Photo: Jennifer Leach of the FTC makes a point on a consumer-fraud panel with the agency’s Steven Baker, left, Steve Bernas, Chicago’s Better Business Bureau, and testimonial speaker Riaz Uddin, far right.
CHICAGO–One in 10 Americans have been ripped off by consumer scams, according to the Federal Trade Commission (FTC). And for African American and Latinos, the odds are even higher that an unscrupulous wheeler-dealer has separated them from their money.
That was part of the message federal, state and local consumer protection officials shared with about 75 community activists, nonprofit agency representatives and journalists at a forum at Columbia College in Chicago, earlier this week.
Blacks, Latinos Targeted
“The nation is awash in a sea of fraud,” stated Steven Baker, director of the FTC’s Midwest Region. Like a disease, he and other panelists said, fraud ignores racial, educational and geographic boundaries, but often targets more vulnerable groups.
Baker, and other panelists at the FTC’s community and media briefing titled, “Spotting and Avoiding Scams in Our Community,” recounted stories of victims who had six-figure incomes, college degrees and professional backgrounds, as well as those living with lower incomes.
Debt-collection scams focus more on African American consumers, Baker noted. African Americans lead the nation among those without traditional bank accounts for checking or savings, according to a 2013 Federal Deposit Insurance Corporation (FDIC) study. As a result, blacks rely more often than other groups on payday loans and check-cashing services with excessive fees, as well as risky financial avenues.
The FDIC report showed 20.6 percent of African Americans do not have bank accounts, compared to 17 percent of Latinos and only 3.6 percent for whites.
Some Latinos don’t file complaints when they have been cheated because they are undocumented, “but we don’t care about that,” one of the panelists noted. All of the speakers stressed that their agencies focus on crimes and are not concerned with the immigration status of the person filing the complaint.
Debt-Collection, Tech and Other Scams
Debt-collection scams lead the list of those targeting African Americans, Baker noted.
The FTC’s research shows the number of tech-support scams have doubled in the last year. Baker said computer users will get a pop-up telling them there is a problem with their computer and they should immediately pay a fee to have an anti-spyware program installed remotely.
In reality there usually is not a problem and the scammers install spyware and record the user’s keystrokes, in turn getting access to bank account information and passwords.
Prizes and sweepstakes scams run a close second, where someone is notified he or she won something but need to forward money to claim that prize. Baker noted that Publishers Clearing House has a team whose primary job it is to make it clear to callers they have not won already when there may be confusion.
A massive problem affecting consumers is robocalling, according to Baker. These automated calls try to convince a listener that his or her credit-card interest rate can be lowered.
Maria Guerra Lapacek, who heads Chicago’s Department of Business Affairs and Consumer Protection, explained two of the top scams targeting city residents are home repairs and reverse mortgages.
African-American and Latino homeowners who were charged exorbitant interest rates for mortgages have benefitted from two lawsuits filed by the Illinois Attorney General’s office, said Assistant Attorney General Cecilia Abundis.
She said last year her office received about 22,000 fraud complaints, a majority of them involving consumer debt or identity theft.
Reiterating that nearly anyone can be a target of a scam. Abundis sharing that she nearly fell for a deceptive telephone pitch, herself. A common ploy that is getting traction involves calls to recent graduates offering to combine their student loans into one at a lower interest rate for only a modest fee. She cautioned that federal and private loans can’t be combined and too many learn this after paying the requested fee.
A representative of the United States Postal Inspection Services on the panel said African Americans have a 17 per cent higher occurrence of being defrauded than white consumers.
Things Consumers Can Do
Steve Bernas, of Chicago’s Better Business Bureau, said consumers can help themselves protect against scams by regularly checking their bank statements and getting their free credit report every year from annualcreditereport.com
He also warned against a growing scam of callers telling individuals they owe an Internal Revenue Service debt that must be paid immediately. “The IRS never phones you, if you owe them money. They always send a letter,” Bernas related.
Jennifer Leach of the FTC, recommended that whenever consumers are contacted about a deal that leaves them suspect, they should “stop and talk about it.” She said it “slows” the scammer who wants you to act immediately on what they are saying, not think about it.” Scammers are professionals and good at finding the vulnerability. “They also threatening people with deportation or police action,” she said.
In addition, scammers rely on people being embarrassed about being taken advantage of and choose not to report it. Representatives from the agencies at the briefing concurred that preventing more fraud requires individuals to report attempted scams, as well as those who were victimized.
The Chicago briefing was one of five being facilitated by New America Media. Others have been held in Los Angeles, Seattle and Atlanta with another schedule in Cleveland in July. The program aims to increase awareness of scams and agencies that can help consumer in ethnic communities through their own media.
