By Andrew Shain
Knight Ridder
August 8, 2004

CHARLOTTE, N.C. | More than 25 million adults, about one in 10 nationwide, were fraud victims in a one-year period, a federal study released Thursday said.

Defrauded consumers most often reported they were billed for something without their consent or were charged much more than expected. The Federal Trade Commission, which conducted the study, estimates 4.6 million people fell for these types of fraud from mid-2002 to mid-2003.

Bogus credit services aimed at consumers with poor financial records were among the most common frauds, the survey found. They include advance-fee loans and credit cards, insurance for credit-card misuse and credit repair.

Usually victims pay $60 to $300 for services never received. An estimated 9.4 million people nationwide were victims of these credit-related scams in a year.

Overall, "This is a big problem," said Keith Anderson, an FTC economist who wrote the study. "People need to be careful."

Jinaki Morton paid $150 to a company that promised to remove a bankruptcy filing from her credit history. The blemish was hurting Morton's chances of getting a loan to expand her Charlotte day-care center.

Nothing changed on her credit report because no one can legitimately remove a bankruptcy from a credit history.

Other top frauds the FTC found include unauthorized buyers-club memberships or magazine subscriptions, and undelivered items.

Fraud victims said they typically lost about $220.

The FTC will encourage prosecutors to act more aggressively on fraud cases.

The commission has no criminal power but sues businesses to win judgments and stop illegal practices.

The FTC, in its first survey of this kind, asked 2,500 people last year if they were fraud victims, not including identity theft, during the preceding 12 months.

It also asked people if they had their long-distance service switched without their knowledge, called slamming. Almost 14 million people, or 6.5 percent of the U.S. adult population, were slammed in a year, the survey found.

Carolinas consumer protection agencies said billing and credit problems rank among their top complaints.

Bogus credit offers are replacing the work-at-home scams as the region's top fraud, said Tom Bartholomy, president of the Charlotte-area Better Business Bureau.

In the FTC survey, minorities - including blacks, American Indians and Hispanics - were more likely victims of fraud.

The survey also found that people earning less than $40,000 a year and consumers carrying more debt than they could handle made up a higher percentage of fraud victims.

But in contrast, people who thought their income in three years would rise much higher were more susceptible to rip-offs than people who thought they would earn the same income. Anderson attributes this to optimism.

"They believe they are smarter and better able to spot a scam," he said.

In contradiction to conventional wisdom, the survey did not find the highest percentage of fraud victims among the elderly or least educated.

The highest percentages were people ages 24 to 44 and those with some college education.

Bartholomy said these are people who have the income to spend on so-called greed scams, such as foreign lotteries that require fees to claim prizes.

Most victims said they first learned of fraudulent services from print ads, which include mail fliers and posters.

Telemarketing and the Internet were the next most-common sources.

The FTC hopes showing that millions of consumers are defrauded each year will generate more complaints with consumer-protection agencies.

Less than one-third of victims said they complained to anyone about being scammed, and less than 10 percent filed grievances with consumer-protections agencies or the police.

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