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CONSUMER FRAUD: Spotting and Protecting Yourself Against It A General Primer : Home

Charitable Solicitations
Door-to-Door Sales
Home Repair Fraud
Landlord-Tenant Law
Telemarketing Fraud

Charitable Solicitations ^ (back to top)

Most charities are honest and put their charitable dollars good use.

However, there also are many so-called charitable groups spend the vast majority of donations they receive on salaries, administrative costs and little--if any--on those in need.

Also, many charitable organizations hire professional fundraisers to solicit money. The fundraisers, not the charities, keep most of the donation.

In Most States

Most charitable organizations must register with the Attorney General, Office of Consumer Affairs, or an equivalent state or county office. Some charities exempt from this provision include religious organizations and educational institutions. Organizations that must register are required to file annual reports with the Attorney General's Office and, on request disclose how much of the solicited money is spent on fundraising costs.

The key to fighting charity fraud is to ask these questions:

  • How will the contribution be spent?
  • What percent of the contribution is earmarked for administrative costs?
  • If it is a telephone solicitation ask caller for his name and the name of company or organization he represents. Check the company's reputation with your local Better Business Bureau the National Charities Information Bureau, 212-929-6300.
  • Ask if the caller works for a professional fund-raiser or if he/she is paid a commission on successful solicitations.

Tips on Dealing with Solicitors

  • Be careful when responding to charity solicitations that come through the mail. Read any solicitation carefully, including the fine print.
  • If the mail solicitation is for a "charity sweepstakes," be aware that "winners' in some sweepstakes may receive only a few cents and that the charity cannot require you to contribute before responding to a sweepstakes offer.
  • Don't judge a charity by its name. Ask the solicitor to describe clearly how your donation will be used.
  • Watch out for names of charities that closely resemble names of other organizations.
  • If you are unfamiliar with the charity, research it first. Watch out for hard-sell solicitations, and be careful about letting door to door solicitors into your home.
  • Request a copy of the organization's annual report. Legitimate charities gladly will send you written information when requested.
  • Avoid cash donations and make your checks payable to the organization not to the individual. Be careful about giving out your credit card number.

Charitable Solicitations -- Check on Charities

Charitable organizations and professional fundraisers are required to register with state and local authorities. Ask and demand to see identification and verification.

Check with your local city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for the specific laws in your state on this issue.

Door-to-Door Sales ^

Unscrupulous sellers try to victimize consumers in their own homes, selling everything from magazines to vacuum cleaners to energy-saving products. These sellers often use high-pressure or scare tactics and sometimes misrepresent the quality and value of their products.

Complaints show that consumers have paid several times the going rate for comparable merchandise and services. To avoid being victimized by an unscrupulous seller, follow these tips:

  • High-pressure sales tactics often are a part of fraudulent activity. Don't let yourself be hurried, intimidated or coerced. After all, the salesperson is at your door uninvited and remain there only at your courtesy.
  • If you are interested in buying from a door-to-door seller, get everything in writing including price, warranty and all conditions. Tell the salesperson you will check it out and get back to him.
  • Ask for proper identification before listening to a sales pitch.
  • Be careful about letting any salesperson into your home.
  • Don't fall for the "sympathy" approach. Salespersons may say they're working their way through college or in some other way try to get your sympathy.
  • Be wary of any offer that includes "referral sales." A referral or promises a discount if you give the name of friends who might buy his products.
  • Don't make any payment hastily, especially for merchandise or services.

Canceling an Agreement

In many state the law provides that you have the right to cancel any credit (not cash) contract within a given number of business days after the sale (excluding Saturdays, Sundays and legal holidays) if the seller personally solicited and presented the contract in your home. But, there is no uniform rule that applies in every state.

States that allow for cancellation of home solicitations exempt cases where:

  • The buyer requested the seller provide the goods or services without delay because of an emergency;
  • The seller in good faith made a substantial start toward fulfilling the agreement before the notice of cancellation was given; and
  • If goods are involved, the items cannot be returned to the seller in "substantially" as good a condition as when received by the buyer.

Check with your local city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for the specific laws in your state on this issue.

Home Repair Fraud ^

Consumers routinely file complaints about workers who accept money for repair jobs they never finish or who fail to honor warranties on home improvement projects.

A common complaint concerns a deceptive asphalt scheme. In this scam workers offer to use leftover asphalt from one job to repave your driveway. More often than not, the workers either start the job and then say it will cost hundreds or thousands more to complete it, or they will just lay black paint instead of asphalt on the driveway and leave town with your money.

Another common complaint concerns work on foundations and attics, which you are unable to see. Many times, recommended repair work is worthless, unnecessary and vastly overpriced.

Phony Workers

Phony workers like these are a special breed of con artists called "gypsies." Unfortunately seniors are often their prime targets.

The reason is simple: Half of all seniors own their own homes and most of them live in older homes.

Sometimes these homes do need repair work and crafty con artists look for this situation. They usually ask for a large down payment before they begin the work, and there even have been reported cases where the repairman goes to the bank with the consumer to withdraw the money.

Sometimes con artists use the obituaries or city directory to find seniors living alone.

Some con artists claim to be city building or health inspectors who are there to check out the furnace. Once in the basement they either cause damage or claim a health or safety threat exists.

Phony Inspectors

Be wary of anyone who offers to inspect your home for free. They may be looking for defects ranging from a leaky roof to termite or foundation damage. If they tell you damage exists, always get a second opinion before you sign a contract or agree to have any repair work done.

Other con artists simply use repair come-ons to get into your home. These people usually work in groups of two or three. For example, one distracts you with a bogus furnace inspection while the others search and burglarize your home. Once they have your money and valuables they leave.

Tips to Help Avoid Con Artists

  • Always check workers' credentials.
  • Never let anyone into your home without first asking for identification. Representatives of utilities and reputable businesses will have proper ID. When in doubt, look up the company¹s number in the phone book and call to verify the identity of the workers.
  • Ask for an address and phone number if the workers tell you they are self-employed.
  • If you agree work should be done, ask for an estimate in writing and tell the workers you'll get back to them.
  • Always get a second opinion and written estimates from one or two local firms.
  • Get all guarantees in writing. Ask for the names of references and call them.
  • Remember, if an offer is good "now or never," you can bet it never will be good.
  • If you encounter a suspected home repair gypsy, say "no," close your door and call local authorities immediately.
  • Check with your local legal aid office, state and country bar associations, city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for brochures and explanations of specific laws in your state on this issue.

Landlord-Tenant Law ^

Landlord-tenant disputes are a common occurrence in the renting process. Some of these disputes could be avoided if landlords and tenants were aware of their rights and responsibilities.

The following is a general statement of the law, but it varies from state to state.

The Lease

Renters are bound either by an oral or written agreement. Written agreements are more common and offer greater protection to both tenant and landlord. When considering a written lease agreement, the tenant should remember to:

  • Read the entire contract and ask questions or obtain a legal opinion about objectionable provisions you do not understand. Ask for changes. If a tenant dislikes certain provisions in the lease, he or she has the right to ask the landlord to amend the lease with written changes. However, if the landlord refuses, which he or she has a right to do, it is up to the tenant to decide whether to sign the lease. If changes are made both the tenant and landlord should initial the changes.
  • At a minimum the lease should include the landlord's name, address and phone number; address of the rental property; amount of the monthly rent; rent due date and grace period; and terms governing the amount and return of the security deposit.
  • Although an oral agreement usually obligates the tenant for only one month, it greatly reduces security. A landlord can evict the tenant or raise rent with 30 days' notice.

Security Deposit

In many states the law requires a landlord, within 30 days of the termination of the lease, to return the full deposit or cash the tenant with an itemized list of damages for which any portion of the deposit is kept. Prior to the expiration of the 30-day period, the landlord must notify the tenant of the time and date the landlord plans to inspect the dwelling to determine any damage. The landlord cannot prevent the tenant from being present during the inspection.

The landlord may keep a part or all of a deposit to compensate for or repair actual damage done, not to include normal wear and tear.

If the landlord has wrongfully withheld a part or all of a deposit, the tenant may sue to recover up to twice the amount wrongfully withheld.


You may have more success if you request the landlord to make repairs within a reasonable period of time. If the repairs are not made, the tenant may send, by registered mail, a written request for the necessary repairs. The tenant should keep a copy of the letter.

If the repairs still are not made, the tenant may seek legal assistance. If the dwelling becomes unsafe due to the repair problems, the tenant should contact the local health or housing authorities.

Tenants and landlords need to remember if rent payments are withheld pending completion of repairs, the renter may be in violation of his lease and may be subject to eviction.

If a tenant damages property, consistently fails to pay rent on time or otherwise violates the terms of the lease, the landlord may begin eviction proceedings.

A landlord may not evict a tenant without a court order. Attempts by a landlord to physically remove a tenant or his property without a court order should be reported to the police.

Check with your local legal aid office, state and country bar associations, city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for brochures and explanations of specific laws in your state on this issue.

Lien Law ^

When you hire a general contractor to build a home or to home repair or remodeling work, the general contractor becomes the middleman between you and any others who provide labor supplies for the project.

In most cases homeowners pay their general contractors, who in turn pay their material suppliers and subcontractors.

But there have been cases in which the homeowner paid the contractor in full, but the contractor failed to pay his subcontractors. The subcontractors then filed liens on the homeowner's property, forcing the homeowner to pay for the work or labor a second time.

Check References

One of the best things you can do to protect yourself from liens is to for references from any contractor you are considering hiring for home building, improvements or repairs. Be sure to specify you want recent references. When you get the references, thoroughly check them out.

One of the best things you can do to protect yourself from liens is to for references from any contractor you are considering hiring for home building, improvements or repairs. Be sure to specify you want recent references. When you get the references, thoroughly check them out.

Check with your local legal aid office, state and country bar associations, city or county consumer agency administrator, county prosecutor's office of consumer affairs or state Attorney General's office for brochures and explanations of specific laws in your state on this issue.

Telemarketing Fraud ^

The Federal Trade Commission estimates that American consumers lose $1 billion a year from deceptive peddling of goods and services over the telephone.

The majority of companies involved in telemarketing are reputable firms that use the telephone to sell quality goods and services. However, there are unscrupulous companies involved in telemarketing fraud, which is defined as the use of telephone communications to fraudulently promote goods or services.

Fraudulent sales callers use phony prizes, cheap products and high-pressure sales tactics to defraud consumers. They attempt to sell goods and services such as investments in oil and gas leases, gemstones, "free" vacations and substandard office supplies.

Protect Yourself

To protect yourself or your business from telemarketing fraud, keep these tips in mind:

  • Be extremely careful in giving out your credit card number.
  • Be cautious if the caller says an investment, purchase or charitable donation must be made immediately. Ask that the information be sent to you.
  • Ask who is in charge of the firm or organization represented.
  • Ask for the address and telephone number of the firm calling you. Be cautious if the caller won't provide that information.
  • Ask if it is possible to obtain the names and phone numbers of satisfied customers in your community.
  • Check with your state and local consumer protection offices an Better Business Bureau for information about the organization.
  • Be wary of offers for free merchandise or prizes. You may end up paying handling fees greater than the value of the gifts.

Tougher Federal Laws

Under the Telephone Consumer Protection Act, if you clearly inform a company to not call you again, and does within 12 months, you may sue the company for $500 or your actual monetary loss, whichever is greater.

How to Handle Sales Calls

Many consumers enjoy receiving phone calls at home about products or services. But the choice is yours. When you receive a sales call:

  • Find out who is calling.
  • If you think you may be interested but want to know more, ask the caller to mail information about the offer or charity.
  • If you are not interested, interrupt the caller and say so.
  • If you don't want to get another call from that company, ask the person take your name off its list.

If you want to reduce the number of home solicitation calls you receive from national companies, put your request in writing and send it to:

Telephone Preference Service
Direct Marketing Association
P.O. Box 9014
Farmingdale, NY 11735-9014

Warranties ^

If you complained about a problem with a product while it still was under warranty, you are entitled to get it repaired under the terms of your warranty contract.

Even if your warranty has ended but you complained about problem before the expiration, a company still is expected to repair or replace the product under the warranty terms. However, keep copies of repair orders and the warranty if you need to back up your claims.

To help prevent future problems when you make a major purchase, compare warranties on competing products.

Questions to Ask

  • What parts and repairs are covered by the warranty?
  • Are any expenses excluded from coverage? (Some warranties require you to pay for labor charges.)
  • How long does the warranty last?
  • What will you have to do to get the product repaired? (Look for conditions that could prove expensive, such as requiring you to ship a heavy object to a factory for servicing.)
  • What will the company do if the product fails? Will the company repair it, replace it or return your money?
  • Does the warranty cover "consequential damages?" (Most do not. This means the company will not pay for any damage the product caused or your time and expense in getting the damage repaired. For example, if your freezer breaks and the food in it spoils, the company will not pay for the food you lost.)
  • Are there conditions or limitations on the warranty? (Some warranties only provide coverage if you maintain or use a product as directed. For example, a warranty may not cover business uses.)

Spoken Warranties

Sometimes a salesperson will make an oral promise, for example, that the store will provide free repairs. Have the salesperson put the promise in writing, or do not count on the service.

Service Contracts

When you buy a car, home or major appliance, you may be offered a service contract. Although often called extended warranties, service contracts are not warranties. Warranties are included in the price of the product.

Service contracts come separately from the product at an extra cost.

To decide whether you need a service contract, you should consider several factors: whether the warranty already covers the repairs you would get under the service contract; whether the product is likely to need repairs and what the potential costs might be; how long the service contract is in effect; and the reputation of the company offering the service contract.

Resolving Disputes

If you are faced with any problems with a product or with obtaining the promised warranty service, here are some steps you can take.

Carefully read the product instructions and warranty. Do not expect features the product was not designed to give or assume warranty coverage that never was promised. Having a warranty does not mean you automatically get a refund if a product is defective. The company may be entitled to try to fix it first.

First discuss your complaint with the retailer. If you cannot reach an agreement, write the manufacturer. Your warranty should list the company's address. Send all letters by certified mail and keep copies. If this doesn't work, you can call your local consumer protection agency; contact the company's dispute resolution organization; take your case to small claims court; or consider a lawsuit.


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