A recent federal report dethroned Utah as the nation's capital of consumer fraud. The state dropped from being the 2006 leader to No. 11 in consumer fraud per capita.
Colorado took the crown, with nearly 240 complaints per 100,000 people, for a total of 11,364 complaints. Utah had 193.2 complaints per 100,000 people, for a total of 5,110 complaints. Consumer fraud cost Utahns an estimated $8.08 million in 2007.
Nationally, reports of consumer fraud increased 20 percent in 2007. Identity theft was the most commonly reported form of consumer fraud.
Dr. Warner Woodworth, professor of organizational leadership and strategy, has researched consumer fraud in Utah.
The state may be controlling consumer fraud more effectively, or other states may just be getting worse, he said.
Utah's fraud crisis may not be the root of the problem, Woodworth said. He said Utahns may be more susceptible to fraud for two reasons: they tend to bemore trusting of their friends and neighbors, and they are naïve of the trouble.
He said his research has shown that the real cause of fraud in Utah is not negligence.
"In my analysis, it's all greed," he said.
Scammers convince victims they are eligible to receive a great prize or a great deal, Woodworth said. The greed comes when people convince themselves that they deserve such a deal and even see it as a blessing.
Woodworth said that many fraud problems could be attributed to weak laws and a lack of financial discipline.
"I have students with 20 credit cards," he said.
Technology has now made it much easier for people to participate in fraudulent activities.
"It will continue to be a big problem in Utah because of greed and in our country because of technology," Woodworth said.
Credit card fraud made up 24 percent of identity theft complaints in the FTC's report. Victims do not usually discover fraudulent charges until receiving their credit reports.
"It is a very costly and difficult process to try to get your identity back," said Dr. Mark Zimbelman, associate professor of accounting.
Although consumer fraud is very common, steps can be taken to prevent it.
"Never give out any credit or personal information to anyone that contacted you by e-mail or phone," Zimbelman said. "You should contact them."
Consumers may not be able to prevent fraud, but both Zimbelman and Woodworth suggest consumers monitor their credit reports.
A free credit report can be ordered by visiting www.annualcreditreport.com, calling 1-877-322-8228 or completing the annual credit report request form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Fraud can be reported at www.ftc.gov or 1-877-FTC-HELP. The FTC gathers evidence and alerts law enforcement throughout the United States and Canada. Reporting fraud can prevent others from becoming victims and help to put an end to fraud.
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