Consumer Fraud Policy

For more information on consumer fraud policy, select the source and summary below:

1. Kristy Holtfreter et. al., Consumer Fraud Victimization in Florida: An Empirical Study, 18 St. Thomas L. Rev. 761, 762 (2006).

The research presented in this article addresses several important consumer fraud concerns. Section II, Consumer Fraud Victimization, begins with an overview of Federal and State of Florida Legislation pertaining to consumer fraud, including a discussion of the history of legal policy efforts. Also reviewed in this section is previously conducted consumer fraud research, including types of consumer fraud, victim vulnerability, and victim reporting. Section III describes the sample and methodology of the inaugural (2004-2005) Florida Consumer Fraud Survey. An analysis of this data is presented in Section IV, which is followed by a discussion of the study's implications for future research and public policy in Section V.

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2. Martin T. Biegelman, Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters, John Wiley & Sons, Inc. (2013).

Expert Martin Biegelman draws from his 40 years of experience fighting fraud by profiling the key traits fraudsters share and the qualities fraud examiners must possess to be successful. Faces of Fraud entertains and informs readers with stories from real cases that the author investigated over his long career by imparting useful tips you can start using right away in the fraud examination field. Each chapter contains stories from actual cases that the author investigated. Faces of Fraud reveals must-know characteristics of fraudsters and the skills needed to outwit them. This book explores the best practices in fraud detection, investigation and prevention to cultivate in order to maximize success.

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3. Michael D. Reisig and Kristy Holtfreter, Shopping fraud victimization among the elderly, Journal of Financial Crime, Vol. 20, Issue 3, 324-337 (2013).

Purpose – This study aims to investigate whether low self-control and routine activity theories explain fraud outcomes among the elderly. Specifically, the effects of low self-control and remote purchasing behaviors on shopping fraud targeting and victimization are empirically assessed.

Design/methodology/approach – Cross-sectional survey data from telephone interviews conducted in Arizona and Florida are used. A total of 2,000 adults aged 60 and over were surveyed. Because selection bias was observed, a two-stage probit regression model was estimated to assess theoretical hypotheses in a multivariate context.

Findings – The results demonstrate that two forms of remote purchasing – telemarketing purchase and mail-order purchase – increase the probability of shopping fraud targeting. Infomercial purchase and mail-order purchase are significant correlates of shopping fraud victimization. The probability of becoming a target and victim is affected positively by reduced levels of self-control. The effects of demographic characteristics on fraud outcomes are null.

Research limitations/implications – This research lends support to the argument that low self-control and routine activity theories shed light on fraud victimization among elderly consumers. Future research should examine the influence of low self-control, individual routines and lifestyles on other forms of victimization that the elderly experience.

Practical implications – The findings underscore the need for fraud prevention and increasing public awareness among elderly consumers.

Originality/value – This is the first study to examine shopping fraud targeting and victimization of the elderly in a broad theoretical context.

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4. Eun-Jin Kim and Loren Geistfeld, Elder Fraud: An American-Korean Comparison, Consumer Interests Annual, Vol. 52 (2006).

Both the United States and Korea are “aging societies.” In 2000 Americans 65 or older were 12.4% of the U.S. population.. By 2030 the aged population in the U.S. is estimated to be 19.7% of the American population. In Korea the elderly were 7.1% of the Korean population in 2000, which is expected to grow to about 20% of the Korean population by 2028. As the older population increases, consumer problems related to the elderly become more numerous. Elderly consumers tend to be disadvantaged in market place due to their physical, psychological, and social limitations. Decision-making tends to become increasingly important as people age, while decision-making capacity tends to decrease as they age. This makes the elderly particularly vulnerable to fraud. This article studies the factors contributing to elder susceptibility to fraud and compares American and Korean elderly.

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5. Marc A. Rodwin, Consumer Protection and Managed Care: The Need for Organized Consumers, Health Affairs, Vol. 15, No. 3, 110-123 (1996). doi: 10.1377/hlthaff.15.3.110

In this paper Marc Rodwin describes the current proposals circulating to give consumers more protection in and information about the managed care marketplace. Believing that all of the regulatory proposals fall short of their goals, Rodwin proposes and explains some more organized forms of consumer advocacy. His study will show how thinking about accountability has evolved; describe how it became an issue in health policy; and draw lessons for health policy from attempts to promote accountability in other fields. Despite its many advantages, managed care creates new problems for consumers. Activists have proposed four types of remedies: (1) increased information and choice; (2) standards for services and marketing; (3) administrative oversight; and (4) procedural due process for complaints. Each approach offers some benefits, but they are insufficient to cope with consumer problems. What is lacking is effective, organized consumer advocacy.

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6. Donna S. Harkness, Packaged and Sold: Subjecting Elder Law Practice to Consumer Protection Laws, 11 J.L. & Pol’y 525 (2002-2003).

This article discusses how unfair and deceptive practices are relevant to the search for legal assistance by explaining the rationale for applying the consumer protection concepts to the practice of law. Employing consumer protection statutes to regulate lawyers serving elderly clients and practicing elder law would enhance trust between the elderly and their legal counsel. Such reform would also provide greater protection and opportunities for redress than existing mechanisms of attorney discipline and malpractice lawsuits.

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7. Kathleen S. Morris, Expanding Local Enforcement of State and Federal Consumer Protection Laws, 40 Fordham Urb. L.J. 1903 (2013).

This Article calls on Congress and the state legislatures to grant large cities and counties standing to enforce the Federal Trade Commission Act (the FTC Act) and its state statutory counterparts (or little Acts). The FTC Act, a federal law, prohibits businesses from engaging in any "unlawful," "unfair," or "deceptive" acts or practices, and the little Acts apply similarly broad prohibitions in all fifty states. This fifty-one-statute consumer protection regime, which has been the law of the land for several decades, carries enormous promise to halt a wide range of unlawful and harmful corporate practices in their earliest stages. Unfortunately, that promise has not been fulfilled because these laws are chronically under-enforced. This Article argues that the nation's legislatures should invite cities and counties with populations over 50,000 into consumer protection enforcement by granting them standing to seek injunctive relief and penalties under the FTC Act and little Acts. It addresses the practical benefits and barriers to disaggregating consumer protection enforcement in this way and discusses the attendant localism and federalism concerns.

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8. Ian Heller, How the Internet has Expanded the Threat of Financial Identity Theft and what Congress can do to Fix the Problem, 17-Fall Kan. J.L. & Pub. Pol'y 84 (2007).

        The current methods used to combat financial identity theft are incapable of achieving any real success because they focus on punishment. Currently, financial institutions are only liable to their customer-victims in limited circumstances and offenders regularly escape justice. As a result, monetary penalties and threats of imprisonment have done little to curb the monumental increase in identity thefts over the last decade. This note argues in favor of shifting the policy of dealing with identity theft from punishment to deterrence, and shifting the burden of its prevention from financial institutions to points-of-sale at retail, online, and commercial establishments.

Part I of this article begins with an exploration of identity theft, focusing in particular on the financial and emotional burden felt by victims, and how the proliferation of Internet use has expanded its threat. In Part II, the article identifies domestic and international efforts currently employed to deal with financial identity theft, and where these efforts fall short. Finally, Part III proposes two alternative solutions to combat financial identity theft: one utilizing the power of free markets and the other relying upon secure biometric technology, both focused on deterrence rather than punishment.

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9. Federal Trade Commission-Bureau of Consumer Protection

The FTC’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by:

We collect complaints about hundreds of issues from data security and false advertising to identity theft and Do Not Call violations. We use these complaints to bring cases, and we share them with law enforcement agencies worldwide for follow-up.

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10. David Cooper, Blowing the Whistle on Consumer Financial Abuse, 163 U. Pa. L. Rev. 557 (2015).

The whistleblower programs that the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) created within the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) offer large monetary rewards for actionable information. These “bounties” have attracted commentary from the academy, the bar, and corporate America. Less often discussed is section 1057 of Dodd-Frank, which creates a private cause of action for informants who experience retaliation for reporting violations of federal consumer financial law to the Consumer Financial Protection Bureau (CFPB). These informants could be a valuable tool for discharging the CFPB's supervisory and enforcement responsibilities. Unfortunately, the history of whistleblower protection under the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) demonstrates that section 1057 alone is not a viable long-term incentive for insiders to come forward. Therefore, this Comment argues that Congress or the CFPB should offer bounties for information that protects consumers' financial welfare, much as existing Dodd-Frank programs remunerate individuals who contact law enforcement for the benefit of investors.

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11. Megan Bittakis, Consumer Protection Laws: Not Just for Consumers, 13 Wyo. L. Rev. 439 (2013).

This article explores how various states address the question of who should be permitted to bring a private claim under the state's consumer protection laws. Next, the article recommends that states adopt very few restrictions on who should be permitted to sue under those laws. Allowing broad standing to potential plaintiffs serves many important goals, not the least of which is that it frees the courts to decide the important issues that arise under these cases--whether a deceptive practice was perpetrated and, if so, how that conduct should be remedied--rather than the courts spending their resources determining whether the plaintiffs can bring the consumer protection action in the first place. When states impose unnecessarily complicated tests for determining standing under the Little FTC Acts, the courts end up determining those issues, rather than getting to the crux of the lawsuit.

Part II of this article gives a brief rendition of the history of the FTC Act and the Little FTC Acts. Part III focuses on those states with very few restrictions on who can sue under their consumer protection laws. Part IV addresses those states that severely restrict who can sue, and Part V focuses on states where the claimant must be a consumer that purchased the good or service for personal use. Part VI explores the split in authority in Florida regarding who may sue under FDUTPA. Finally, Part VII explains the article's recommendation that most people and entities, not just those who would be considered “consumers,” should have standing under the Little FTC Acts.

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12. Lauren A. Fisher Flores, Protecting the Vulnerable Among Us, 19 J. Consumer & Com. L. 28 (Fall 2015).

This paper explores a recent case from Travis County that lays the groundwork for individual consumers to pursue a private right of action. It uses this case to argue that private attorneys can complement the Attorney General's actions and help curb the problem by filing suit under the Texas Deceptive Trade Practices Act (DTPA). After laying out the foundational provisions of the DTPA, the paper describes the recent Travis County case, showing how the case is an invitation for private attorneys to enter this arena and protect consumers.

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13. Maria G. Hibbard, Hanging Up Too Early: Remedies to Reduce Robocalls, 5 Case W. Reserve J.L. Tech. & Internet 79 (2014).

Although the FTC's Do Not Call Registry, the national list of consumers who do not wish to receive telemarketing calls, has “significantly reduced the number of unwanted telemarketing calls ... from legitimate marketers who honor the system and recognize the importance of respecting consumer choice,” illegitimate companies and telemarketers with fraudulent intent continue to abuse the market with growing frequency. From January through June 2012, over 1.2 million fraudulent robocalls were reported--a 29% increase from the same period in 2011. Despite telemarketing regulations prohibiting such calls, there is “an increase in calls from fraudsters who are apparently willing to both violate the laws against robocalls and ignore the Do Not Call Registry.”

As the Do Not Call Registry reaches its tenth birthday, another serious assessment of telemarketing regulation is warranted. Although the Telephone Consumer Protection Act originally gave the FCC authority to create a national do-not-call list, a national list was not created until 2003, when the Do Not Call Implementation Act gave the FTC authority to create and enforce such a list. With authority divided between the FCC and FTC, both agencies constantly revised their respective telemarketing regulations throughout the 2000s in an attempt to reach regulatory consistency. However, constant revisions and inconsistent standards have left consumers frustrated, telemarketers confused, and efforts to enforce fraudulent telemarketing delayed. The regulatory authority of both agencies-and the First Amendment issues associated with regulating commercial speech-has been challenged in court throughout the last decade. Any valuable analysis of telemarketing regulation must weigh the interests of the government, the free speech of the telemarketer, and the individual consumer's right to be free from unwanted intrusions in the home.

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14. David C. Vladeck, Charting the Course: The Federal Trade Commission’s Second Hundred Years, 83 Geo. Wash. L. Rev. 2101 (Nov. 2015).

The Federal Trade Commission has an ambitious and indeed daunting mission: To prevent “unfair or deceptive acts or practices in or affecting commerce.” Congress created the FTC to be the first line of defense for consumers in a marketplace often fraught with bad actors. And the FTC has risen to the challenge; it has a proud legacy of protecting consumers from those who make the marketplace dangerous. The agency protects consumers from scam-artists intent on taking the last dollars out of their wallets, from abusive debt collectors, from shady lenders, from advertisers who make false claims about their product's attributes, and from those who hijack consumers' personal information for commercial gain. These missions have long been at the core of the agency's work, and, absent a dramatic change in human nature, will remain so.

This Article focuses on two of the FTC's core consumer protection missions-- protecting privacy and fighting false advertising--because the Commission's work in these areas is evolving, as is the applicable law. This Article identifies a number of issues that the Commission should consider as it refines its privacy and advertising work and offers some suggestions as to how the Commission should chart its course for its second hundred years.

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15. Todd Zywicki, The Consumer Financial Protection Bureau: Savior or Menace? 81 Geo. Wash. L. Rev. 856 (April 2016).

A centerpiece of the Dodd-Frank financial reform legislation was the creation of a new Federal Consumer Financial Protection Bureau (“CFPB”) within the Federal Reserve. Few bureaucratic agencies in American history, if any, have combined the vast power and lack of public accountability of the CFPB. It is an independent agency inside another independent agency, presided over by a single director who is insulated from presidential removal. Additionally, the Board is outside of the congressional appropriations process. Finally, its actions are unreviewable by the Federal Reserve--they can be checked bureaucratically only by a supermajority vote of the Financial Stability Oversight Council finding that the Board's actions imperil the safety and soundness of the American financial services industry.

Proponents of the CFPB argue that extreme independence is justified to insulate it from political pressures. But the history of regulation teaches that insulation can be isolation, resulting in inefficient regulation. Scholars over the past several decades have identified common pathologies associated with bureaucratic behavior. The CFPB's structure virtually guarantees the manifestation of those pathologies in practice: excessive risk aversion, agency imperialism, and tunnel vision. Indeed, it is as if the CFPB were an agency frozen in amber during the Nixon Administration and thawed out today, completely unaware of the past several decades' lessons on how to structure an effective regulatory strategy.

In the end, by manifesting these bureaucratic pathologies, the CFPB is likely to raise the price of and reduce access to credit, thereby harming the very consumers it was founded to protect.

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16. Dee Pridgin, Sea Changes in Consumer Financial Protection: Stronger Agency and Stronger Laws, 13 Wyo. L. Rev. 405 (2013).

This article will provide an overview of these new laws, explain how they differ from prior consumer protection laws, and address the merits of this new direction in consumer protection. Part II discusses the creation of the CFPB, how it was based on the need to correct some structural flaws in the architecture of consumer protection in the financial sector, as well as the need for a consumer protection agency that could employ the insights of behavioral economics to fashion regulations that are more effective. A contrast between the new CFPB and the Federal Trade Commission, which had been the major federal consumer protection agency in the United States for almost one hundred years, is also included in Part II. Part III describes a related shift in consumer financial protection from the purely disclosure remedies characteristic of the Truth in Lending Act, to the more substantive limitations that are characteristic of the Credit CARD Act and the Mortgage Reform Act. This change in focus is arguably based on a move from the rational consumer choice theory that underpinned the Truth in Lending Act and other earlier consumer protection legislation, to more of a reliance on the relatively new field of behavioral economics. Part IV will describe in more detail the provisions of the Mortgage Reform and Anti-Predatory Lending Act and the Credit CARD Act to demonstrate the move from a reliance solely on consumer choice and rational choice theory to a legal regime based more on the teachings of behavioral economics. Part V will conclude the article with an analysis of the disadvantages and advantages to consumers of the new approach to consumer protection documented in the preceding sections.

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17. James John Shield, Jr., Apple, Inc. v. Superior Court: Caveat Emptor: The Future of Online Credit Card Transaction, 13 DePaul Bus. & Com. L.J. 529 (Summer 2015).

This Note will explore the potential legal and policy issues addressed by the Apple court. Part II presents the background information necessary to fully understand the impact of the Apple decision. Section A discusses the general nature of online transactions, highlighting the growth of e-commerce and credit card fraud and the potential risks confronting both consumers and sellers in an online transaction. Section B details the relevant statutory provisions the Apple court interpreted and the pertinent decisions preceding Apple. Part III covers the actual subject matter of the Apple decision, presenting the facts, procedural history, the majority's holding and reasoning, and the dissent's objections. Part IV analyzes arguments on both sides of the court and attempts to justify the holding due to the policies of caveat emptor, Section A, and judicial discretion, Section B. Finally, Part V contemplates the potential impact that Apple will have on e-commerce and Internet fraud. Specifically, Section A explains how consumers are subjected to increased risks of credit card fraud and identity theft, and Section B discusses potential issues that might arise from having separate bodies of law governing traditional and online sales.

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18. Mary Spector, Where the FCRA Meets the FDCPA: The Impact of Unfair Collection Practices on the Credit Report, 20 Geo. J. on Poverty L. & Pol'y 479 (Spring 2013).

This Article explores the impact that some of the contemporary practices in consumer debt collection litigation may have on credit reporting and scoring. In doing so, it will pay particular attention to available data regarding the use of unfair collection practices in such litigation, and will consider whether consumer reports of such litigation unfairly burden consumers' ability to obtain future housing, employment, insurance, or credit.

Part I of this Article begins with a brief discussion of the mechanics of consumer reporting and the statutory framework the FCRA provides. The discussion will draw heavily from three recent reports regarding the industry: the Federal Trade Commission's (FTC) 2012 report on its ongoing study of credit reporting accuracy, the FTC's 2011 report summarizing its staff interpretations of the FCRA, and a 2012 report regarding key features of the FCRA published by the Consumer Financial Protection Bureau (CFPB). Part I will pay particular attention to the practices and obligations of consumer reporting agencies in connection with the reporting of information collected from public records. Part II will examine some of the data collected from recent studies of collection practices,including data contained in a 2013 report by the FTC on the debt buying industry. Part III will consider what this data means for consumers wishing to challenge reports containing public records resulting from consumer debt collection litigation. It will also highlight some of the obstacles consumers face at the intersection of the Fair Debt Collection Practices Act (FDCPA) and the FCRA. Finally, Part IV will consider several alternatives to relieve some of the burden on consumers who were subjected to abusive collection tactics in litigation.

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