a lawsuit against a company for allegedly taking advantage of people seeking the legal right to live and work in the country. The lawsuit says the defendant has no law degree and no staff but published at least 73 advertisements as “notarius” offering immigration services in Russian-language publications.


The Russian word notarius literally translates to ‘notary’ in English but it has a different meaning to people from Russian-speaking regions, “where one must be an attorney or complete advanced legal training to become a notary,” the lawsuit says.


“A similar linguistic accident is often taken advantage of by scammers targeting Spanish-speaking communities,” the attorney general said, noting that many Latinos believe notarios or notarios públicos can serve as lawyers. Other communities, “including North and West African, Korean, Chinese, Vietnamese and Ukrainian immigrants, have also been targeted,” he added.


Los Angeles, CA: Mortgage modification scammers


The Federal Trade Commission (FTC) obtained a settlement from a federal district court in Los Angeles that bans four “mortgage modification scammers” from offering relief services, resolving charges that they deceived homeowners facing foreclosure.


The settlements stem from an FTC complaint against HOPE Services and HAMP Services, which are based in Lake Forest, in Orange County. Pretending to be a “nonprofit” with government ties, HOPE and HAMP stole the mortgage payments of consumers who were promised mortgage modifications, deceptions that contributed to homeowner foreclosures and bankruptcies, the FTC said.


The settlement order requires the owners of the companies to pay a judgment of more than $2.7 million, the amount consumers paid.


“These rip-off artists took struggling homeowners’ last dollars, but we’ve shut down their destructive and illegal schemes,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Now, in addition to financial judgments, the court has permanently banned them from the industries and practices they exploited.”


New York, NY: Defrauding envelope stuffers


At the request of the FTC, a New York court recently halted a nationwide work-at-home envelope-stuffing scam that took more than $7 million in upfront fees from tens of thousands of consumers. Under these schemes, companies offer lucrative compensation to those willing to pay up-front fees to receive materials that are to be placed in envelopes and mailed.


Many of the victims were promised payment of $20 for each “Get Credit Now” booklet they mailed. Of those who agreed to the terms, only 10 percent of consumers received any payment at all, and their total average earnings were $19.50, far less than the $99 to $399 they had to pay up-front to participate, the FTC said. According to the FTC complaint, the scammers operated under a number of business names – among them is Capital Enterprises Inc.


Cleveland, OH: Bogus job offers


The Better Business Bureau (BBB) in Cleveland is warning area residents that scammers are preying on people who are conducting job searches or posting their resumes on the internet. In recent weeks, consumers have reported a “steady stream” of such fraud, the Cleveland BBB office said.  


“BBB continues to investigate bogus job offers that are victimizing hopeful job seekers,” the Cleveland office said in a statement on its website. “While some of the scammers concoct business names ... others mimic legitimate companies based here and abroad. Addresses provided by the bogus companies either do not exist or are actual addresses at which the scammer is not really located.”


The Cleveland BBB office said an Ohio State University student, for example, told its investigators that he found an ad on a website job board offering compensation for mailing material to the company’s agents throughout the U.S. Instead of responding to the offer via the internet link, the student found a phone number for the company referenced in the ad. When he called the company, he learned that the business had not posted the ad and that the offer was a scam.


Chicago, IL: Debt collection fraud


Another scam – debt collection fraud – was halted recently when lawyers at the FTC’s Midwest regional office obtained an order from a federal court in Chicago, banning the activities of a Canadian-based company that billed community-based organizations such as churches, medical offices and retirement homes under a Yellow Pages advertisement scam. Under the court order, the company must pay $1.2 million to reimburse victims.


Using a variety of business names, the FTC said the defendants sent medical practices, churches, and retirement homes invoices with the familiar “walking fingers” image seeking $480.95 for a one-year directory listing that the victims did not request.


“When consumers ignored the invoices, the defendants sent collection warnings demanding payment of more than $2,000,” the FTC said. “When consumers still refused to pay, the defendants sent threatening notices, posing as a third-party debt collector.”


Houston, TX: Bogus e-commerce


The Better Business Bureau in Houston is issuing warnings about bogus e-mails from scam artists posing as retail chains or e-commerce companies such as Amazon or eBay.


“The e-mails claim there is a ‘wrong transaction’ and you are prompted to click the refund link,” the Houston BBB office says. “You are then asked to complete a form with personal information that can be sold to cyber criminals.”


Atlanta, GA: Ponzi scheme for gifts


A new gift-related scam is also the focus of an alert from the BBB office in Atlanta, which cites a “gift exchange” that is actually a pyramid scheme. The BBB office said: “You spot a friend’s post on your Facebook or Instagram feed. It’s inviting you to join a gift exchange, and it sounds like a great deal. If you buy one $10 gift for a stranger, you will receive as many as 36 gifts back … The idea is that you send money (or a gift) to the person at the top of the list, cross them off, add your name to the bottom and send the list to more friends. However, the scheme relies on constantly recruiting new participants, making it mathematically impossible to sustain.”


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