Deception and Fraud Section 3.3

Deception vs. Fraud Deception Deception Exaggeration Exaggeration Legal Legal Misleading Misleading Fraud Fraud Deliberate Deliberate Unlawful extremes Unlawful extremes

Deception Trading Up Trading Up Sale Price Sale Price Suggested Retail Price Suggested Retail Price Loss Leader Loss Leader

Fraud Statement is fraudulent if: Statement is fraudulent if: Person making statement KNOWS it’s false Person making statement KNOWS it’s false Purpose of statement causes others to give up some value Purpose of statement causes others to give up some value Proving fraud is difficult Proving fraud is difficult Was it a mistake? Was it a mistake? Was there intent? Was there intent? Best advice is to avoid fraud Best advice is to avoid fraud

When it seems too good to be true…

…it probably is!!

Types of Fraud Bait and Switch Bait and Switch Pyramid Schemes Pyramid Schemes Chain letters Chain letters Memberships, not products Memberships, not products Airport scheme Airport scheme Telephone (& Internet) Fraud Telephone (& Internet) Fraud

Pyramid Schemes

Telephone Fraud Too good to be true Too good to be true Request for credit card or ss# Request for credit card or ss# Buy for something free Buy for something free Refusal to send written confirmation or information Refusal to send written confirmation or information Pressure to act now or offer expires Refusal to identify themselves or company Refusal to provide company info (phone, address)

Telephone Techniques Drop famous names Drop famous names “Having lunch with Michael Jordan was great…” Use terms of endearment, emotions Use terms of endearment, emotions “I lost my mother and you remind me of her.” Suggest lack of power Suggest lack of power “May I talk to the decision maker?” Use guilt trips Use guilt trips “I’ve already spent an hour with you…” Pressure to make quick decisions Pressure to make quick decisions “We only have two left…”

Telephone Advice Ask for time to think about it Ask for time to think about it Ask for information be sent to you Ask for information be sent to you Ask for their number and call back Ask for their number and call back Ask for referrals Ask for referrals

More Faces of Fraud Health-care products that cure Health-care products that cure Home improvement charging fees up front Home improvement charging fees up front Vacation clubs promising cheap vacations Vacation clubs promising cheap vacations REALLY inexpensive repair work REALLY inexpensive repair work Weight loss programs appearing unrealistic Weight loss programs appearing unrealistic Piggyback scams Piggyback scams

Protect Yourself Be skeptical! Be skeptical! Ask questions! Ask questions! Research companies Research companies Research products Research products Use your head, not your “heart” Use your head, not your “heart”