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African Americans More Likely to Be Victims of Fraud

Tips to Recognize and Avoid a Scam

In a recent survey on fraud, the Federal Trade Commission (FTC) found that African Americans were more likely to have been victims of fraud than non-Hispanic whites. The top three frauds reported by African Americans in the survey were advance fee loan scams, deceptive buyers' club memberships, and fake foreign lotteries.

One way frauds like these happen is over the phone. In fact, telemarketing fraud affects millions of people every year. The FTC offers these tips to help you determine a caller's intentions and avoid these scams:

“Fees First” Credit & Loan Promises

With an advance fee loan, you’re asked to pay an upfront fee for a promised loan — before you actually get it. Scammers typically take the money and run. Signs you may be dealing with an advance fee loan scam include:

A lender who’s not interested in your credit history. Callers who say "Bad credit? No problem!" may not be trustworthy.
"Your loan is guaranteed." Legitimate lenders never guarantee that you’ll receive a loan before you’ve even applied.
A lender who asks you to wire money or pay an individual directly. It’s never a good idea to wire money to a stranger. A legitimate lender won’t ask you to do it.

Buyers' Club Memberships

Whether they promise you a free trial, special deal, or a discount on products and services, a buyers’ club membership becomes a fraud when you’re billed for something you didn’t agree to purchase. Callers sometimes enroll consumers without their knowledge, or offer a membership as a free gift, not mentioning they’ll be automatically enrolled and charged a fee once the free trial period is over. Before you sign up, be sure to:

Ask questions and read the terms and conditions, before you join. Will you be charged if you don’t cancel after a free trial is up? Will you be obligated to buy certain products or spend a certain amount each year?
Do your research to make sure a “free” offer really is free. Sometimes free trials turn into paid subscriptions.
Compare costs. When you factor in shipping and the cost of products after any initial discounts, is it still a good deal?

Sham Sweepstakes & Lotteries

The caller says you’ve won a foreign lottery — one you never knew you entered — and all you have to do is pay a fee to cover the cost of claiming your prize. Or, the caller may just need some personal information to deposit the money. Don’t buy it. You should know that:

If you’ve really won, you won’t be charged for the privilege. Legitimate sweepstakes don't require you to pay insurance, taxes, or shipping and handling charges to collect your winnings. They also shouldn’t be calling to get a credit card, bank account, or Social Security number.
It’s illegal for callers to sell you foreign lottery tickets — and that’s assuming they even intend to enter you. It’s also illegal for you to play.
If you decide to “play,” expect many more bogus offers for lottery or investment opportunities to come your way. Your name may be put on a “sucker list” that fraudsters buy and sell.

The FTC’s new consumer education campaign — Who’s Calling? Recognize & Report Phone Fraud — uses videos, articles, and other resources to educate consumers about how to recognize telemarketing scams. To learn more about how to protect yourself from phone fraud and report a scam, visit ftc.gov/phonefraud. The website is also available in Spanish at ftc.gov/fraudetelefonico.

This article was developed by the FTC as part of its ongoing work to educate consumers about telemarketing fraud. It can be reprinted, posted, or adapted by any business, community, or social organization to help its members, employees, or audiences learn more about fraudulent telemarketing.

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