Glossary of Scams and Legal Terms

Scams

Auto Warranty Scam

A scammer calls you with a sales pitch for renewing your auto warranty or insurance policy. The scammer may have acquired information about your car and its existing warranty to make the offer seem more credible.

Charity Scams

Scammers call asking for charitable donations, often after large-scale disasters. They may make up phony charities or spoof a real charity to trick you out of your money.

Chinese Consulate Scam

Scammers, speaking Mandarin, pose as Chinese consulate employees. They may request money for a family member who they say is in trouble or ask for personal information for a parcel delivery. Sometimes they claim the call relates to a criminal investigation. Criminal Liaison Unit, an office within the FTC that works with other law enforcement authorities to prosecute criminal fraud cases.

Disaster Relief Scam

After disasters, scammers may impersonate charities and call seeking donations for disaster aid. Before giving money, verify that the charity is legitimate.

Free Trial Scams

Free-trial product offers you receive over the phone may be too good to be true. A small fee by credit card may be required, which can lead to other unwanted fraudulent charges, or you may be unable to cancel after the trial runs out, forcing you to pay for the product in question.

Employment/Work-at-Home Scams

Bogus job postings, phone calls, recruitment emails and online ads – often illegally using legitimate company names – are all tools scammers use to defraud people seeking employment. Always be suspicious of quick offers with high salaries or pre-payment requests for coaching, training or certifications, and never share personal information until you're certain a job posting is legitimate. Many employment scams also offer advanced payment for supplies. These checks will often bounce, costing you money.

Gift Card Scams

A telltale sign of phone scams is if the caller asks you to make a payment with a gift card. Many scammers prefer this non-refundable and hard to trace form of payment.

Grandparent Scam

A form of imposter scam in which the scammer calls a person, pretending to be a family member in distress and pressuring the person to send money immediately for bail, hospital bills, etc.

Grant Scams

Scammers claim that you are eligible for a government grant and offer to forward it to your checking account as soon as you give them your account information, which they sell or use to steal your money. The scammer may spoof the number of the government agency they claim to be representing, in a Government Grant Scam.

Health Insurance Scam

Scammers call peddling phony health care coverage at discounted rates. Callers sometimes use telephone spoofing to impersonate government officials or insurance companies. Often the products they sell are not insurance, but instead medical discount cards that are not accepted by health care providers. While fraudulent solicitations occur year-round, be especially vigilant during open enrollment season.

Imposter Scam

Scammers contact consumers through a phone call, robocall, email, or other communication falsely claiming to be from the IRS, Social Security Administration, immigration authorities, or some other government agency or entity, demanding immediate payment, often by untraceable methods like gift cards.

Tech Support Scam

A form of fraud in which a scammer contacts a consumer either online or by phone, claiming to be from their computer or software company. Scammers will falsely state that the person's device has been infected by a virus or other form of malware. They then charge people to "fix" the non-existent defect or remote into their device to steal personal information.

Legal Terms

Asset Freeze

In some cases, the FTC will ask a federal court temporarily to deny defendants access to their bank accounts and other financial holdings. The purpose is to prevent defendants from hiding cash, laundering it, or transferring it offshore, so that money for victimized consumers will be available if the court agrees that the defendant has violated the law.

Avalanche clause

In consumer protection cases brought in federal court,  if a defendant claims not to have money to pay a financial judgment, some orders include a clause  specifying that if the financial information the defendants gave the FTC proves to be untruthful, the FTC may ask the judge to order payment of the full judgment.

Biz-opp

Short for "business opportunity." The FTC has brought many case challenging false earnings claims made by sellers of biz-opps. The agency's Business Opportunity Rule requires that sellers of business opportunities give prospective buyers specific information to help them evaluate a business opportunity.

Bureau of Consumer Protection

The branch of the FTC that handles consumer protection matters. The Bureau includes the Director and staff in Headquarters building, as well as several Divisions, including:

  • Advertising Practices – enforces truth-in-advertising laws;
  • Financial Practices – enforces laws on deceptive and unfair practices in the financial services industry;
  • Marketing Practices – enforces the law with respect to Internet, telecommunications, and direct-mail fraud; deceptive spam; fraudulent business, investment, and work-at-home schemes; and the national Do Not Call violations;
  • Privacy and Identity Protection – enforces the law with respect to consumer privacy; breaches of data security; identity theft; and laws and regulations for the credit reporting industry.
  • Enforcement – litigates civil contempt and civil penalty actions to enforce all FTC federal court injunctions and administrative orders that address consumer protections issues;
  • Consumer and Business Education – plans, develops, and implements creative national campaigns to alert consumers to their rights;

CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing Act)

A federal law passed in 2004 that established standards for the sending of commercial e-mail and directed the FTC to enforce those standards.

Competent and Reliable Scientific Evidence

A legal term describing the level of proof companies typically must have in order to substantiate claims they make about their products.

Consumer Education

Supplementing its law enforcement efforts, the FTC publishes educational materials to help consumers make informed decisions and avoid scams, and to help businesses comply with the law.

Consumer Sentinel

A central database of consumer complaints and investigative tools  managed by the FTC and made up of data from hundreds of law enforcement agencies and consumer groups, including the Postal Inspection Service, the Better Business Bureau, and the state attorneys general, as well a number of foreign countries. Much of the complaint information is available to federal, state, local, and international law enforcement agencies to use in investigations and to track trends taking place.

COPPA (pronounced 'COP-uh')

The Children's Online Privacy Protection Act. A federal law enforced by the FTC requiring website owners to take steps to protect children's privacy, including obtaining valid parental permission before collecting personally identifiable information from kids under 12. Not to be confused with the Children's Online Protection Act, called 'COPE-uh,' which has been the subject of constitutional challenges at the Supreme Court.

Corrective Advertising

A legal remedy sometimes imposed by the courts that requires a company to run ads affirmatively correcting deceptive claims made in previous ads.

Cramming

The illegal practice of adding unauthorized charges to consumers' telephone bills or credit cards.

[The National] Do Not Call Registry

Implemented by the FTC in 2003, a national list of phone numbers registered consumers who do not wish to receive telemarketing calls. The rule requires covered telemarketers to "scrub" their lists of numbers on the registry. Violations of the Rule can result in substantial civil penalties.

Enforcement Sweep

A coordinated group of cases targeting a particular kind of consumer protection wrongdoing often brought in conjunction with other federal, state, or local consumer protection authorities.

FACT Act

Also known as FACTA ('FACT' uh'), the Fair and Accurate Credit Transactions Act of 2003. Among other things, the statute gives consumers the right to a free annual credit report at annualcreditreport.com, mandates new procedures aimed at combating identity theft, imposes limits on the sharing of credit information, and requires companies to follow stricter guidelines in disposing of sensitive financial data.

FTC Act

Passed by Congress in 1914, the FTC Act created the Federal Trade Commission and charged the agency with enforcing the Act's ban on "unfair methods of competition" and "unfair or deceptive acts or practices in commerce."

Identity Theft (ID Theft)

Scammers can steal a person's identity (often through the fraudulent use of their social security numbers or credit cards) and rack up debt in the innocent victim's name. The FTC's Consumer Response Center runs an Identity Theft Hotline for impacted consumers.

Mail Order Rule

The common name for the Mail or Telephone Order Merchandise Rule, the law enforced by the FTC that requires catalog companies, online marketers, and other businesses to send merchandise to consumers promptly.

Malware

Pernicious software installed on consumers' devices without their knowledge or without an accurate explanation of the ramifications. These programs can cause devices to crash, and be used by criminals to monitor and control users' online activity, steal personal information, send spam, and commit fraud.

Monetary Remedies

There are two types of monetary remedies available to the FTC:

  • Civil Penalties: A civil penalty is a statutory amount paid by a defendant for violating an FTC rule or order. The FTC does not have statutory authority to assess fines and does not have authority to seek civil penalties for an initial violation of the FTC Act. The FTC can seek civil penalties if a defendant violates a previous FTC order, and for violations of some other, narrower statutes. Claims for civil penalties are filed by the Department of Justice on the FTC's behalf.
  • Consumer Redress: In some cases, the FTC can seek an order requiring that defendants turn over money they obtained illegally so that it can be used to compensate for the harm caused by the defendants' alleged misconduct. The Commission can obtain redress either by court order or through a settlement agreement with the defendants. Frequently, redress funds are sent directly to consumers who lost money due to the misconduct, or it can be paid to the U.S. Treasury if aggrieved consumers can't be identified.

Negative Option Plan

Consumers who enroll in this type of plan are notified of upcoming merchandise shipments and have a set period to decline the shipment. Sellers interpret a customer's silence, or failure to take an affirmative action, as acceptance of an offer. The FTC's Negative Option Rule requires sellers to clearly disclose the terms of any such negative option plan for the sale of goods before consumers subscribe.

Neighbor (Caller-ID) Spoofing

Scammers spoof caller ID information  so that an incoming phone call displays the same initial digits as your own phone number (usually the first six), making it seem like someone else with a local number is trying to reach you. In Mirror Spoofing scams, the caller makes your own phone number appear on your caller ID.

Phishing

A form of fraud in which a scam artist sends an email (or places a phone call) purporting to be from the recipient's bank, internet service provider, or other trusted source and asking for personal information such as credit card or bank account numbers, passwords, or Social Security numbers. Phishing is a common method of perpetrating identity theft.

Ransomware

Cybercriminals take over a consumer's device and block access until the consumer pays a ransom. In many cases, the fraudsters threaten to destroy the hard drive if the consumer doesn't pay by a deadline.

Receiver

In a consumer fraud case, a person appointed by a court to oversee the operations of a business while the FTC matter is ongoing. The court also may direct the receiver to wind down the entity's operations at the end of a case.

Robocall

A pre-recorded telemarketing call. As of September 1, 2009, nearly all telemarketing robocalls to consumers' home and cell phones are illegal.

Smishing

Short for "SMS phishing," smishing often involves text messages claiming to be from your bank or another company. The message displays a phone number to call or a link to click, giving scammers the chance to trick you out of money or personal information.

Spam

Unsolicited commercial email.

Spoofing

Originally referring to the practice of sending a commercial email with a deceptive "FROM:" address in an effort to fool the recipient into thinking the message comes from a trusted source. Spoofing is a violation of both Section 5 of the FTC Act and the CAN-SPAM Act. Now the phrase is also used to describe the practice of abusing the Caller ID system (Caller ID spoofing) so that a false number appears on a consumer's Caller ID screen.

Spyware

A software program installed on consumers' computers without their consent to monitor their computer use. Spyware may be used to send pop-up ads, redirect computers to certain websites, or record keystrokes, which could lead to identity theft.

Telemarketing

Any plan, program, or campaign to sell goods or services through interstate telephone calls. The Telemarketing and Consumer Fraud and Abuse Prevention Act (TCPA) became law in 1994 to combat telemarketing fraud. The FTC enforces the law through the Telemarketing Sales Rule (TSR).

Temporary Restraining Order

Also known as a TRO, this is an order issued by the court, often without a hearing, to prevent an action by a person or company for a short period of time. In a fraud case, FTC staff may get a TRO to prevent a company from continuing to engage in a particular practice, such as engaging in certain kinds of telemarketing or billing consumers' credit cards.

TILA

The federal Truth in Lending Act, enforced by BCP's Division of Financial Practices.