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Far too many of these fraud schemes permeate our society and daily experiences

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Far too many of these fraud schemes permeate our society and daily experiences. Most of you, your families, or loved ones will be touched in some way by one or more of the fraud schemes covered in these chapters. We certainly can't stop this fraud, but we can educate ourselves and those around us on these schemes, their signs and symptoms, and means of prevention and protection.

In this light, our final discussion of the semester will create an open discussion of many of these schemes, helping to educate all of us and raise our level of awareness. In this way, we are better prepared to avoid these situations, educate others, and help to protect ourselves and those we care about.Post a 2 to 4 paragraph summary of the following:

• Summary description of the fraud scheme
• Educate us regarding the symptoms and warning signs of the particular scheme
• Summarize a case study example of the fraud scheme, either from research or from personal experience, of the fraud in your life or that of someone close to you
• Discuss methods of prevention for your selected fraud scheme, including how you can educate others in your life to help protect them
• Please be sure to cite any outside resources that you may use
• CHAPTER Consumer Fraud Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. After studying this chapter, you should be able to: ? Define what consumer fraud is and understand its seriousness. ? Understand identity theft. ? Classify the various types of investment and consumer frauds. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 2 ? Consumer fraud ? Any fraud that targets individuals as victims ? Examples ? Telephone fraud ? Magazine fraud ? Sweepstakes fraud ? Foreign money offers ? Counterfeit drugs ? Internet auctions ? Identity theft ? Bogus multilevel marketing schemes Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 3 ? Federal Trade Commission survey results ? Estimated that more than 25 million adults—10.8 percent of the adult population—were victims of fraud during 2011 ? Identified characteristics of victims of consumer fraud ? Ranked top-five most frequently reported types of consumer fraud 1. Weight-loss products (estimated 5.1 million victims) 2. Prize promotions (estimated 2.4 million victims) 3. Unauthorized billing—buyers’ club memberships (estimated 1.9 million victims) 4. Unauthorized billing—Internet services (estimated 1.9 million victims) 5. Work-at-home programs (estimated 1.8 million victims) Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 4 ? Identity theft is used to describe those circumstances when someone uses another person’s name, address, Social Security number (SSN), bank or credit card account number, or other identifying information to commit fraud or other crimes. ? The most detrimental consequence of identity theft isn’t the actual loss of money, but rather the loss of credit and reputation along with introduction of erroneous information that is extremely difficult to restore or fix. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 5 ? Perpetrators of identity theft follow a common pattern after they have stolen a victim’s identity. ? Although some fraudsters perpetrate their frauds in slightly different ways, most generally follow the stages in the cycle shown in Figure 15.1. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 6 Stage 1. Discovery 1. Perpetrators gain information. 2. Perpetrators verify information. Stage 2. Action 1. Perpetrators accumulate documentation. 2. Perpetrators conceive cover-up or concealment actions. Stage 3. Trial 1. First dimensional actions— Small thefts to test the stolen information. 2. Second dimensional actions— Larger thefts, often involving personal interaction, without much chance of getting caught. 3. Third dimensional actions— Largest thefts committed after perpetrators have confidence that their schemes are working. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 7 ? Buying large-ticket items ? Taking out car, home, or other loans ? Establishing phone or wireless service in victim’s name ? Using counterfeit checks or debit cards ? Opening a new bank account ? Filing for bankruptcy under the victim’s name ? Reporting a victim’s name to police in lieu of their own ? Opening new credit card accounts ? Changing victim’s mailing address Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 8 ? Common ways to steal someone’s identity ? Posing as a legitimate employee, government official, or representative of an organization with which the victim conducts business ? Shoulder surfing—watching or listening as a victim enters a credit card number ? Dumpster diving—rummaging through consumers’ trash to gain access to preapproved credit card applications, tax information, receipts containing credit card numbers, social security receipts, or financial records ? Skimming—using a storage device to gain access to valuable information when a credit card is processed Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 9 ? Skimming is predominantly used to commit credit card fraud but it is gaining in popularity among identity thieves. ? Skimming devices are small and easy to hide ? Skimming occurs during transactions at common locations including: ? Restaurants ? ATM machines ? Gas pumps ? Stores Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 10 ? Gathering information from businesses ? Stealing wallets or purses ? Breaking into victims’ homes ? Stealing mail ? Completing “change of address” forms ? Shoulder surfing ? Phishing Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 11 ? Guard your mail from theft ? Opt out of preapproved credit cards ? Check your personal credit information (credit report) at least annually ? Protect SSNs ? Safeguard personal information ? Guard trash from theft ? Protect wallet and other valuables ? Use strong passwords ? Protect your home ? Protect your computer ? Opt out of information sharing Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 12 ? When people commit identity theft, they can face criminal charges, civil actions, or both. ? Every state, as well as the federal government, has statutes prohibiting identity theft in its various forms. ? Table 15.1 lists some of the more common identity fraud federal statutes that every fraud examiner should know about. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 13 Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 14 ? Contact the Federal Trade Commission (FTC). ? Contact financial institutions where your identity might have been used to establish a fraudulent account. ? Consider changing personal identification numbers (PINs), bank account cards, checks, and other personal identifying data. Organizations and agencies that provide assistance to victims of identity theft ? Federal Trade Commission (FTC) ? Federal Bureau of Investigation (FBI) ? U.S. Secret Service ? U.S. Postal Inspection Service ? Internal Revenue Service ? Social Security Administration ? Credit reporting agencies ? Check verification companies Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 15 Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 16 ? Identity theft is not the only type of consumer fraud. ? Other types of scams target consumers. ? These scams fall into five categories: ? Foreign advance-fee scams ? Work-at-home schemes ? Bogus mystery shopping scams ? Telemarketing fraud ? Investment scams Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 17 ? Nigerian money offers ? Other foreign-advance fee scams ? Clearinghouse scam ? Purchase of real estate scam ? Sale of crude oil at below market price ? Disbursement of money from wills Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 18 Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 19 ? Multilevel marketing ? Fraudulent multilevel marketing organization (pyramid or Ponzi scheme) ? ? ? ? ? Headhunter fees Front loading Opportunity meetings Snake oil plans Ground floor opportunity ? International multilevel marketing schemes ? Chain letters ? Mail stuffing ? Product testing ? Craft assembly Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 20 Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 21 ? Perpetrators promise victims a job that involves strolling through stores, shopping for merchandise, and then filing reports on their experiences. ? Consumers are asked to pay an “application charge” and they are promised supplies with a list of places and companies that may hire mystery shoppers. ? This list is a simple collection of department store addresses and contact information. ? Other scams require that consumers buy merchandise from a particular Web site. ? Although some mystery shoppers’ advertisements are legitimate, the majority are not. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 22 2 ? Figure 15.4 provides an example of three mystery shopping letters. 1 3 Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 23 ? Basics ? Boiler rooms ? Target lists ? Scripts ? Promises ? Scams that prey on the elderly ? Safeguards against telemarketing fraud ? Avoid sales calls ? Telemarketing fraud involves large and small transactions Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 24 ? Investment fraud is any fraud that is related to stocks, bonds, commodities, limited partnerships, real estate, or other types of investments. ? In investment fraud, perpetrators usually make fraudulent promises or misstatements of fact to induce people to make investments. ? Investment frauds are often set up as Ponzi schemes. ? Investments frauds can occur within or outside business organizations. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 25 ? Mortgage fraud involves falsifying or omitting information when obtaining a mortgage loan. ? The goal is to obtain a higher loan than would be provided if the truth was disclosed. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 15 26 ? During the subprime mortgage crisis, banks and mortgage brokers were encouraging and even, in some cases, creating fictitious information. ? This is an unusual form of consumer fraud in that consumers can play both roles as perpetrator and victim. ? In many cases, consumers were encouraged to commit fraud for the purpose of getting a loan on a home that they could not afford. ? In the end, they become victims of the lender who gained fees to originate their loan. ? The ensuing subprime mortgage crisis, which was arguably the result of multiple frauds, led to massive worldwide economic consequences of epic proportions. Albrecht, Fraud Examination, 6th Edition. ©2019 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.