Common Scams

Canadian Telemarketing Scams

A number of Colorado consumers, especially seniors, receive unsolicited telephone calls from individuals and companies claiming to represent various charities, government lotteries, or attorneys. These calls are all designed to defraud consumers into believing that they have won a large prize, or that someone is attempting to help them recover money lost in a previous telemarketing scam. These calls are all fraudulent. If you are receiving such calls, there are several places you should file a report:

Phone Busters
Box 686
North Bay, Ontario P1B8J8
Phone: 1-888-495-8501
Fax: 1-888-654-9426 
E-mail: info@phonebusters.com

Phone Busters was established in 1993 as a national deceptive telemarketing call center. Operated by the Ontario Provincial Police, originally, their goal was to prosecute in Ontario, and Quebec under the Criminal Code of Canada. However, now they have grown to facilitate prosecution by United States agencies through extradition and by Industry Canada under the Competition Act. The Competition Act is a federal law that makes deceptive telemarketing a crime.

They have extended their goals further to include educating the public about specific fraudulent and telemarketing pitches, as well as collection and dissemination of victim evidence, documentation, statistics and tape recordings to outside investigations.
The Phone Busters website is an extremely user friendly website. Even if the consumer doesn’t need to contact the agency through the website, recommend that they check it out. Under “How to spot a scam,” it has a list of scams that is interesting and useful.
Please note, that to them, local means Canada.

Consumer Sentinel
600 Pennsylvania Avenue, NW
Washington, DC 20580 

Consumer Sentinel is a consumer complaint database maintained by the Federal Trade Commission. The database was created to allow law enforcement to track consumer complaints involving Internet cons, telemarketing scams and other consumer fraud-related complaints. Consumers can file complaints on-line on the website mentioned above.

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Cashiers Check Scams

More and more consumers are falling victim to a variety of scams that involve the use of forged or fraudulent cashiers checks. The fake cashier’s checks may appear to be authentic -- including the name of a legitimate United States bank and even containing the magnetic routing codes that appear along the bottom of the check.

This is how the typical cashier’s check scam works. A seller is advertising a valuable item over the Internet. A "buyer,” often from a foreign country, contacts the seller about purchasing the item and states that he plans to use a cashier’s check issued from a bank in the United States. The buyer tells the seller that he either mistakenly sent too large a check, or that he will be sending a check for more than the purchase price. In either event, the seller is instructed to immediately wire the "balance" back to the buyer.

The unsuspecting seller then deposits the cashier’s check in their bank account. Under federal banking law, the customer's bank is required to make those funds available to its customer on the first business day after the funds are deposited. So, the unwary seller is able to withdraw the "overpayment" before the check winds its way back to the bank that supposedly issued it. That can take seven days, or even longer. Of course, after wiring the money back to the buyer, the scam artist is nowhere to be found.

Unfortunately for the consumer who withdraws funds from their account after depositing a phony cashiers check, the consumer -- not the bank -- is responsible for those counterfeited funds. That is because, under Colorado law, a consumer depositing a check into their account makes certain warranties to the bank regarding the authenticity of that check. If the check is ultimately dishonored, the seller becomes obligated to pay the amount due on the check. The bank whose name appears on the counterfeit check has no responsibility to honor it.

Here is some basic advice to follow whenever you are offered a cashier’s check:

  • Never accept a cashier’s check for an amount greater than the purchase price. Call the bank that issued the cashier’s check when you receive it.
  • Do not rely on the phone number that the buyer gives you. Locate the bank’s number from a reliable source, such as a phone book.
  • When calling a bank, verify the following information: the check number, the name of the person to whom the check was issued, and the amount of the check.
  • Be sure to wait until you can verify the authenticity of the check prior to giving the buyer the goods. Sometimes these "buyers" wait to give the seller a check on the weekend or when banks are closed, and the check cannot be verified right away.

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Chain Letters

United States Postal Inspection Service
Criminal Investigations Service Center
Attn: Mail Fraud
222 S Riverside Plaza, Suite 1250
Chicago, IL 60606-6100

1745 Stout Street, Suite 900
Denver, CO 80299
Phone: (303) 297-6220
Phone: (303) 313-5320
Fax: (303) 313-5351

There are three criteria for an illegal chain letter:

  • The letter asks for money.
  • There is an element of misrepresentation.
  • The letter purports that you can expect to receive sums of money.

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Charitable Fraud

Colorado Secretary of State, Licensing Division
1700 Broadway, Suite 300
Denver, CO 80290
Phone: (303) 894-2200
Fax: (303) 869-4860
E-mail: sos.licensing@sos.state.co.us

Charities and Paid Solicitors must be registered

Under the Colorado Charitable Solicitations Act anyone who solicits or intends to solicit more than $25,000 in a year must file a registration statement with the Secretary of State Licensing Division before engaging in any fundraising activities in Colorado. This registration requirement applies to:

  • Every charitable organization that intends to solicit funds in Colorado;
  • Every professional fundraising consultant who has or will have custody or control of contributions, and;
  • Every paid charitable solicitor.

This is a change from the previous law, which applied only to paid solicitors. The registration statements must be updated annually, and, in the case of a charity, must contain a financial report for the most recent fiscal year.

Solicitation Campaigns

No later than 15 days before the commencement of a solicitation campaign, a paid solicitor must file a solicitation notice providing a summary of its solicitation contract with a charitable organization, a full and fair statement of the charitable purpose for which the campaign is being conducted and specific identifying information about the paid solicitor. See C.R.S. 6-16-103-105, C.R.S. 6-16-109-111 and 6-1-302 for more information.

Where to report Charity Fraud

Violations of the Charitable Solicitations Act are also considered a “deceptive trade practice” in violation of the Consumer Protection Act, so the Consumer Protection Section of the Attorney General’s Office has jurisdiction. To file a consumer complaint either call 1-800-222-4444 or use our online consumer complaint form.

Right to rescind on charitable pledges/donations

Pledges of cash or purchases made to benefit a non-profit organization may be rescinded within three business days of receiving written confirmation of the contribution from the charity. (Donations of goods such as furniture, clothing, toys, etc. have a one-day cancellation period.)

Disclosures required by fundraisers

Consultants and fundraisers must disclose whether they have, within the immediately preceding five years, been convicted of certain felonies or violations of charitable solicitation laws in Colorado or other states.

Miscellaneous tips for the consumer

Before responding to a request for money, consumers should be familiar with the organization and/or request written information before giving. You can search for registered charities and paid solicitors, and review financial statements, on the Secretary of State’s website at http://www.sos.state.co.us/pubs/bingo_raffles/charitable.htm. If the organization is not familiar to you, check with the Better Business Bureau. They have a listing of charities at www.give.org.

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Counterfeit Products

When shopping online, it is not uncommon for deal-seeking consumers to encounter counterfeit or pirated goods. From designer purses to pharmaceutical products to movies and music, counterfeit and pirated goods can take many forms:

Clothing and accessories — During the holidays or in the run up to special events, consumers often seek out deals on designed products, such as purses or shoes. While searching online, consumers can take several steps to ensure that what they are paying for is a genuine product and not a counterfeit or pirated item.  

Manufacturers often will list on their Web sites authorized retailers of their products. This, too, can be a guide for consumers who want to make sure the product they are paying for is, in fact, a genuine product and not a counterfeit or imitation model.

Medication — High drug prices can often push consumers to search for prescription drugs or other supplements online. Consumers should beware of any drug offers from unlicensed pharmacies or from overseas. These products often are not what consumers think they are buying and can have dangerous additives or other substances in them.

Music and movies — Pirated music and films abound on the Internet. Consumers should always bear in mind that any deal that seems too good to be true, such as unlimited downloads or DVDs, CDs or digital media files for unreasonably low prices, probably are. Consumers also should steer clear of Web sites that offer music or movies before their official release dates.

Tickets — Consumers should beware of offers for tickets to sporting, music or other entertainment events where valuable seats, such as those on the 50-yard line or next to the stage of a concert, are priced well below what they should. Many ticket retailers have sites where consumers can buy tickets from other ticket holders.

Consumers should avoid online sales where they are unable to closely inspect the product they are buying. Goods lacking warranties or, in the case of perishable products, use-by dates also should be viewed as highly suspect. Attention to detail often will allow consumers to tell the difference between a genuine product and a fake.

Legitimate online retailers also encrypt their transactions with their customers. You should always think twice before transmitting your personal information, including credit card numbers, over any Web site that does not encrypt its connections. You can easily discern whether a retailer is encrypting a transaction by looking for a padlock icon on your Web browser.

The Office of the Attorney General has the authority to intervene in cases where consumers are deceived as to the standard, quality or grade of a product. If you believe you have been defrauded through the sale of counterfeit or pirated products, you can file a complaint via www.coloradoattorneygeneral.gov/complaint.

Consumers who believe they have received or purchased counterfeit prescription drugs, also should report this to your local law enforcement, which has jurisdiction under the Imitation and Counterfeit Controlled Substances Act, § 18-18-419, et seq., C.R.S.

Consumers also should report instances of counterfeit or pirated products to the National Intellectual Property Rights Coordination Center as well as the Coalition Against Counterfeiting and Piracy. 


Cramming

“Cramming” is the practice of placing unauthorized, misleading, or deceptive charges on your traditional telephone bill. According to the Federal Communications Commission (FCC) on its website (www.fcc.gov), if a local telephone company, long distance telephone company, or another type of service provider either accidentally or intentionally places unauthorized, misleading, or deceptive charges on your bill, you may have been "crammed". Cramming comes in many forms and is often hard to detect unless you closely review your telephone bill. The following charges would be legitimate if a consumer had authorized them but, if unauthorized, these charges could constitute cramming:

  • Charges for services that are explained on a customer's telephone bill in general terms - such as "service fee", "service charge", "other fees", "voicemail", "mail server", "calling plan", "psychic", and "membership";
  • Charges that are added to a consumer’s telephone bill every month - with a clear explanation of the services provided – such as a “monthly fee ” or “minimum monthly usage fee;”
  • Other charges from a local or long distance company for a service that it provides but, like the other examples, could be cramming if unauthorized

While cramming charges typically appear on consumers’ local telephone bills, they may also be included with bills issued by long distance telephone companies and companies providing other types of services, including cellular telephone, digital telephone beeper and pager services.

For charges related to telephone service between states or internationally, you can file a complaint with the FCC via the Internet at https://www.ftccomplaintassistant.gov/FTC_Wizard.aspx?Lang=en or in writing, by telephone, or by e-mail at:

Federal Communications Commission
Consumer & Governmental Affairs Bureau
Consumer Inquiries and Complaints Division
445 12th Street, SW
Washington, D.C. 20554

Phone: 1-888-CALL-FCC (1-888-225-5322)
TTY: 1-888-TELL-FCC (1-888-835-5322)
Fax: 1-866-418-0232
E-mail: fccinfo@fcc.gov

For charges on your telephone bill for non-telephone-related services, your complaint should be filed with the Federal Trade Commission (FTC). Call 1-877-FTC-HELP, or use the FTC’s online complaint form at https://www.ftccomplaintassistant.gov/FTC_Wizard.aspx?Lang=en. (An example of non-telephone related service is “content” services such as psychic hot-lines.)

For charges for telephone-related services provided within your state, you should contact:

Colorado Public Utilities Commission
External Affairs Section
1560 Broadway, Ste. 250
Denver CO 80203
Phone: 1-800-456-0858
Phone: (303) 894-2070
Fax: (303) 894-2065
E-mail: pucconsumer.complaints@dora.state.co.us

You may now file a complaint against a public utility with the PUC on-line athttp://www.dora.state.co.us/puc/consumer/ConsumerComplaint.htm 

Also, See “Slamming” in this Resource Guide.

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Foreign Lotteries

Solicitations or offers to participate in a foreign lottery are phony. So are telephone calls, e-mails and letters claiming that you have won a foreign lottery. Never send money to anyone claiming to represent a foreign lottery.

Here are some tips from the United States Postal Service about foreign lotteries:

  • It's illegal. A federal statute prohibits mailing payments to purchase any ticket, share, or chance in a foreign lottery.

  • It's impractical. Unlike playing in your state's lottery, you could not be certain that you would obtain the play you paid for.

  • Most foreign lottery solicitations sent to addressees in the U.S. do not come from foreign government agencies or licensees. Instead, they come from "bootleggers" who seek exorbitant fees from those wishing to play. The activities of bootleggers are neither being controlled nor monitored by the government of the country in which they are located.

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Franchises (Business Opportunities)

A lot of consumers are drawn to seminars and infomercials promising income generating full or part-time business opportunities. While there a number of legitimate and successful franchise opportunities available, most are very expensive and require a tremendous amount of energy and effort. Unfortunately, too may people invest nearly all of their savings in opportunities that promise tremendous income with little effort only to lose everything.

Franchises and business opportunities are not regulated in Colorado. The Federal Trade Commission does have a Franchise and Business Opportunity Rule (16 C.F.R. Part 436) that it enforces. This Rule requires franchise and business opportunity sellers to give you specific information about their business opportunity at least 10 days before you pay any money or legally commit yourself to a purchase. That information includes:

  • names, addresses and telephone numbers of at least 10 previous purchasers who live closest to you;
  • a fully audited financial statement of the seller;
  • background and experience of the business' key executives;
  • cost of starting and maintaining the business; and
  • the responsibilities you and the seller will have to each other once you've invested in the opportunity.

If the seller doesn't give you a disclosure document, ask why.

Verify the explanation with an attorney, a business advisor or the FTC by calling its toll-free helpline at 1-877-FTC-HELP (382-4357). Even if the business is not legally required to provide a disclosure document, you still may want one for your own information.

Here are some important tips provided by the FTC:

  • Study the disclosure document and proposed contract carefully.
  • Interview current owners in person.
  • Don't rely on a list of references selected by the company because it may contain shills.
  • Ask owners and operators how the information in the disclosure document matches their experiences with the company.
  • Investigate claims about your potential earnings. Be suspicious of any company that does not show you in writing how it computed its earnings claims.
  • Sellers also must tell you in writing the number and percentage of owners who have done as well as they claim you will.
  • Recognize that once you buy the business, you may be competing with franchise owners or independent business people with more experience than you.
  • Shop around. Compare franchises with other business opportunities. Some companies may offer benefits not available from the first company you considered. The Franchise Opportunities Handbook, published annually by the U.S. Department of Commerce, describes more than 1,400 companies that offer franchises. Contact those that interest you. Request their disclosure documents and compare their offerings.
  • Listen carefully to the sales presentation. Some sales tactics should signal caution. For example, if you are pressured to sign immediately "because prices will go up tomorrow," or "another buyer wants this deal," slow down. Be wary if the salesperson makes the job sound too easy. The thought of "easy money" may be appealing, but success generally requires hard work.
  • Get the seller's promises in writing.
  • Consider getting professional advice before you invest. Ask a lawyer, accountant or business advisor to read the disclosure document and proposed contract.

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Going Out of Business Sales

The State of Colorado does not regulate going out of business or liquidation sales. Businesses may have to obtain a special license or permit from a local city, county or town before conducting such a liquidation sale.

Phony or deceptive going out of business or liquidation sales may violate the Colorado Consumer Protection Act. To file a consumer complaint either call 1-800-222-4444 or use our online consumer complaint form. Consumers may also pursue a small claims action.

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Home Repair Fraud

Phony home repair contractors victimize too many homeowners. A typical scenario involves an uninvited door-to-door solicitation from a contractor claiming to have a “special price” on roofing, siding, windows, asphalt, etc. Of course, the price is only good “right now” and the contractor will need all or most of the price paid “up front.” Some of these phony contractors work alone and others travel together in roaming groups or clans (thus, the name “Travelers”). Once they get your money they usually disappear having done little or none of the promised work. The work that is done is usually of poor quality.

There are some easy things you can do to protect yourself from this type of home repair fraud:

  • Never allow an uninvited contractor into your home to “look around” or make an “inspection.”
  • Never get pressured into making an immediate decision whether to hire a contractor to do any work on your home.
  • Before you spend any significant amount of money on home repairs (say, in excess of $500), obtain bids from at least 3 different contractors.
  • Before you select a final contractor, check his complaint and business history with your local Better Business Bureau. See “Better Business Bureaus” in this Resource Guide.
  • Demand that your final selection sign a written contract that spells out when the work will be started, the quality and type of all materials to be used, and when the work will be completed. Insist on making partial payments under the contract as specific work is completed to your satisfaction.
  • Require your contractor to obtain mechanic’s lien waivers from all suppliers and subcontractors. See “Liens” in this Resource Guide.

If a phony home repair contractor has victimized you, contact your local law enforcement agency or District Attorney. See “District Attorneys” in this Resource Guide.

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Internet Fraud

Federal Bureau of Investigation Field Office
Federal Office Building, Room 1823
1961 Stout Street, 18th Floor
Denver, CO 80294
Phone: (303) 629-7171
Fax: (303) 629-7171

The Colorado Consumer Protection Act applies to representations made over the Internet to the same extent that it applies to representations in any other medium. Therefore, if a consumer believes he/she has been a victim of Internet fraud, he or she may also contact the Consumer Protection Section of the Attorney General’s Office. To file a consumer complaint either call 1-800-222-4444 or use our online consumer complaint form.  

General information about Internet Fraud

Consumers are making an increasing number of purchases over the Internet. The Internet offers great convenience, but consumers who make purchases over the Internet should use the same caution that they do with companies who solicit them through other means. Many of the same tactics used by dishonest people in the past over the phone or through the mail are now used on the Internet. Failure to deliver paid-for items, fraudulent investment offers, multi-level marketing or pyramid schemes, and the familiar postal chain letters are just a few of the old tried-and-true scams which have been converted for use on the Internet. Fraudulent companies can literally disappear into "cyberspace," erasing all traces of their operation and leaving you with few remedies against them. Therefore, especially on the Internet, keep in mind that if it sounds too good to be true, it probably is.

Here are some basic tips when purchasing goods over the Internet:

  • Order from companies with which you have previously dealt or that you know to be legitimate. At a minimum, find out if there is a customer service number that you can contact if there is a problem with the product.
  • Protect your privacy. Do not provide any more personal information than is necessary. Never give out your Social Security number or driver's license number. In addition, be leery if someone asks you to reveal your passwords or any information used to install your online service.
  • Find out in advance what the shipping and handling fees will be for items ordered. Don't assume the seller will choose the least expensive option for you.
  • Check the promised delivery date. By federal law, companies must ship items by the date they promise, or, if no delivery date is stated, within thirty 30 days after the order date. If the seller cannot ship the item within that time, the seller must notify you, give you a chance to cancel the order, and send a full refund if you choose to cancel.
  • Ask ahead of time what the company's refund policy is. Ask to be provided with a copy of this policy.
  • Pay with a credit card. If a product does not arrive or if you believe it was misrepresented, you can dispute the charge with your credit card company. In addition, federal law protects you if someone uses your credit card, not your debit card, in an unauthorized fashion. Do not, under any circumstances, provide your checking account number.
  • Keep a record of your purchase. Write down all information related to the transaction. If ordering online, print out a copy of your order form or any confirmation you receive.
  • If you are considering bidding on an Internet auction item, check out the seller. Contact your local Better Business Bureau to see if the company has any unresolved complaints against it.

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Internet Auctions

Online auctions can be an affordable and convenient way to buy and sell almost any kind of property. However, complaint statistics compiled by the Federal Trade Commission consistently place Internet action fraud at or near the top in annual complaints. Those complaints generally deal with late shipments, no shipments, or shipments of products that aren't the same quality as advertised; bogus online payment or escrow services; and fraudulent dealers who lure bidders from legitimate auction sites with seemingly better deals. The FTC offers a number of rules and tips for buyers and sellers on Internet auction sites on its website: http://www.ftc.gov/bcp/conline/pubs/online/auctions.htm.

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Investment Fraud

Colorado Division of Securities
1560 Lincoln Street, Suite 900
Denver, CO 80203
Phone: (303) 894-2320
Fax: (303) 861-2126

The Colorado Division of Securities within the Department of Regulatory Agencies attempts to protect investors and maintain public confidence in the securities markets while avoiding unreasonable burdens on participants in the capital markets. The Division licenses and regulates stockbrokers and investment advisers and the securities investments they offer, sell and advise about in Colorado. The website includes information for investors to assist them in making sound and reasoned investment decisions.

Information on the license status of specific broker-dealers (firm or individual) can be located on the website for the National Association of Securities Dealers (NASD) at http://www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&nodeId=469.

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Junk E-mail

Colorado Junk Email Law:
The "Colorado Junk E-mail Law" establishes certain restrictions on the transmission of unsolicited commercial electronic mail messages which promote the sale or lease of goods, services or property to Colorado residents. It provides enforcement procedures, monetary remedies, and other protections for e-mail service providers and recipients of unsolicited commercial e-mails. See C.R.S. 6-2.5-101-105 . Among other things, this law:

  • Requires disclosure of the actual point of origin e-mail address of the sender of any unsolicited commercial e-mails.
  • Prohibits falsifying e-mail transmission information or using a third party's Internet address without permission.
  • Requires any unsolicited commercial e-mail to begin with the characters "ADV" to designate it as an advertisement, unless the sender is a tax exempt non-profit entity; a political or polling organization; an organization that communicates with its members, employees, or contractors via e-mail; or the sender has a prior business relationship with the recipient.
  • Requires unsolicited commercial e-mail senders to allow recipients a mechanism to easily remove themselves from the sender's e-mail address list.
  • Prohibits the sending of unsolicited commercial e-mails to any persons who have requested that their names be removed from a mailing list.

Consumer Remedies
The Junk E-mail Law creates a private right of action in small claims, county, or district court for persons receiving unsolicited commercial e-mails and for e-mail service providers whose network or facilities are used to send unsolicited e-mails. Prevailing parties may recover actual damages, attorney fees, and costs. Prevailing parties are entitled to a civil penalty of $10 for each unsolicited commercial electronic mail message violation.

Miscellaneous Provisions
The new law authorizes courts to conduct legal proceedings so that trade secrets are protected and computer systems remain secure. County courts and small claims courts are allowed to enter injunctive relief in cases filed under the law. E-mail service providers that adopt measures to prevent the transmission of unsolicited commercial electronic mail messages prohibited by the law shall be immune from civil liability for their actions. In addition, e-mail service providers are not liable for the mere transmission of bulk, unsolicited commercial electronic mail messages over the provider's computer network.

Federal Law – CAN-SPAM Act of 2003
In 2003 Congress passed the “Controlling the Assault of Non-Solicited Pornography and Marketing Act” (“CAN-SPAM Act”). The Act is designed to deal with unsolicited or “junk e-mail messages delivering either a commercial offer or pornographic images. CAN-SPAM Act prohibits transmission of any e-mail that contains false or misleading header (or “from” line) information and prohibits false or misleading “subject” line information. The Act also requires a functioning return e-mail address or similar mechanism for allowing the addressee to “opt out” of receiving any further messages from the sender. Senders must comply with any opt out requests within 10 business days. The Federal Trade Commission has primary authority to enforce CAN-SPAM Act, although state attorneys general and Internet Service providers also may enforce its provisions. More information on reducing junk e-mail and spam can be found at www.ftc.gov/bcp/menus/consumer/tech/spam.shtm. 

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Junk Faxes

The Colorado Consumer Protection Act (C.R.S., 6-1-702 ) prohibits the sending of an unsolicited facsimile in violation of the Federal Telephone Consumer Protection Act (47 U.S.C. 227). It also prohibits the sending of any facsimile that fails to provide at the top or the bottom margin (1) the date and time the facsimile was sent, (2) an identification of the person sending the facsimile, and (3) the telephone number of the sending machine of the person.

Liquidated damages in the amount of $500 are available for violations of the Consumer Protection Act or under the federal Telephone Consumer Protection Act.

If your residential fax number is on the Colorado no-call list, a complaint can be filed at 800-309-7041 orwww.coloradonocall.com . Consumers should additionally file a complaint with the FCC at 888-225-5322.

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Junk Mail

Mail Preference Service
Direct Marketing Association
1120 Avenue of the Americas
New York, NY 10036
Phone: (212) 768-7277 
Fax: (212) 302-6714

Consumers can write to the Mail Preference Service to stop their name from being sold to most large mailing-list companies. This will not affect lists that already have their name, so consumers need to write to those companies individually to have their name removed from their list. It will stop new companies from getting a consumer's name.

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Living Trusts

A living trust is an estate-planning device that has become increasingly popular in recent years. It is created for the purpose of holding ownership to an individuals assets during his lifetime and distributing those assets at the time of his death. Usually the individual is also the trustee of the living trust and can control the assets even though they belong to the trust. The intent of the trust is to eliminate the need for probate of the individuals estate at his death. It is important to note that living trusts may not be right for everyone. You should contact your personal lawyer or other reputable estate-planning professional for advice.

Be wary of any individuals who try to sell you a living trust program by exaggerating the tax consequences or other costs of a simple will probate in Colorado. Such individuals may also claim that a living trust can be used to shelter your assets so that you can qualify for Medicaid or other low-income benefits programs. Such claims may not be true. Again, it is important for you to seek advice from your personal lawyer or other reputable estate-planning professional before you agree to purchase a “one size fits all” living trust program.

To file a consumer complaint either call 1-800-222-4444 or use our online consumer complaint form.

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Magazine Sales

C.R.S. 6-6-103(2)  covers unsolicited magazine sales and subscriptions. The statute provides that “the sender of a magazine or other periodical shall cancel a subscription if any invoice is returned by the recipient marked ‘cancel’. Cancellation shall also occur when the recipient gives written notice of cancellation to the sender at the sender's address or at the address of the subscription department printed in the periodical, or, if no such department is listed, at the general business address of the periodical.” Within sixty days after notice of cancellation for prepaid subscriptions, the sender shall refund to the recipient any amount paid for the subscription less the amount owed by the recipient for any periodicals, together with the postage thereon, if postage has been charged separately, received before the effective date of the notice of cancellation.

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Mail Fraud

U.S. Postal Inspection Service
1745 Stout Street, Suite 900
Denver, CO 80299-3034
Phone: (303) 313-5320
Toll-free: 1-800-372-8347
Fax: (303) 313-5351

The U.S. Postal Inspection Division handles complaints covering mail fraud.

Consumers should be wary of any of the innumerable offers received through the mail. Sweepstakes, lotteries, or fabulous offers that require money to be paid up front are usually fraudulent. Many other offers are accompanied by products that do not live up to their description. An excellent guide to identifying and preventing mail fraud is available on-line at http://www.usps.com/cpim/ftp/pubs/pub300a_print.htm.

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National Fraud Information Center

National Fraud Information Center
Phone: 1-800-876-7060

Consumers can report telemarketing fraud and report suspicious activity on the Internet with the National Fraud Information Center. Consumers can also submit a complaint online. This is a partnership of the National Association of Attorneys General and the Federal Trade Commission.

Incident reports are entered in the NFIC database and referred to various federal and state regulatory and enforcement agencies: the FBI, Secret Service, U. S. Postal Inspectors, Securities and Exchange Commission, and U. S. Attorneys. You can file a report of suspected telemarketing or Internet fraud on line at http://www.dora.state.co.us/pls/real/CCTS_oWEB.trans_complaint_form.

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Negative Option Plans

A lot of products (especially books, records, videos, and similar products) are sold through what are called “negative option” plans. Under a negative option plan, products are automatically delivered to you unless you affirmatively indicate that you do not want them. Legitimate book or record clubs, for example, will send you a new selection each month unless you previously indicated that you didn’t want the selection or were canceling your participation. Other, illegitimate companies may try and bill you for goods you did not order but were sent to you anyway. Under the Colorado Unsolicited Goods Act (C.R.S., 6-6-101 ) a sender of unsolicited goods is prohibited from sending a bill for such unsolicited goods or any dunning communications. Violation of this section shall constitute a class 2 petty offense, and, upon conviction thereof, the violator shall be punished by a fine of not more than $250.00. See “Unsolicited Goods" in this Resource Guide.

Unless otherwise agreed, where unsolicited goods are delivered to you, you have the right to refuse to accept delivery of the goods and are not bound to return such goods to the sender. If such unsolicited goods are either addressed to or intended for you, they shall be deemed a gift and you may use them or dispose of them in any manner you sees fit without obligation to the sender.

The Federal Trade Commission has a specific Rule dealing with pre-notification negative option plans (16 C.F.R. Part 425) – including book, music and video clubs where you are obligated to continue purchasing merchandise unless you opt out of a specific purchase. Complaints regarding violations of this Rule can also be filed with:

Federal Trade Commission Consumer Response Center
CRC-240 
Washington, DC 20580
Phone: Toll-free 1-877-FTC-HELP (382-4357) or 
1-877-ID-THEFT (438-4338)

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Nigerian Scams

This has become a generic name for a scam that generally involves an appeal from a foreign citizen (usually posing as a dignitary of some third-world country). These letters, facsimiles, and e-mails usually inform the recipient that he/she is allegedly due a large sum of money or asks for their assistance with some form of illegal money laundering. The recipient either will be asked to provide money as "processing fees" or personal financial information to facilitate the transaction. These are always scams and should never be responded to.

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Odometer Fraud

Odometer fraud is the illegal practice of rolling back odometers to make it appear that a motor vehicle has lower mileage than it actually does. Any person who disconnects, resets, or alters the odometer on a motor vehicle with the intent to defraud a subsequent purchaser or lessee is in violation of federal law. See 49 U.S.C. 32701-32711. Penalties can include a civil fine of up to $2000 for each violation and imprisonment for up to three years. Violators may also be liable in a private lawsuit for three times the actual damages or $1500, whichever is greater.

Disclosures

Federal law requires that any person transferring ownership of a motor vehicle to provide the transferee a written disclosure of the cumulative mileage registered on the odometer OR IF THE ACTUAL MILEAGE IS UNKNOWN a disclosure to that effect. That disclosure is to be contained on the title issued in connection with each transfer.

The written disclosure must be signed by the transferor, including his printed name. The transferor must certify that to the best of his knowledge, the odometer reading reflects the actual mileage, or that the odometer reading reflects the amount of mileage in excess of the designed mechanical odometer limit. If the transferor knows that the odometer reading differs from the mileage, he must include a statement that the odometer reading does not reflect the actual mileage and should not be relied upon. In addition, the disclosure must contain the following information:

  • The odometer reading at the time of the transfer (not including tenths of miles);

  • The date of the transfer;

  • The transferor’s name and current address;

  • The transferee’s name and current address; and

  • The identity of the vehicle, including its make, model, year, and body type, and its vehicle identification number.

The written disclosure must also refer to the Federal law and shall state that failure to complete or providing false information may result in fines and/or imprisonment.

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Payment-Processing Scams

Like other work-at-home scams, payment-processing scams prey on the unemployed or consumers looking to make some quick money. The scammers advertise online or via e-mail that they are looking for a part-time payment processor or an accounts payable manager based in the United States. Victims are required to have a personal bank account to “process” the company’s money, which arrive in the form of money orders or checks, and then wire a portion of the money to the foreign company.

Victims could find themselves out thousands of dollars when the money order or check bounces and they have already wired the money to their “employer.” If the check or money order does not bounce, victims could find themselves an unwitting participant in a money-laundering operation.

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Pyramid Schemes

Schemes designed to make money almost exclusively by constantly recruiting new members into the scheme are called “pyramid schemes” because the person at the top of the pyramid earns money from everyone below him (those recruited into the scheme after him). Pyramid schemes generally have fun-sounding names like “people helping people,” the “dinner party” and similar names. Whether they involve the payment of money, the purchase of products, or the making of a “gift,” participation in a pyramid scheme is illegal in Colorado. Not only is it a violation of the Colorado Consumer Protection Act (See C.R.S. 6-1-105(1)(q)) but also is punishable as a misdemeanor upon a first conviction and a felony upon a second and subsequent convictions.

The best way to describe a pyramid scheme, and why they always fail, is through a simple example:

Tom pays $100 (it could be a $100 “gift”) to join a scheme called the “Garden Club.” He recruits two new members into the Club who each pay Tom $100. Each of those two new members recruit two additional members who also pay Tom $100 each. There are now seven members in the Garden Club and Tom has earned a total of $600 ($700 minus his initial $100 investment). Tom then moves out and the new members move one step closer to the top of the pyramid (the one who gets paid) in the order they were recruited in. Each is willing to pay the $100 with the expectation that they too will eventually be at the top of the pyramid and will earn $600 on their initial $100 investment from members recruited after them.

Unfortunately, even a simple pyramid scheme needs an impossibly endless supply of new recruits to keep going. After just three rounds in the above-example, the Garden Club had seven members. In order to complete ten full rounds (i.e., 10 people advance from initial recruitment to final payoff) the Garden Club would have to recruit 512 new members. After only twenty rounds, a staggering 524,288 new recruits would be required to keep the scheme alive. Of course, that means that, numerically, the vast majority of those who get caught in a pyramid scheme never get a single penny back in return.

The primary differences between a pyramid and a true multi-level marketing (MLM) plan include (1) the existence in the MLM of a legitimate product or service; (2) the emphasis in an MLM on product or service sales, not on recruitment, and (3) the legitimate products or services are available and marketed at competitive prices to the general public and not just to new recruits into the plan.

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Slamming

“Slamming” refers to the illegal practice of switching a customer from one long-distance telephone company to another without the customer’s permission. Consumer protection rules created by the Federal Communications Commission (FCC) provide a remedy if you’ve been slammed. According to information provided by the FCC on its website (www.fcc.gov ):

If you HAVE paid your phone bill and discover that you have been slammed: The slamming company must pay your authorized long-distance carrier 150% of the charges it received from you. Out of this amount, your authorized carrier will then reimburse you 50% of the charges you paid to the slammer. For example, if you were charged $100 by the slamming company, that company will have to give your authorized carrier $150, and you will receive $50 as a reimbursement.

Before a telephone company can place an order to switch a customer who agreed to sign up during a telemarketing call, the company must use at least one of the following methods to verify that the customer authorized the switch:

  • Obtain a written or electronic Letter of Agency (LOA) from the customer, which must include (1) the subscriber's billing name and address, (2) each telephone number to be covered by the order to change the subscriber's telephone company, (3) a statement that the subscriber intends to change from his or her current telephone company to this new company, (4) a statement that the sub- scriber designates this new carrier to act as the agent for this change, and (5) a statement that the subscriber understands that there may be a charge for this change. It must also be separate from any promotional material - like prizes, contests, and forms - that come with it.
  • The LOA provided by the carrier must be limited strictly to authorizing a change in telephone carrier and it must be clearly identified as an LOA authorizing the change. The LOA must be written in clear language and the print must be of sufficient size and readable style, generally comparable in type, style, and size to any promotional materials, and must make clear to the consumer that the document, when signed, would change his or her telephone carrier.

Only the name of the telephone carrier that will set the consumer's rates can appear on the letter of authorization. The LOA must also contain full translations if it uses more than one language.

If you have been slammed, you can file a complaint with:

Federal Communications Commission
Consumer & Governmental Affairs Bureau
445 12th Street S.W.
Washington, DC 20554
E-mail: slamming@fcc.gov

Colorado Public Utilities Commission
External Affairs Section
1580 Logan St., OL2
Denver CO 80203
Phone: 1-800-456-0858
Phone: (303) 894-2070
Fax: (303) 894-2065
E-mail: pucconsumer.complaints@dora.state.co.us

You may now file a complaint against a public utility with the PUC on-line athttp://www.dora.state.co.us/puc/consumer/ConsumerComplaint.htm 

Also, See “Cramming” in this Resource Guide.

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Telemarketing

National Fraud Information Center/Internet Fraud Watch
Phone: 1-800-876-7060

Consumers can report telemarketing fraud and report suspicious activity on the Internet with the National Fraud Information Center. The National Consumers League operates NFIC/IFW. Complaints can be filed online or by calling the above phone number. Complaints received by NFIC/IFW are sent to law enforcement agencies across the United States.

See also “National Fraud Information Center” in this Resource Guide.

Consumer Sentinel
600 Pennsylvania Avenue, NW
Washington, DC 20580

Consumer Sentinel is a consumer complaint database maintained by the Federal Trade Commission. The database was created to allow law enforcement to track consumer complaints involving Internet cons, telemarketing scams and other consumer fraud-related complaints. Consumers can file complaints on-line on the website mentioned above.

Office of the Attorney General
Consumer Protection Unit
1525 Sherman Street, 7th Floor
Denver, CO 80203
Phone: 1-800-222-4444 (in Colorado)
Phone: 1-800-332-2071 (out of state)
Fax: (303) 866-4916

Telephone sellers must register with the Attorney General at least 10 days prior to conducting business in the state of Colorado. See C.R.S. 6-1-303. A commercial telephone seller conducts business in the state if the telephone solicitations of prospective purchasers are made from locations in Colorado or solicitation is made of prospective purchasers located in this state. Telephone sellers should ask for the telemarketer registrar, who handles the registration.

Consumers who do not want to receive uninvited commercial telephone solicitations may register on the Colorado and/or the national no-call lists. See “No-Call Laws” in this Resource Guide.

General information about telemarketing fraud

It is estimated telemarketing fraud costs consumers in excess of forty billion dollars each year. It can take many forms: phony prize promotions, credit repair scams, business opportunity and get rich quick schemes, and investment fraud. Also watch out for “sound-alike” charitable solicitations. Older Coloradans are often the ones victimized by telemarketers trying to take advantage of failing health or desperate financial concerns. Also check out the FTC Telemarketing Sales Rule, which can be accessed on the FTC’s website at www.ftc.gov.

Protect yourself from telemarketing fraud

Consumers can protect themselves from telemarketing fraud by:

  • Be suspicious of anyone calling your home or office promising prizes and awards if you agree to participate in their promotion. Most often, those prizes don’t exist.

  • Never give your credit card or bank account number to a stranger calling you on the telephone.

  • Never agree to purchase products sight unseen.

  • Don’t be pressured into participating by claims that “today is the last day of promotion,” or “you must act now or you will lose out.” This is usually just a ploy to get you to buy.

Any commercial telephone seller must allow a purchaser to cancel within three days after the purchaser's receipt of the goods, services or property. You must deliver or send written notice and return any goods.

Cross Border Telemarketing Fraud

See information under “Canadian Telemarketing Scams” in this Resource Guide for more details on cross border telemarketing issues.

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Travelers

See “Home Repair Fraud” in this Resource Guide.

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Work-At-Home

Typical work-at-home scams utilize claims of large earning potential for little expenditure of time. Job opportunities may appear on craigslist, on any number of on-line job sites, or through unsolicited e-mail messages. Examples of some common work-at-home scams include:

 

  • Home Assembly and Crafting – This one has been around for a long time. Certainly there are some legitimate opportunities to turn real craft skills into a home-based business, but be wary of any “opportunity” that promises what may seem to be unrealistic earnings projections and requires YOU to pay the promoter for all materials and kits to be assembled.
  • Envelope Stuffing – Another of the classic ways people are promised a profitable way to earn money at home. After you purchase all of the supplies (envelopes, stamps or stamp meter, etc.) you may have to stuff thousands of envelopes just to break even.
  • Mystery Shopping – Workers are recruited to shop on-line or at local stores and to prepare reviews. Often the first thing they are asked to “shop” is Western Union or MoneyGram. You are sent a check that you deposit in your personal bank account and then wire-transfer most of that money (keeping a fee for yourself). Unfortunately, the check you received is bogus causing you to overdraw your account leaving you responsible to your bank for the deficiency.
  • Reshipping – So-called large multi-national companies recruit people to re-ship products all over the world. You have to ask yourself: “why would any legitimate company need to rely on individual shipping clerks working out of their homes?” The answer is simple – a legitimate company would never operate in this fashion. You are likely participating in an illegal theft or counterfeit enterprise, allowing the truly bad guys to hide behind your address and identity as you ship stolen or counterfeit goods around the globe for them.
  • Payment Processing – Similar to the reshipping scams, these payment processing or payment transfer scams have one of two objectives (and sometimes both): get you to participate in a theft/money laundering scheme or gain access to your personal bank account and other information for identity theft.

 

There are many other dubious work-at-home offers out there. The best thing you can do is be highly skeptical of any offer that (1) is conducted entirely long-distance via e-mail or phone calls, (2) asks you to use your personal bank account or home address for processing shipments or payments (3) promises large earnings with little up-front investment and minimal hours, or (4) requires that you provide personal identifying or financial information.

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