Scams top the list of fastest-growing consumer complaints
Tax ID theft and scams such as phone calls from someone claiming to be with the IRS, your employer or your credit card issuer present a double threat: They’re both the fastest-growing and worst types of consumer complaints, according to a survey released Wednesday.
“If someone calls or emails you unexpectedly claiming to be from the IRS, your utility company, a tech-support company or even your employer, don’t assume that it’s true,” said Susan Grant, director of consumer protection and privacy at the Consumer Federation of America (CFA). “Be especially wary if you’re asked to send money immediately or provide personal information that the person should already have. These are danger signs of fraud.”
The survey, released by the CFA and the North American Consumer Protection Investigators, focuses on state and local agencies. The 33 agencies in 21 states that participated logged more than 200,000 complaints in 2015.
Problems with car sales and service came in at No. 1 for the second consecutive year. Credit and debt issues — including debt collections, a perennial top consumer complaint — moved down a spot to No. 4.
Scams and fraud ranked No. 10 by frequency, but they came in first when agencies were asked about the fastest growing and worst types of complaint.
Scams called the ‘worst’
Scams of all types earned the “worst” badge for their impact on vulnerable people, the low likelihood of recovering money lost and the outrage factor, among other things. Scammers mask their identity and location, often thwarting efforts to recover money or pursue legal remedies.
People typically are vulnerable to scams if they feel scared or think they’re getting something for free (how many sweepstakes or vacations have you been told you “won”?). Among the common scams:
- Tech support: A caller claiming to be with a well-known company such as Microsoft seeks access your computer, warning you will lose files or suffer other harm if you don’t allow it.
- The grandparent scam: A “grandchild” calls an older person, claiming to need quick cash for an emergency in another state or country.
- CEO email: An email that appears to be from your company CEO asks employees to wire money to a foreign supplier for a deal that needs to close immediately — promising you’ll be reimbursed, of course.
- IRS scam: A caller “from the IRS” wants money you owe, now, often in the form of a prepaid card (iTunes gift cards are also being used this way). The caller may warn that you’ll have to pay even more or that law enforcement officers will come to your home if you don’t comply.
- Tax ID theft: In this case, the scammer poses as you and scoops up your tax refund. In many cases, taxpayers don’t find out about it until they can’t file their tax returns because someone beat them to it.
Cars: Buying and maintaining them
Problems with cars — misrepresentations from sellers, lemons, repairs, leasing and towing disputes — led the list of complaints.
Phil Reed, a car-buying expert at NerdWallet, wasn’t surprised. But he says consumers have ways to protect themselves. “For most of us, a car is one of the biggest purchases we make, and it’s smart to do research before taking a test drive,” Reed says. “Whether you are choosing a car, a mechanic or an auto loan, knowing what your options are is crucial to making a smart decision.”
Used car shoppers have more tools available than ever to make sure they get a dependable car at a good price. From vehicle history reports to dealer reviews and car pricing guides, the transaction can be fast, stress-free and possibly even enjoyable.
When it comes to repairs, Reed says good communication with a trusted mechanic is key. Take the time to research the mechanic. You can also research the possible problem by using vehicle owner forums and online reviews. A little knowledge goes a long way toward holding down costs and picking the right service facility.
Debt collection
Debt issues pop up at No. 4 in this survey and were the No. 1 consumer complaint in a report from the Federal Trade Commission in March. Whether it’s for a legitimate debt that’s been inflated by fees and interest or you’re being pursued for a debt you didn’t actually incur, collection efforts can make you fearful and anxious.
It’s important to address the issue, even if you believe you don’t owe the money. Begin by asking for a validation of the debt.
Also, check your free credit reports. You’re entitled to one per year from each of the three major credit-reporting agencies. Fix any errors, because they can lower your credit score; the lower your credit score, the more you’ll have to pay for credit. Information you don’t recognize can also tip you off to potential identity theft.
Remember that consumers have rights. If collectors are calling you at work, they must stop if you request that. Collectors cannot call you late at night or threaten you. Know the facts about debt collection; you may be able to sue if collectors violate the law.
What can you do?
At the top of participating agencies’ wish list is an end to mandatory arbitration clauses. These clauses, often in fine print, ask consumers to sign away their right to go to court. Among other things, they prevent the possibility of class-action lawsuits. Consumer advocates have long criticized such clauses, and the Consumer Financial Protection Bureau has proposed rules that would prohibit them.
Regulation takes time, but consumers can take steps now to protect themselves: It’s always good to verify prices ahead of time, get service agreements in writing, avoid paying upfront, and hang on to your final payment until all services are done to your satisfaction.
The CFPB has tools and resources for consumers, and you may be able to file a complaint on its website. You can also request help from a state or local consumer protection agency when a transaction goes awry. Be especially careful when transacting in the report’s top 10 complaint areas:
- Auto. Misrepresentations in advertising or sales of new and used cars, lemons, faulty repairs, leasing and towing disputes.
- Home improvement/construction. Shoddy work, failure to start or complete the job.
- Utilities. Service problems, billing disputes).
- Credit/debt. Billing and fee disputes, mortgage fraud, credit repair, debt-relief services, predatory lending, abusive debt-collection tactics.
- Retail sales. Deceptive ads, defective goods, problems with gift cards and certificates, rebates and coupons.
- Services. Shoddy or incomplete work, lack of licensing.
- Landlord/tenant. Unsafe or unhealthy conditions, lack of repairs, deposit and rent issues, unfair eviction.
- Furniture, appliances, household goods. Faulty merchandise or repairs, failure to deliver.
- Health products/services. Lack of license, misleading claims.
- (Tie) Fraud. Scams, bogus sweepstakes and lotteries, work-at-home schemes. Internet sales. Deceptive practices, failure to deliver online purchases.
Bev O’Shea is a staff writer at NerdWallet, a personal finance website. Email:boshea@nerdwallet.com. Twitter: @BeverlyOShea.
The article Scams Called ‘Worst’ of Consumers’ Top 10 Complaints originally appeared on NerdWallet.
More from NerdWallet