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Consumer fraud often involves fake organizations

In a lot of consumer fraud cases, those who commit fraud simply try to find something that they know people care strongly about. They'll then invent fake organizations and try to get people to give them money, all with the intent of disappearing with the cash when all is said and done.

For instance, some people create fake charities. They then act like they want to support a good cause -- providing humanitarian aid after an earthquake, for instance -- and people who care about the cause decide to donate. The charity doesn't even have to do much of the work since the event itself is like free advertising.

This type of fraud is especially detrimental because there are probably very real charities that are focusing on the same event. Not only do those who are defrauded lose their money, but so does the real charity and the people it was trying to help.

Another example is a fake lottery. The Federal Trade Commission gets tens of thousands of complaints about this, and they say many of them are aimed at the elderly. Often, a post card or a phone call is used to tell a person he or she won the lottery, but then the caller asks the person to mail over money to pay the taxes, promising to send the full winnings back in return. Obviously, they just take the "tax" money, and they sometimes harass the person to try to get even more.

These examples show how important it is to do your research before giving anyone money. However, if you have been defrauded, you also need to know what legal options you have. Fraud is illegal and consumers can fight to protect themselves when it is suspected.

Source: Investopedia, "The Most Common Types Of Consumer Fraud," Amy Fontinelle, accessed Dec. 08, 2016

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