Consumer Fraud

Consumer Fraud

Consumer fraud occurs when deceptive, misleading, unfair, or false business practices business practices cause an individual or entity to suffer financial or personal loss. There are several types of fraud that affects consumers in Pennsylvania and across the country.

Identity Theft

Identity theft occurs when an individual or entity steals your personal information, which can include your name, Social Security number, bank account numbers, and credit card information. This often happens through what is known as “data mining.” Data mining is a system used by businesses to turn raw data into useful information. Businesses use software to look for patterns in larges batches of data to learn more about their consumers and develop more effective marketing strategies, increase sales, and decrease costs.

You may be a target of identity theft if you notice the following: 

  • Financial statements, invoices, and bills you usually receive, stop arriving in the mail. This is a sign that defrauders have changed your address so they can open financial products in your name.
  • The IRS alerts you that more than one tax return was filed in your name.
  • There are unfamiliar accounts on your credit report.
  • Unknown withdrawals are made from your bank accounts.
  • You receive bills from medical providers for treatments you did not have.
  • You receive notices or hears news that there was a data breach at a company you do business with.
  • You receive phone calls from debt collectors about credit cards and debt you are unaware of.

Mortgage Fraud

Mortgage fraud is one of the most common types of consumer fraud, and is currently on the rise. These forms of fraud include foreclosure rescue plans, loan modification schemes, and equity skimming. They are often carried out by real estate professionals who misuse their specialized knowledge and authority. The National Crime Prevention Council advises that you may be a target of mortgage fraud if one or more of the following are true:

  • Payment of fees is required in advance of services provided.
  • The process to buy the home seems to take longer than normal.
  • You are offered a money-back guarantee, advised to stop making mortgage payments, told not to contact your mortgage servicer, or instructed to begin making payments to someone other than your servicer.
  • You are promised a loan modification or that foreclosure will not happen.
  • You were asked to sign papers you did not have a chance to read or fully understand.
  • Your questions were not answered or were answered incompletely.

Consumers can protect themselves against mortgage fraud by doing the following:

  • Ask for and check the license of anyone with whom you are doing business.
  • Do not sign any paperwork that does not completely make sense to you.
  • Seek referrals and avoid unsolicited contacts related to any real estate deal.
  • Seek the advice of a qualified consumer fraud lawyer
  • Walk away from any high-pressure or transactions that seem too good to be true.

Predatory Lending and Personal Loan Fraud

Predatory lending and personal loan fraud affect consumers most in need and most likely to accept a fake offer. Consumers with a lot of debt, the elderly, and those with poor credit are most at risk of being targeted by predatory lenders. Both types of fraud involve any kind of lending that lures the borrower into accepting unfair terms through deception and coercion. Predatory lenders, loan companies, appraisers, and contractors can cause people to lose their homes and their investments because of unscrupulous practices. 

Some characteristics of predatory lending and personal loan fraud include:

  • Aggressive sales tactics. Predatory lenders may call you or even come to your house. 
  • Credit insurance is required with the whole premium paid in advance.
  • High interest rates or rates that are not disclosed at all.
  • High pre-payment penalties. These are often hidden fees that prevent borrowers from paying off their mortgage early, thus increasing the amount the lender collects. 
  • Non-amortizing loans. Amortization allows you to pay off the interest during the first few years of the loan, so in the final years you are paying primarily the principal.
  • The lender asks you to leave signature lines or any other important line item of forms blank. 
  • The lender encourages you to lie about certain information on your loan application.
  • The lender tells you the deal is only good if you sign immediately.
  • The property is being sold for more than it is worth. Predatory lenders often work with appraisers who will appraise the property for more than it is worth.
  • There are unexpected costs at settlement.
  • You are told you can get a loan regardless of your credit history.

Student Loan Fraud

College students are one of the top target groups for consumer fraud. The idea of paying off student loans can be daunting for young adults, and defrauders often prey on this. 

Types of student loan fraud

  • Student loan consolidation offers. If a company attempts to charge you fees upfront to consolidate your federal student loans, it is fraud. These companies take your money under the guise of a processing fee to consolidate your federal loan, when you can consolidate it for free yourself at StudentLoans.Gov.
  • Student loan debt relief fraud. If a company says they can eliminate or reduce your student loan, be careful. Typically, student loan debt cannot be eliminated or forgiven, aside from specific exceptions. Again, you can set these up yourself for free through the Department of Education.

How to Avoid Student Loan Fraud

  • Anyone requesting your FSA ID is likely a defrauder. The FSA ID is your legal signature and should never be created or used by anyone else, not even your parent, child, a school official, or a loan company representative. It is also a username and password combination you use to log in to the United States Department of Education online systems. 
  • Be wary of statements of immediate or fast debt forgiveness, cancellation, or a looming deadline.
  • Do not give into pressure tactics. Whatever ‘opportunity’ you are being offered could likely be a ploy for you to pay for information you could find yourself for free.
  • Do not pay upfront fees for a loan program through the Department of Education.
  • If a person or entity claims the program is affiliated with the government or Department of Education but is not part of a government agency or an official loan officer, walk away.
  • Remember that you never have to pay for help with your federal financial aid or student loans.

Debt Collection Fraud

Debt collection defrauders pose as collection agencies, and call consumers demanding payment of non-existing outstanding debts. If you have actual unpaid debt subject to collection, you have rights there as well. These rights are spelled out in the Fair Debt Collection Practices Act (FDCPA). Signs of debt collection fraud to help you avoid it, include:

  • Defrauders will often withhold information, including the exact amount of the so-called debt, the name of the creditor, or other information that allows you check on the legitimacy of the debt collector.
  • They try to pressure you to pay with cash by money transfer, or with a prepaid debit card.
  • Defrauders may threaten you with jail, suggesting they are a government official. They might even threaten to tell family members and employers.
  • They attempt to get your personal information, such as account numbers or your Social Security number.
  • Defrauders typically call early or late, before 8 a.m. or after 9 p.m., which is forbidden by the FDCPA.

Credit and Debit Card Fraud

Credit and debit card fraud is another form of consumer fraud that is recently on the rise. The following are red flags for credit and debit card fraud:

  • Your statement contains charges you do not recognize.
  • You notice several small dollar amount charges from your account, which is a sign that an individual or business could be testing your card in advance of a major purchase.
  • You have never seen the name of the company attached to the charge.
  • Charges appear from unfamiliar or distant locations you have not visited.
  • You notice a significant and unexpected decrease in your available credit balance.
  • You receive phone calls requesting credit or debit card information.

Protect yourself against credit and debit card fraud by doing the following:

  • Check accounts daily and report unusual activity to your bank.
  • Complain to the CFPB if the bank’s response is not satisfactory.
  • Have the card canceled or your account frozen.
  • Do not respond to calls with information the callers should already have.
  • If you decide to follow up on a call, do so by contacting your bank at a known number.


According to the FTC, a relatively new twist on consumer fraud comes in the form of robocalls. A robocall is a call that delivers pre-recorded messages through auto-dialing software, rather than from a real person.

Some robocalls provide useful information, such as appointment reminders or flight cancellations. Most likely though, they are fraudulently trying to sell you something. Technology makes it cheap and easy for companies to make robocalls over the internet, which is why they are so prevalent. Here are some things to be aware of if you receive a robocall:

  • Credit card interest rate reduction offers. Often these calls guarantee to reduce your credit card interest rate for a fee. These types of offers are usually fraudulent and no more effective at getting credit card companies to lower your interest rate than if you called the company yourself for free. In addition to paying a fee for no service, some of these defrauders ask for personal information, which they then use to commit identity theft. 
  • Debt collection. Keep in mind that businesses legitimately attempting to collect a debt are allowed to use recorded messages to reach you. Services that attempt to sell you other services to reduce your debt are not.
  • Always remember that robocalls that try to sell you something are illegal unless a company has your written consent to call you in that way. To get your permission, the company has to be clear that it is asking to contact you using robocalls; and it is not allowed to make you to agree to the calls as a condition of receiving a product or service. If you choose to give permission, you have the right to opt-out later.

Cashier’s Check Fraud

Cashier’s checks are considered by many consumers to be risk-free, because the funds are paid out of a bank. Unfortunately, cashier’s check fraud is on the rise and perpetrated by some of the biggest banks in the United States. The most common forms of cashier’s check fraud are:

  • An unknown buyer offering to pay cash on delivery with a cashier’s check.
  • An unknown customer submitting a cashier’s check for more than the cost of the goods and asking that you pay the excess amount ASAP. If you agree to this request, the buyer will receive the goods that are typically shipped upon receipt of the check, the money you supposedly received for the goods, and the overage you gave the buyer under the assumption the bank check was good.

How to Avoid Cashier’s Check Fraud

  • Do not accept cashier’s checks from a buyer you do not know.
  • Never accept a check for payment that is more than your asking price. 
  • If you are willing to accept a cashier’s check, insist on one drawn from a bank that has a local branch.

Email Compromise 

Email-related fraud has been an issue for consumers for decades. It is common to get an offer for a deal that sounds too good to be true, or receive an unexpected password reset request for one of your accounts. Companies are capable of creating a fake website or email address that looks legitimate but is not. Even if you get a message that appears to be from a legitimate company, do your research.  

How Can Fraudulent Companies Be Held Responsible?

While misleading business practices are not always illegal under Pennsylvania law, certain practices that rise to the level of being considered “deceptive” are prohibited by state law.

On the federal level, the Unfair Trade Practices and Consumer Protection Law (UTPCPL) is Pennsylvania’s consumer protection law. The statute defines its purpose as to prevent unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce. The UTPCPL includes a catch-all provision that prohibits businesses in Pennsylvania from engaging in fraudulent or deceptive conduct which creates likelihood of confusion or of misunderstanding during a transaction. The statute lists a number of unfair or deceptive acts or practices, including:

  • Passing off goods or services as those of another.
  • Using deceptive representations or designations of geographic origin in connection with goods or services.
  • Representing goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand.
  • Advertising goods or services with intent not to sell them as advertised.
  • Failing to comply with the terms of any written guarantee or warranty given to the buyer at, prior to, or after a contract for the purchase of goods or services is made.
  • A business or party that violates the state’s deceptive trade practices law may face a temporary or permanent injunction from engaging in that practice. Whenever a permanent injunction is ordered, the court may also order the defendant to compensate victims for any losses they may have suffered, such as refunding the cost of a fraudulently advertised product.

On the state level, the Attorney General’s Bureau of Consumer Protection in Pennsylvania performs many duties, including:

  • Investigates commercial and trade practices in the distribution, financing and furnishing of goods and services for the use of consumers.
  • Conducts studies, investigations and research into matters affecting consumer interests and make such information available to the public.
  • Investigates fraud and deception in the sale, servicing and furnishing of goods and products, and strive to eliminate such illegal actions.
  • Based upon consumer complaints or investigations, the Bureau is authorized to take formal legal action against persons and organizations who engage in unfair and deceptive conduct in the advertisement or sale of goods or services within the Commonwealth. 

How Can a Consumer Protection Lawyer Help You?

It can be overwhelming to try to proceed when you realize you may have been defrauded. Many feel they are unable to take on the fraudulent parties, especially large companies, even though there are options.

A Pennsylvania consumer protection lawyer can help you through this confusing time and answer all of your questions. Here are some ways a lawyer can assist you:

  • Help you understand all aspects and strategies to your case, and provide answers to your questions.
  • Request discovery from various interested parties that relate to your matter.
  • Develop a plan against the at-fault parties, making sure you understand how the case will be litigated, as well as the estimated time-frame for how long it will take for the case to be resolved.
  • Draft and file the initial claims against all parties and businesses that perpetrated the fraud.
  • Calculate the full amount of economic loss you have suffered because of fraudulent businesses and individuals.
  • Negotiate a reasonable settlement or, if necessary, take the case to trial.

Pennsylvania Consumer Protection Attorneys at East End Trial Group Can Handle Any Consumer Fraud Case

If you have experienced consumer fraud, speak with one of our Pennsylvania consumer protection attorneys at East End Trial Group. Call us at 412-223-5740 or complete our online form to schedule a private, free consultation. Located in Pittsburgh, we serve clients throughout Pennsylvania.

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