Not only are Americans faced with a near constant influx of sour news that undermines their confidence in the economy, but scam artists are constantly finding new ways to take advantage of consumers, according to new research.
Fraud, debt collection abuses, and mortgage-related problems ranked among the top five fastest growing consumer complaints, according to a report released Tuesday by the Consumer Federation of America and the North American Consumer Protection Investigators, with home loan issues topping the list of the worst complaints.
Auto sales, credit and debt, and home improvement continue to be the areas where most complaints are fielded, according to the report, with real estate—non-mortgage related problems, including timeshare sales, retirement communities, and fraud—cracking the top 10 for the first time.
The rankings were compiled from almost 300,000 complaints reported to 37 state and local consumer protection agencies across the United States. The agencies were able to recover almost $147 million for duped consumers.
But that pales in comparison to how much money was lost to scams last year. According to multiple sources, consumers reported losing a whopping $1.5 billion in 2011, with the median damage per victim estimated at more than $500.
Here's a closer look at some top consumer scams and tips on how to avoid them:
Autos. Consumers shopping for new and used cars were misled by false advertising, sold lemons, or had leasing and towing disputes. People were also taken advantage of when bringing their vehicle in for repairs.
Nine victims in Florida were duped by a seller on Craigslist claiming to be an auto dealer. Customers who paid the fraudster either never received their vehicles or received junk cars without titles, the report said.
Bottom line: It's risky to buy a car online from a stranger and consumers should never pay a seller in full before receiving the vehicle.
Credit/debt. Complaints about credit card billing and fees continued to surge to the top of the list, followed by a host of mortgage-related problems, including modifications and fraud. Debt relief services, predatory lending, and illegal or abusive debt collection tactics were also included.
[Read: London 2012 by the Numbers.]
One Washington, D.C. resident having trouble keeping up with his mortgage paid a company $3,500 to obtain a mortgage loan modification. Six months later with no progress, the consumer demanded a refund only to find out a professing fee of $495 would be deducted. By the time the consumer contacted the D.C. Attorney General's Office for help, the company was defunct and the consumer was out thousands of dollars.
Bottom line: It's illegal for mortgage relief assistance services to charge consumers until the lender provides a written loan modification offer and the consumer accepts it.
Services. Consumers complained about everything from providers misrepresenting their services, to doing shoddy work, to failing to have the necessary licenses to perform work.
One New Jersey woman purchased a headstone for her sister's grave only to find out two years later, it had never been delivered, despite the fact she had paid $1,900.
Bottom line: Consumers should never pay for a service in full before everything that was promised is done.
Meg Handley is a business reporter for U.S. News & World Report. You can reach her at firstname.lastname@example.org and follow her on Twitter.