Consumer Fraud

• NCJ Number: 83345
• Author(s): L D Stellwagen
• Date Published: 1982
• Length: 30 pages
• Contract Number(s): J-LEAA-013-78
• Sponsoring Agency: National Institute of Justice (NIJ); US Dept of Justice NIJ Pub
• Corporate Author: Abt Associates, Inc
• Sale Source: National Institute of Justice/
• Publication Type: Survey
• Language: English
• Country: United States of America
• Note: Policy Briefs - Action Guides for Legislators and Government Executives based on research and program development projects of the National Institute of Justice

Annotation

This policy brief reviews State legislation to curb unfair and deceptive consumer fraud practices, summarizes successful legislative enhancements and fraud prevention mechanisms, and describes legislative actions needed to revise and expand existing consumer fraud legislation.

Abstract

A comprehensive State program to combat consumer fraud has two basic elements: a strong Unfair and Deceptive Acts and Practices (UDAP) statute, and specific legislation to cut abuse in targeted industries by developing mechanisms which deter fraud and compensate victimized consumers. States' UDAP statutes prohibit numerous deceptive and fraudulent commercial activities and allow for civil and criminal actions against fraud. Specific statutes, although not part of the UDAP statute, are often enforceable under it. Supplemental legislation includes industry-specific statutes (aimed at one commercial sector with a history of fraud), practice-specific statutes (prohibit sales tactics with a high potential for abuse), and opportunity-scheme statutes (limit situations in which the consumer might get involved in 'get-rich-quick' scams). Each consumer fraud statute should more closely regulate transactions and establish a mechanism to prevent deception or limit losses if fraud occurs. Alternative ways to protect consumers, in addition to State legislation, include increasing consumer access by placing consumer representatives on regulatory boards; establishing statewide ombudsmen; maintaining consumer education programs; and establishing mediation projects, consumer fraud units, and investigative programs. An effective consumer fraud program must curb rampant abuse, facilitate State enforcement, and encourage private enforcement. These three strategies must be meshed into a single system and periodically reassessed. Tables, footnotes, and 21 references are included. State UDAP statute characteristics and examples of State UDAP amendments and specific legislation are appended.