How to be an 

Informed 

Consumer

R

e

ad Up!

Federal Trade Commission

www.ftc.gov
About the FTC 

The FTC is the nation’s consumer protection 

agency. Its mission is to protect consumers 

from unfair and deceptive practices in the 

marketplace. The FTC deals with issues that 

impact most Americans. Consumers who 

exercise their right to receive a free credit 

report, sign up for the National Do Not Call 

Registry to block unwanted telemarketing 

calls, or refer to care labels in their clothes, 

product warranties, or stickers showing the 

energy costs of home appliances are taking 

advantage of consumer protections that are 

required by law and enforced by the FTC. To 

file a complaint or get free information on 

consumer issues, visit www.ftc.gov or call 

toll-free, 1-877-FTC-HELP (1-877-382-4357); 

TTY: 1-866-653-4261.

Consumer Tips

Read Up! How to be an Informed Consumer 

provides in-depth information about many 

different consumer issues, as well as tips on 

how to avoid scams and rip-offs. But it is a 

good idea to keep these tip-offs to rip-offs in 

mind before you make any major purchase:

1.Know who you are dealing with. Don’t 

do business with any company that won’t 

provide its name, street address, and 

telephone number.

2.Protect your personal information. Share 

credit card or other personal information 

only when you’re buying from a company 

you know and trust.

3.Take your time. Resist any urge to “act 

now” despite the offer and the terms. Once 

you turn over your money, you may never 

get it back.

4.Read the small print. Get all promises 

in writing and review all the documents 

carefully before you pay any money or sign 

a contract.

5.Never pay for a “free” gift. Throw away 

any offer that asks you to pay for a gift. If 

it’s free or a gift, you shouldn’t have to pay 

for it. Free is free.

6.Know the risks before you spend your 

money. When it comes to investments, 

every potentially high-profit investment is 

high-risk. That means you could lose your 

investment — all of it.
Read Up!

If you’re a Hispanic consumer, you know that you are part of a growing economic force, 

receiving offers for products and services like never before. Having access to practical 

information before spending your money can help you make well-informed decisions. 

The Federal Trade Commission (FTC), the nation’s consumer protection agency, has created Read Up! How to be an Informed Consumer, a comprehensive resource to guide 

you through major purchases and help you understand your rights as a consumer. The 

guide is organized into five main sections to help you quickly find the information you 

need:

• Managing Your Finances: Learn how to establish and use credit, request a free copy of 

your credit report, read your credit score, and avoid credit scams.

• Major Purchases and Investments: Learn the details of buying a house or a car, 

repairing or renovating your home, buying a franchise or starting a business, paying 

for a college education, or purchasing funeral goods and services.

• Your Consumer Rights: Learn the steps to take to resolve disputes, correct billing 

errors, and reduce the number of unwanted telemarketing calls you get.

• Avoiding Scams and Rip-offs: Learn to recognize work-at-home scams, fake 

international driver’s licenses, the green card lottery scam, vacation package scams, 

and misleading advertising claims for health and weight loss. 

• Safety and Security: Learn the basics about protecting your personal information to 

avoid identity theft, practicing online safety, and avoiding online scams.

Reach Out!

Read Up and Reach Out: A Guide to Consumer Education and Outreach is a resource for leaders within the Hispanic community and organizations that work with 

Hispanics to talk about consumer issues. It includes tips on how to:

• include consumer education in your outreach programs

• get other organizations involved in your consumer education efforts

• order free FTC consumer education materials

If you’d like to order a free copy of Read Up! How to Be an Informed Consumer 

or Read Up and Reach Out: A Guide to Consumer Education and Outreach, visit

www.ftc.gov/bulkorder or call 1-877-FTC-HELP. Both are available online at 

www.ftc.gov/espanol.

Read U p

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Table of Contents

Managing Your Finances............................................................................. 1

Credit...................................................................................................... 1

Establishing Credit......................................................................... 1

Understanding Your Credit Report............................................... 2

Credit Scoring................................................................................. 3

Using Credit Cards Responsibly................................................... 3

Debt Collection............................................................................... 3

Avoiding Credit Scams................................................................... 4

Major Purchases and Investments............................................................. 7

Buying a Home...................................................................................... 7

Renovating or Repairing Your Home................................................ 11

Buying a Car......................................................................................... 13

Franchises and Other Business Opportunities............................... 15

A College Education............................................................................ 16

Paying for Funeral Goods and Services............................................ 18

Your Consumer Rights.............................................................................. 19

Mail and Telephone Order Sales....................................................... 19

Door-to-Door Sales.............................................................................. 19

Billing Errors........................................................................................ 20

Unordered Merchandise.................................................................... 20

Resolving Disputes............................................................................. 21

Reducing Unwanted Telemarketing Calls......................................... 22

Avoiding Scams and Rip-Offs.................................................................... 23

Current Scams..................................................................................... 23

Work-at-Home Scams................................................................... 23

International Driver’s License Scams........................................ 26

Green Card/Visa Lottery Scams.................................................. 26

Vacation Package Scams............................................................. 27

Misleading Health and Weight Loss Claims..................................... 29

Medical Clinics............................................................................. 30

Weight Loss Claims...................................................................... 30

Information Security................................................................................. 31

Identity Theft....................................................................................... 31

Practicing Online Safety..................................................................... 32

Phishing Emails............................................................................ 33

Spyware......................................................................................... 33

Email Viruses and Worms............................................................ 33

Internet Auctions......................................................................... 33

More Resources from the Federal Trade Commission (FTC)............... 35

How to Order Publications................................................................ 35

Filing a Consumer Complaint............................................................ 35

how to be an Informed Consumer 

Credit

The decisions you make now about how you 

manage your finances and handle money and 

credit can affect your ability to borrow money 

in the future, as well as the cost of borrowing 

that money. They also can affect your ability 

to rent or buy a place to live, get auto or life 

insurance, or even get a job. The more you 

know about credit, the better prepared you 

will be to manage your finances and establish 

a solid financial foundation. 

When you get credit, you are borrowing 

money from a lender, and you have to pay 

back that money — usually with interest. You 

can get credit in many different ways: through 

a credit card, a personal loan, an educational 

loan, an automobile loan, or a home mortgage. It’s important to maintain a good credit 

record because it can affect how much you 

pay to borrow money. If you have a good record, it means that you are a good candidate 

for a loan — based on your history of paying 

bills, your job history, and your salary — and 

it will be easier for you to get loans at lower 

interest rates. That usually translates into 

lower monthly payments. 

If you have a poor credit history, however, it 

can be a big problem. A poor credit history 

usually results from making payments late or 

borrowing too much money, and it can mean 

two things: 1) that you might have trouble 

getting a car loan, a credit card, a place to live 

and, sometimes, a job or 2) that you will pay a 

lot to get the loans you need.

Establishing Credit

Suppose you never financed a car, a computer, or some other major purchase. How do 

you begin to establish credit? 

• Consider applying for a secured credit card. 

It requires you to open and maintain a bank 

account or other account at a financial 

institution as security for your line of 

credit. Your credit line will be a percentage 

of your deposit, typically from 50 to 100 

percent. Application and processing fees 

are common for secured credit cards. In 

addition, secured credit cards usually carry 

higher interest rates than traditional nonsecured cards.

• You might apply for a credit card issued 

by a local store; local businesses often are 

more willing than national chains to extend 

credit to someone with no credit history. 

Once you establish a pattern of paying 

these bills on time, major creditors might 

be more willing to extend credit to you. 

• Consider asking someone with an 

established credit history — perhaps a 

relative — to co-sign the account if you don’t 

qualify for credit on your own. The co-signer 

promises to pay your debts if you don’t. 

You’ll want to repay any debt promptly so 

you can build a credit history and apply for 

credit in the future on your own.

If your application for credit is turned down, 

the creditor must tell you why. It may be that 

you haven’t been at your current address or 

job long enough. Or your income may not be 

high enough. Different credit card companies 

have different standards. But if several 

companies turn you down, it may indicate 

that you are not ready for the responsibilities 

that come with getting credit.

Managing Your Finances
 READ UP!

 Understanding Your Credit Report

Your credit report contains information about 

where you live, how you pay your bills, and 

whether you’ve been sued, been arrested, 

or filed for bankruptcy. Consumer reporting 

companies collect this information, create a 

credit report, and then sell it to businesses 

that use it to evaluate your applications for 

credit, insurance, employment, or renting a 

home. A consumer reporting company can 

report most accurate negative information for 

seven years and bankruptcy information for 

10 years. 

You have the right to receive a free copy of 

your credit report every year. The Fair Credit 

Reporting Act (FCRA) requires each of the 

nationwide consumer reporting companies 

— Equifax, Experian, and TransUnion — to 

provide you with a free copy of your credit 

report, if you ask for it, once every 12 months. 

You will have to answer some questions to 

prove that you are who you say you are and 

to make sure you get the right credit report.

Free Credit Reports

To order your free credit report, 

visit www.annualcreditreport.com, 

call 1-877-322-8228, or complete the 

Annual Credit Report Request Form 

available at www.ftc.gov/freereports

and mail it to: Annual Credit Report 

Request Service, P.O. Box 105281, 

Atlanta, GA 30348-5281.

After you receive your credit report, read 

it carefully. If you find mistakes in your report, 

you should try to correct that information 

immediately. 

• First, tell the consumer reporting company, 

in writing, what information you think is 

inaccurate. Include copies (NOT originals) 

of documents with your letter to prove 

your point. In addition to providing your 

complete name and address, your letter 

should clearly identify each item you 

dispute in your report. Include a statement 

of the facts, an explanation of why you 

dispute the information, and your request 

that it be removed or corrected. You may 

want to enclose a copy of your report with 

a circle around the items in question. 

• Next, tell the creditor or other information 

provider, in writing, that you dispute an 

item. Be sure to include copies (NOT 

originals) of documents that support 

your position. Many providers specify 

an address for disputes. If the provider 

reports the item to a consumer reporting 

company, it must include a notice of your 

dispute. And if you are correct — that is, if 

the information in the report is found to be 

inaccurate — the information provider is 

not allowed to report it again. 

For more information about correcting 

mistakes in your credit report, visit 

www.ftc.gov/credit and look for How to 

Dispute Credit Report Errors.

What if you find accounts that 

aren’t yours, that you didn’t 

authorize, or that you didn’t 

even know existed? Refer to the 

Identity Theft section on page 31 

of this guide.

Read Up!
how to be an Informed Consumer 

Credit Scoring

Creditors use credit scoring systems to 

determine if you’re a good risk for a credit 

card, an auto loan, or a mortgage. Information 

about you and your credit experiences, such 

as your bill-paying history, the number and 

type of accounts you have, late payments, 

collection actions, outstanding debt, and how 

long you’ve had your accounts, is collected 

from your credit application and your credit 

report. Using a statistical program, creditors 

compare this information to the credit 

performance of consumers with similar 

profiles. A credit scoring system awards 

points for each factor that helps predict who 

is most likely to repay a debt. A total number 

of points — a credit score — helps predict 

how creditworthy you are, that is, how likely 

it is that you will repay a loan and make the 

payments on time.

How to Improve Your Credit Score

Credit scoring models are very complicated 

and often vary among creditors and for 

different types of credit. If one factor changes, 

your score may change — but improvement 

generally depends on how it relates to other 

factors considered by the model. Only the 

creditor can explain what might improve your 

score under the particular model used to 

evaluate your credit application. 

Nevertheless, scoring models generally evaluate the following types of information in your 

credit report: 

• whether you paid your bills on time 

• your outstanding debt 

• how long you have been paying bills

• whether you applied for new credit recently 

• the number and types of credit accounts 

you have

Using Credit Cards Responsibly

A credit card makes it easy to buy things now 

and pay for them later. If you’re not careful, 

you can lose track of how much you’ve spent 

by the time the bill arrives. And if you don’t 

pay your entire bill, you’ll probably have to 

pay finance charges on the unpaid balance. 

If you continue to charge while you have an 

outstanding balance, your debt will grow. 

Before long, your minimum payment will 

cover only the interest. Not only could it take 

years to catch up, but you will have paid 

much more for the items than they originally 

cost. If you start having trouble repaying your 

debt, you could harm your credit record.

Debt Collection 

If you’ve already established your credit 

history but are having trouble making your 

monthly payments — or if you’re being contacted by debt collectors — you might feel 

overwhelmed. But there are things you can 

do to manage your debt. 

1. Develop a Budget: Make a list of how 

much money you bring in and how much 

money you spend on a monthly basis. Start 

by listing your income from all sources. 

Then, list your “fixed” expenses — those 

that are the same each month — like 

mortgage payments or rent, car payments, 

and insurance premiums. Next, list the 

expenses that change — like entertainment, 

recreation, and clothing. Writing down 

all your expenses, even those that seem 

insignificant, can help you track your 

spending patterns, identify necessary 

expenses, and figure out priorities. The goal 

is to make sure you can make ends meet on 

the basics like housing, food, health care, 

insurance, and education.
 READ UP!

2.Contact Your Creditors: Contact your 

creditors immediately if you’re having 

trouble making your payments. Tell them 

why it’s difficult for you, and try to work out 

a modified payment plan that reduces your 

payments to a level you can manage. Don’t 

wait until your accounts have been turned 

over to a debt collector. At that point, your 

creditors have given up on you.

3. Dealing with Debt Collectors: The Fair 

Debt Collection Practices Act is the 

federal law that dictates how and when 

a debt collector may contact you. A debt 

collector may not call you before 8 a.m., 

after 9 p.m., or while you’re at work if the 

collector knows that your employer 

doesn’t approve of the calls. Collectors 

may not harass you, lie, or use unfair 

practices when they try to collect a 

debt. And they must stop contacting you 

if you ask them to in writing. For more 

information, visit www.ftc.gov/credit

and see Fair Debt Collection.

4.Credit Counseling: If you’re not disciplined 

enough to create a workable budget and 

stick to it, if you can’t work out a repayment 

plan with your creditors, or if you can’t 

keep track of mounting bills, consider 

contacting a credit counseling organization. 

Reputable credit counseling organizations 

can advise you on managing your money 

and debts, help you develop a budget, 

and offer free educational materials and 

workshops. They should send you free 

information about the services they 

provide without requiring you to provide 

any details about your situation. If a firm 

doesn’t do that, consider it a warning sign 

and go elsewhere for help. For more 

information, visit www.ftc.gov/credit

and see Fiscal Fitness: Choosing a 

Credit Counselor.

5.Consolidate Your Debt: You may be able to 

lower your debt payments by consolidating 

your debt through a second mortgage or a 

home equity line of credit. But remember 

that these loans require you to use your 

home as collateral. If you can’t make the 

payments — or if your payments are late 

— you could lose your home. For more 

information, visit www.ftc.gov/credit and 

see Knee Deep in Debt.

Avoiding Credit Scams

If you are having trouble managing your 

debt or setting up your first account, you 

might be tempted by offers that guarantee 

to provide you with a loan, wipe out 

negative information on your credit report, 

or consolidate your debts. Before you do 

business with any company, check it out with 

your local consumer protection agency or the 

Better Business Bureau where the company is 

located. Some common credit scams involve 

offers for debt relief, guarantees that you’ll 

get credit if you pay a fee first, or offers to 

remove accurate negative information from 

your credit report.
how to be an Informed Consumer 

Offers for Debt Relief

If you are trying to get solvent, be on the alert 

for advertisements that offer quick fixes like 

these:

•	“Consolidate your bills into one monthly

payment without borrowing”

•	“STOP credit harassment, foreclosures,

repossessions, tax levies and garnishments”

•	“Keep your property”

•	“Wipe out your debts! Consolidate your bills!

How? By using the protection and assistance

provided by federal law. For once, let the law

work for you!”

These services usually involve filing for 

bankruptcy relief, which can hurt your credit 

and cost you attorneys’ fees. If you’re having 

trouble paying your bills:

• talk with your creditors 

• contact a credit counseling service 

• consider a second mortgage or home equity 

line of credit, but remember the risk: if you 

can’t make the payments, you could lose 

your home

Advance-Fee Loan Scams

Some scam artists target consumers with bad 

credit or no credit. In exchange for a fee you 

pay in advance, they “guarantee” that you will 

get the credit you want as a credit card or a 

personal loan. The fee you pay in advance 

may be as high as several hundred dollars. 

The FTC has shut down many of these companies because they didn’t deliver on their 

promise. Resist the temptation to follow up 

on an advance-fee loan guarantee; it may be 

illegal. A legitimate lender never guarantees 

in advance that you’ll get a loan. 

Advance-Fee Loans

Ads for advance-fee loans often 

appear in the classified ad section of 

local and national newspapers and 

magazines. You also may get them in 

the mail, hear them on the radio, or see 

them on television. 

Keep these tips in mind when you see 

or hear ads that promise easy credit, 

regardless of your credit history: 

• Don’t pay for the promise of a loan. 

It’s illegal for companies doing 

business by phone in the U.S. to 

promise you a loan and ask you to pay 

for it before they deliver. 

• Ignore any ad — or hang up on any 

caller — that guarantees a loan in 

exchange for a fee in advance.

• Legitimate lenders do not “guarantee” 

that you will get a loan or a credit card 

before you apply, especially if you have 

bad credit, a bankruptcy on your credit 

report, or no credit history. 

• Never give out your credit card 

account number, bank account 

information, or Social Security 

number over the telephone unless 

you are familiar with the company and 

know why they need your information. 

• Don’t make a payment for a loan 

directly to an individual; no legitimate 

lender would ask you to do so. 

• Don’t use a wire transfer service or 

send money orders for a loan. You have 

little recourse if there’s a problem with 

a wire transaction. Legitimate lenders 

don’t pressure you to wire funds. 

• If you are not absolutely sure who you 

are dealing with, get the company’s 

number from the phone book or directory assistance, and call to make sure 

you’re dealing with the company you 

think you are. Some scam artists have 

pretended to be the Better Business 

Bureau or another legitimate organization, and some even pay people to 

pretend to be references.
 READ UP!

Credit Repair Scams

You see the ads in newspapers, on TV, and 

on the Internet. You hear them on the radio. 

You get fliers in the mail. You may even get 

calls from telemarketers offering credit repair 

services. They all make the same claims:

•	“Credit problems? No problem!”

•	“We can erase your bad credit.

100% guaranteed.”

•	“Create a new credit identity — legally.”

•	“We can remove bankruptcies,

judgments, liens, and bad loans from

your credit file forever!”

Don’t believe these statements. They’re 

just not true. No one can remove accurate 

negative information from your credit report. 

Only time, a conscientious effort, and a plan 

for repaying your debt will improve your 

credit report.

Read Up!

For more information on these and other important credit issues, visit www.ftc.gov/credit.

Reach Out!

• Conduct a series of workshops and dedicate one session to each of these topics: 

establishing credit, understanding your credit report, credit scoring, using credit cards 

responsibly, debt collection, and avoiding credit scams.

• Tell your friends, family, and colleagues about their right to get a free credit report. If 

they want to learn more, give them a copy of Your Access to Free Credit Reports. You 

can print it from www.ftc.gov/credit or order free copies by calling 1-877-FTC-HELP or 

visiting www.ftc.gov/bulkorder.

If you are considering responding to an offer 

to “repair” your credit, think again. Don’t do 

business with any company that: 

• wants you to pay for credit repair before 

they provide any services.

• does not tell you your legal rights and what 

you can do for yourself — for free. 

• recommends that you not contact a 

consumer reporting company directly. 

• suggests that you try to invent a “new” 

credit identity by applying for an Employer 

Identification Number, and that you use it 

instead of your Social Security number. 

This is common and illegal.

• advises you to dispute all information 

in your credit report or take any action 

that seems illegal, such as creating a new 

credit identity. If you follow illegal advice 

and commit fraud, you may be subject to 

prosecution. 

For more information about repairing 

credit on your own, visit www.ftc.gov/credit

and look for Credit Repair: Self Help May 

Be Best.
how to be an Informed Consumer 

Making a major purchase like a home or a car 

can be a stressful and complex process. But if 

you learn about your options, you can make a 

well-informed decision.

Buying a Home

For many people, being able to buy a house 

or condo represents the realization of the 

American dream. Before making what is likely 

to be the biggest purchase decision of your 

life, first make sure to understand the different types of mortgage products that are available. Then, you can choose the one that best 

meets your needs. 

Shopping around for a home loan or mortgage 

will help you get the best financing deal. 

A mortgage — whether it’s a home purchase, 

a refinancing, or a home equity loan — is a 

product, just like a car, so the price and terms 

are negotiable. Compare all the costs involved 

in getting a mortgage, including points, fees, 

and down payments. Shopping, comparing, 

and negotiating could save you thousands 

of dollars. 

Points

Points are fees paid to the lender or broker 

for the loan and often are linked to the 

interest rate; usually the more points you 

pay, the lower the rate. One point equals 

one percent of the loan amount.

• Check your local newspaper or lender 

for information about current rates 

and points. 

• Ask for points to be quoted to you as 

a dollar amount — rather than just as 

the number of points — so that you will 

actually know how much you will have 

to pay. 

Fees

A home loan often involves many fees, 

such as loan origination or underwriting 

fees, broker fees, and transaction, settlement, and closing costs. Each lender 

or broker should be able to give you an 

estimate of its fees. Many of these fees 

are negotiable. Some fees are paid when 

you apply for a loan (such as application 

and appraisal fees), and others are paid at 

closing. In some cases, you can borrow the 

money you need to pay these fees, but doing so will increase your loan amount and 

total costs. “No cost” loans sometimes are 

available, but they usually involve higher 

interest rates. 

Major Purchases 

and Investments

Terms to Understand

Get Information from Several Types 

of Lenders

Home loans are available from several types of 

lenders — savings banks, commercial banks, 

mortgage companies, and credit unions. Different types of lenders may quote you different prices, so contact several of them to make 

sure you’re getting the best price. 

You can also get a home loan through a 

mortgage broker. Brokers find a lender for 

you. A broker’s access to several lenders can 

mean a wider selection of loan products and 

terms you can choose from. Brokers generally 

contact several lenders regarding your application, but they are not obligated to find the 

best deal for you unless they have contracted 

with you to act as your agent. Contact more 

than one broker, just as you contact more 

than one bank or thrift institution.
 READ UP!

Get All Important Cost Information 

in Writing

Know how much of a down payment you can 

afford, and find out all the costs involved in 

the loan. Knowing only the amount of the 

monthly payment or the interest rate is not 

enough. Ask for information from each lender 

about the same loan amount, loan term, and 

type of loan, and get it in writing. 

When you ask for information about rates, ask 

each lender:

• for a list of its current mortgage interest 

rates and whether the rates being quoted 

are the lowest for that day or week. 

• whether the rate is fixed or adjustable. 

When interest rates for adjustable-rate 

loans go up, the monthly payment usually 

goes up, too. 

• how the rate and your loan payment will 

vary if the rate quoted is for an adjustablerate loan, including whether your payment 

will be reduced when rates go down. 

• about the loan’s annual percentage rate 

(APR). The APR takes into account not 

only the interest rate, but also points, 

broker fees, and other credit charges that 

you may be required to pay, expressed as 

a yearly rate. 

Once you are satisfied with the terms you 

have negotiated, get a written lock-in of the 

terms — this will guarantee you a specific 

interest rate if you close on the loan within 

a period of time, usually 60 or 90 days. The 

lock-in should include the rate that you have 

agreed to, how long the lock-in lasts, and the 

number of points you will pay. A fee may be 

charged for locking in the loan rate but this 

fee may be refundable at closing. Lock-ins can 

protect you from rate increases while your 

loan is being processed; if rates fall, however, 

you could end up with a less favorable rate. If 

that happens, try to negotiate a compromise 

with the lender or broker.

Down Payments and 

Private Mortgage Insurance

Some lenders require 20 percent of the 

home’s purchase price as a down payment. 

However, many lenders now offer loans that 

require less than that — sometimes as little 

as 5 percent on conventional loans. If you 

can’t make a 20 percent down payment, 

lenders usually require you to buy private 

mortgage insurance (PMI) to protect them in 

case you don’t make your payments. When 

government-assisted programs like FHA 

(Federal Housing Administration), VA (Veterans Administration), or Rural Development 

Services are available, the down payment 

requirements may be substantially lower. 

If PMI is required for your loan, ask what the 

total cost of the insurance will be, how much 

your monthly payment will be, including 

the PMI premium, and how long you will be 

required to pay PMI. 
how to be an Informed Consumer 

Mortgage Discrimination

Fair lending is required by law. The Equal 

Credit Opportunity Act (ECOA) prohibits 

lenders from discriminating against credit 

applicants in any aspect of a credit transaction on the basis of race, color, religion, 

national origin, sex, marital status, age, 

whether all or part of the applicant’s income 

comes from a public assistance program, 

or whether the applicant has in good faith 

exercised a right under the Consumer Credit 

Protection Act. 

The Fair Housing Act prohibits discrimination in residential real estate transactions 

on the basis of race, color, religion, sex, 

handicap, familial status, or national origin. 

Under these laws, you cannot be refused a 

loan based on these characteristics, nor be 

charged more for a loan or offered less favorable terms based on such characteristics.

If you think you’ve been discriminated 

against: 

• complain to the lender. Sometimes you can 

persuade the lender to reconsider your 

application. 

• check with your state Attorney General’s 

office to see if the creditor violated state 

laws. 

• contact a local private fair housing 

group and report the violations to the 

appropriate government agency. If your 

mortgage application is denied, the lender 

must give you the name and address of the 

agency to contact. 

For ECOA violations involving mortgage 

and consumer finance companies, file a 

complaint with the FTC at www.ftc.gov/

complaint or 1-877-FTC-HELP.

Lender Do’s and Don’ts 

Lenders must: 

• consider reliable public assistance income 

the same as other income. 

• consider reliable income from part-time 

employment, Social Security, pensions, 

and annuities. 

• consider reliable alimony, child support, 

or separate maintenance payments, if you 

choose to tell them about it. A lender may 

ask you for proof that you receive this 

income consistently. 

• accept someone other than your spouse 

if a co-signer is needed. If you own the 

property with your spouse, he or she may 

be asked to sign documents allowing you to 

mortgage the property. 

Lenders cannot: 

• discourage you from applying for a mortgage or reject your application because 

of your race, national origin, religion, sex, 

marital status, or age, or because you receive public assistance income.

• consider your race, national origin, or sex, 

although you will be asked to disclose this 

information voluntarily to help federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status 

and whether you have the right to remain in 

the country long enough to repay the debt. 

• impose different terms or conditions, such 

as a higher interest rate or larger down 

payment, on a loan based on your race, 

sex, or other prohibited factors.

• consider the racial composition of the 

neighborhood where you want to live. 

This also applies when the property is 

being appraised. 

• ask about your plans for having a family. 

But they can ask questions about expenses 

related to your dependents. 

• refuse to purchase a loan or set different 

terms or conditions for the loan purchase 

based on discriminatory factors.

• require a co-signer if you meet their 

standards.
10 READ UP!

Credit Problems? Still Shop, 

Compare, and Negotiate

Don’t assume that minor credit problems or 

difficulties stemming from unique circumstances like illness or temporary loss of income will limit your loan choices to high-cost 

lenders. If your credit report contains negative information that is accurate, but there 

are good reasons to trust that you will repay 

a loan, explain your situation to the lender 

or broker. If you cannot explain your credit 

problems, you will probably have to pay more 

than borrowers who have good credit histories. But don’t assume that the only way to 

get credit is to pay a high price. Ask how your 

credit history affects the price of your loan 

and what you can do to get a better price. 

Take the time to shop around and negotiate 

the best deal that you can. Credit problems 

or not, it’s always a good idea to review your 

credit report for accuracy and completeness 

before you apply for a loan. 

Read Up!

For details about different types of home 

mortgages, visit www.ftc.gov and read Looking for the Best Mortgage.

Reach Out!

• If you know someone who is looking for a home, give them a copy of Looking for the 

Best Mortgage.

• Partner with the local housing authority to do a briefing session on the ins and outs of 

home mortgages and give out copies of Looking for the Best Mortgage. 

• Partner with a local law school to do a briefing session on what’s legal — and what’s 

not — in the mortgage lending area.

After you purchase a home, you’ll 

have to pay to keep it cool or warm. And 

home heating and cooling bills can add 

up to hundreds of dollars every month. 

For tips on how to save money on 

heating and cooling your home, visit 

www.ftc.gov/energysavings. 
how to be an Informed Consumer 11

Renovating or Repairing Your Home

Once you own a home, you might consider 

a renovation or simply repairing some items 

that need attention. If you are not going to do 

the work yourself, finding a competent and 

reliable contractor can be the first step to a 

successful and satisfying home 

improvement project.

Your home may be your most valuable 

financial asset and that’s why it’s important 

to be cautious when you hire someone to 

work on it. Home improvement and repair 

and maintenance contractors often advertise 

in newspapers, the Yellow Pages, and on the 

radio and TV. But don’t consider an ad an 

indication of the quality of a contractor’s 

work. Your best bet is a reality check from 

friends, neighbors, or co-workers who 

have had improvement work done. Get 

written estimates from several firms. Ask 

for explanations for price variations. Don’t 

automatically choose the lowest bidder.

Before you hire a contractor, interview them 

and ask some questions.

• How long have you been in business? 

• Are you licensed and registered with the 

state? 

• How many projects like mine have you 

completed in the last year? 

• Will my project require a permit? 

Ask for a list of references and talk with former 

clients directly. They can help you decide if a 

particular contractor is right for you. Ask if: 

• you can visit their home to see the 

completed job

• they were satisfied with the project and if it 

was completed on time

• there were unexpected costs and if so, what 

they were

• they would recommend the contractor or 

use the contractor again
12 READ UP!

Not all contractors operate within the 

law. Here are some tip-offs to potential 

rip-offs. Be wary of a contractor who: 

• solicits door-to-door

• just happens to have materials left over 

from a previous job

• only accepts cash payments

• asks you to get the required building 

permits

• does not list a business number in the 

local telephone directory

• tells you your job will be a 

“demonstration”

• pressures you for an immediate 

decision

• offers exceptionally long guarantees

• asks you to pay for the entire job 

up front

• suggests that you borrow money from a 

lender the contractor knows

Read Up!

For more information about renovating or repairing your home and scams to watch out 

for, visit www.ftc.gov and look for Home Sweet Home Improvement.

Reach Out!

Place a copy of Home Sweet Home Improvement in public meeting areas like the lobby 

of a community center, public computer rooms at your local library, your church’s hall, 

and anyplace else where people go for information.

If you have a problem with your home 

improvement project, try to 

resolve it with the contractor. Follow up 

any phone conversations with a letter. 

Send it by certified mail and request a 

return receipt as proof that the company 

received your letter. Keep a copy for 

your files.

If you can’t resolve the situation, contact 

one of the following organizations for 

more information and help:

• your state and local consumer 

protection offices

• your local Better Business Bureau

• your state or local Builders Association 

and/or Remodelers Council

Recognize and Avoid Home Repair Scams
how to be an Informed Consumer 13

Buying a Car

For most consumers, a car is a very big purchase. Before you shop for a new car, make 

sure you know how to make a smart deal. Think 

about what car model and options you want 

and how much you’re willing to spend. Do some 

research. You’ll be less likely to feel pressured 

into making a hasty or expensive decision and 

more likely to get a better deal. Shop around 

and plan to negotiate on price. Dealers may be 

willing to bargain on their profit margin, often 

between 10 and 20 percent. Usually, this is the 

difference between the manufacturer’s suggested retail price (MSRP) and the invoice price.

Buying a Used Car

If you need transportation and have a limited 

budget, buying a used car from an individual 

or a dealer might be a good option. But buying 

a car from a private individual is different than 

buying from a dealer because private sales 

generally aren’t covered by federal law, or by 

“implied warranties” of state law. A private sale 

probably will be “as is” — you’ll have to pay 

for anything that goes wrong after the sale.

The Used Car Rule requires dealers to post a 

Buyers Guide in every used car they offer for 

sale. The Buyers Guide gives a great deal of 

information, including:

• whether the vehicle is being sold “as is” or 

with a warranty

• what percentage of the repair costs a dealer 

will pay under the warranty

• the fact that spoken promises are difficult 

to enforce

• the major mechanical and electrical 

systems on the car, including some of the 

major problems you should look out for

The Buyers Guide also tells you to: 

• get all promises in writing

• keep the Buyers Guide for reference after 

the sale

• ask to have the car inspected by an 

independent mechanic before the purchase

Whether you buy a used car from a dealer or an 

individual, examine the car using an inspection 

checklist. You can find checklists in magazines 

and books and on Internet sites that deal with 

used cars. Test drive the car under different 

road conditions — on hills, highways, and in 

stop-and-go-traffic; ask for the car’s maintenance records from the owner, dealer, or repair 

shop; and hire a mechanic to inspect the car. 

Auto negotiations have a vocabulary of their 

own. Here are some terms you may hear 

when you’re talking price. 

• Invoice Price is the manufacturer’s initial 

charge to the dealer. This usually is 

higher than the dealer’s final cost because 

of rebates, allowances, discounts, and 

incentive awards. Generally, the invoice 

price should include freight (also known 

as destination and delivery). If you’re 

buying a car based on the invoice price 

(for example, “at invoice,” “$100 below 

invoice,” “two percent above invoice”) and 

freight is included, make sure freight isn’t 

added to the sales contract. 

• The Monroney sticker shows the base 

price, the manufacturer’s installed options 

with the manufacturer’s suggested 

retail price (MSRP), the manufacturer’s 

transportation charge, and the fuel 

economy (mileage). Federal law requires 

that this label be placed on the car window; 

only the buyer can remove it. 

• Dealer Sticker Price, usually on a 

supplemental sticker, is the Monroney 

sticker price plus the suggested retail 

price of dealer-installed options, such 

as additional dealer markup (ADM) or 

additional dealer profit (ADP), and 

dealer preparation.

• Base Price is the cost of the car without 

options, but with standard equipment and 

factory warranty. This price is printed on 

the Monroney sticker. 

Learning the Terms
14 READ UP!

Financing Your Car

If you decide to borrow money to buy your 

car, be aware that the financing offered by the 

dealer, even if the dealer contacts lenders on 

your behalf, may not be the best deal you can 

get. Contact other lenders directly. Compare 

the financing they offer you with the financing the dealer offers you. Because offers vary, 

shop around for the best deal, comparing the 

annual percentage rate (APR) and the length 

of the loan. When negotiating to finance a car, 

don’t focus only on the monthly payment. 

The total amount you will pay depends on the 

price of the car you negotiate, the APR, and 

the length of the loan.

Considering a Service Contract

A service contract that you may buy with 

a new car provides for the repair of certain 

parts or problems. This type of contract is 

offered by manufacturers, dealers, or 

independent companies and may or may 

not provide coverage beyond the 

manufacturer’s warranty. A warranty is 

included in the price of the car while a 

service contract costs extra.

Before deciding to purchase a service contract, read it carefully to get the answers to 

these questions. 

• What’s the difference between the coverage 

under the warranty and the coverage under 

the service contract? 

• What repairs are covered? 

• Is routine maintenance covered? 

• Who pays for the labor and parts? 

• Who performs the repairs? Can repairs be 

made elsewhere? 

• How long does the service contract last? 

• What are the cancellation and refund 

policies? 

Read Up!

For more information about 

buying a new or used car, visit 

www.ftc.gov.

Reach Out!

Organize a car buyer’s information fair and 

give out free helpful publications about 

buying a new car, reading car ads, alternative fuel vehicles, used car auctions, 

vehicle financing, improving gas mileage in 

your vehicle, and leasing or renting a car. 

Print them at www.ftc.gov.

Drive Down the Cost 

of Owning a Vehicle

The way you fuel, drive, and maintain 

your car — whether new or used — impacts the cost of operating it. You can 

lower the cost of driving if you:

• combine errands and avoid unnecessary idling 

• use overdrive gears and cruise control

• stay within the posted speed limits

• carpool 

• use the recommended octane level for 

your car 

• steer clear of “gas saving” gadgets or 

any gizmo that promises to improve 

your gas mileage 

• keep your tires properly inflated and 

aligned and your engine tuned according to your owner’s manual

• change your oil and use the grade 

of motor oil as recommended in the 

owner’s manual 

• check and replace air filters regularly

• remove extra weight from your trunk
how to be an Informed Consumer 15

Franchises and Other 

Business Opportunities

For many entrepreneurs, franchises are a 

popular way to start a business. A franchise 

typically enables you, the investor or “franchisee,” to operate a business. By paying a 

franchise fee, which may be thousands of 

dollars, you are given a format or system 

developed by the company (franchisor), 

the right to use the franchisor’s name for a 

period of time, and assistance. For example, 

the franchisor may help you find a location 

for your outlet; provide initial training and an 

operating manual; and advise you on management, marketing, or personnel. Some franchisors offer continuing support like monthly 

newsletters, a toll-free telephone number for 

technical assistance, and periodic workshops 

or seminars.

While buying a franchise may reduce your 

investment risk by enabling you to associate 

with an established company, it can be costly. 

You also may be required to give up significant 

control over your business, while taking on 

contractual obligations with the franchisor. 

Franchise and Business Opportunity Rule 

If you’re a prospective business owner and 

you are considering buying a franchise or 

investing in another business opportunity, 

investigate it carefully. The law requires franchise and business opportunity sellers to give 

you specific information to help you make an 

informed decision. 

A franchise or business opportunity seller 

must give you a detailed disclosure document 

at least 10 business days before you pay any 

money or legally commit yourself to a purchase. You can use these disclosures to compare a particular business with others you 

may be considering or simply for information. 

The disclosure document includes: 

• the names, addresses, and telephone 

numbers of at least 10 previous purchasers 

who live closest to you 

• a fully audited financial statement of the 

seller 

• the background and experience of the 

business’s key executives 

• the cost of starting and maintaining the 

business 

• the responsibilities you and the seller will 

have to each other once you’ve invested
16 READ UP!

Recognizing Business Opportunity Scams

Fraudulent business opportunity promoters 

often use the classifieds and the Internet to 

promote all kinds of offers, from pay phone 

and vending machine routes to work-at-home 

businesses like medical billing and envelope 

stuffing. Too often, these ads make promises 

— about earnings, locations, merchandise, or 

marketability — that sound great, but aren’t 

true. The result: you can get ripped off and 

lose money instead of making it. 

Before investing in any business opportunity:

• look at the ad carefully. If it claims buyers 

can earn a certain income, it also must give 

the number and percentage of previous 

purchasers who achieved the earnings. 

• get earnings claims in writing. If the 

business opportunity costs $500 or more, 

the promoter must back up the earnings 

claim in a written document. If it’s a workat-home or other business opportunity 

that involves an investment of under $500, 

ask the promoter to put the earnings 

information in writing. 

• interview each previous purchaser in 

person, preferably where their business 

operates.

• contact the Attorney General’s office, state 

or county consumer protection agency, and 

Better Business Bureau where the business 

opportunity promoter is based and where 

you live to find out whether there is record 

of unresolved complaints. 

• take your time. Promoters of fraudulent 

business opportunities often use highpressure tactics to get your money fast. 

For more information on business opportunities and the Franchise and Business Opportunity Rule, visit www.ftc.gov/bizopps.

A College Education

For many people, a college education can be 

the key to a successful career. But a college or 

university education can be expensive. Some 

schools provide financial help or “scholarships.” Many students take out loans, apply 

for financial aid or scholarships, or use a 

combination to help pay for their schooling.

Unfortunately, in their efforts to pay the bills, 

many students are falling prey to scholarship 

and financial aid scams. Some cheats guarantee or promise scholarships, grants, or 

fantastic financial aid packages that turn out 

to be scams. Many use high pressure sales 

pitches at seminars where you’re required 

to pay immediately or risk losing out on the 

“opportunity.” 

If you’re looking for financial aid or 

a scholarship: 

• take your time. Don’t rush into paying at 

any seminar. 

• investigate the organization you’re 

considering paying for help. Talk to a 

guidance counselor or financial aid advisor 

before spending your money. You may be 

able to get the same help for free. 

• be wary of “success stories” or testimonials 

of extraordinary success. The seminar 

operation may have paid people to give 

glowing stories. Instead, ask for a list of 

at least three local families who used the 

services in the last year, and talk to them in 

person.

• be cautious about purchasing from seminar 

representatives who don’t want to answer 

questions or who give answers you really 

don’t understand. Legitimate business 

people are always willing to give you 

information about their service. 

• ask how much money is charged for the 

service, what services will be performed, 

and about the company’s refund policy. But 

keep in mind that you may never recoup 

the money you give to a scammer, despite 

the refund policies they tell you about. 

• remember that legitimate companies never 

guarantee or promise scholarships or grants 

before you apply.
how to be an Informed Consumer 17

Watch Out for These 

Signs of a Diploma Mill 

• “No Studies, No Exams — Get a Degree

for Your Experience.” Diploma mills grant 

degrees for “work or life experience” alone. 

Accredited colleges may give a few credits 

for specific life experiences, but not an 

entire degree. 

• “No Attendance.” Legitimate colleges or 

universities, including online schools, 

require substantial course work. 

• “Flat Fee.” Many diploma mills charge on a 

per-degree basis. Legitimate colleges charge 

by the credit, course, or semester, not a flat 

fee for an entire degree. 

• “No Waiting.” Operations that guarantee 

a degree in a few days, weeks, or even 

months cannot be legitimate. If an ad 

promises that you can earn a degree very 

quickly, forget about it. 

• “Click Here to Order Now!” Some scams 

use aggressive sales tactics. Accredited 

colleges don’t use spam or high-pressure 

telemarketing to market themselves. Some 

diploma mills advertise in newspapers, 

magazines, and on the web. 

Bogus Diplomas

Some people may be tempted to pay a flat 

fee for a degree awarded on life experience 

without having to take any courses. Businesses that offer this type of degree are called 

“diploma mills.” If you use a so-called “degree” from a diploma mill to apply for a job or 

promotion, you risk not getting hired, getting 

fired, and in some cases, being prosecuted. 

Most employers and educational institutions 

consider it lying if you claim academic credentials that you didn’t earn through actual 

course work.

Read Up!

To learn more about how to avoid a scholarship scam, visit www.ftc.gov/scholarshipscam.

Reach Out!

Give copies of the FTC’s brochure, bookmark, or poster about scholarship scams to guidance 

or career counselors at your area high schools, to PTA presidents, or to organizers of local 

college fairs.
18 READ UP!

Paying for Funeral Goods 

and Services

When a loved one dies, grieving family members and friends often are confronted with 

dozens of decisions about the funeral — all 

of which must be made quickly, and many of 

which are costly. Funerals rank among the 

most expensive purchases many consumers 

will ever make. A traditional funeral, including a casket and vault, costs about $6,000, 

although “extras” like flowers, obituary notices, acknowledgment cards, or limousines 

can add thousands of dollars to the bottom 

line. Many funerals run well over $10,000. Yet 

even if you’re the kind of person who might 

haggle with a dozen dealers to get the best 

price on a new car, you might feel uncomfortable comparing prices or negotiating over the 

details and cost of a funeral. Compounding 

this discomfort is the fact that some people 

“overspend” on a funeral or burial because 

they think of it as a reflection of their feelings 

for the deceased. 

The trend toward making funeral arrangements before they’re needed suggests that 

many consumers want to compare prices and 

services so that when the time comes, the 

funeral reflects a well-informed purchase decision, as well as a meaningful one. Many say 

they see funeral planning as an extension of 

estate planning. 

The Funeral Rule 

Most funeral providers are professionals who 

strive to serve their clients’ needs. But some 

aren’t — and don’t. They may take advantage 

of their clients through high prices, overcharges, double charges, or unnecessary 

services. A federal law makes it easier for you 

to choose only those goods and services you 

want or need and to pay only for those you 

select, whether you are making arrangements 

for yourself or for a loved one. 

The law requires funeral directors to give you 

itemized prices in person and, if you ask, over 

the phone. It also requires funeral directors 

to give you a written price list to keep that 

shows the goods and services the funeral 

home offers. If you want to buy a casket or 

outer burial container, the funeral provider 

must show you descriptions of the available 

selections and the prices before showing you 

the caskets.

Many funeral providers offer various “packages” of commonly selected goods and services 

that make up a funeral. But when you arrange 

for a funeral, you have the right to buy goods 

and services separately. You do not have to 

accept a package that may include items you 

do not want. 

According to the Funeral Rule:

• you have the right to choose the funeral 

goods and services you want (with some 

exceptions). The funeral provider must 

state this right in writing on the general 

price list.

• if state or local law requires you to buy a 

particular item, the funeral provider must 

disclose it on the price list, with a reference 

to the specific law.

• the funeral provider may not refuse, or 

charge a fee, to handle a casket you bought 

somewhere else.

• a funeral provider who offers cremations 

must make alternative containers available.

For more information about purchasing 

funeral goods and services, visit www.ftc.gov/

funerals and read Funerals: A Consumer 

Guide.

If you own a funeral home and want more 

information about your responsibilities under 

the law, read Complying with the Funeral 

Rule at www.ftc.gov/funerals.
how to be an Informed Consumer 19

These days, consumers shop at stores, 

through catalogs, on the phone, and online. 

They may buy products from a salesperson 

who knocks on their door or from a seller 

who could be thousands of miles away. Some 

of these transactions may not go as smoothly 

as they hope. But as a consumer, you have 

rights in these situations, and businesses 

selling products have responsibilities they 

must meet as well. 

Mail and Telephone Order Sales

The law protects consumers who shop by 

phone or mail if the merchandise arrives late 

— or doesn’t arrive at all. By law, a company 

should ship your order within the time stated 

in its ads. If no time is promised, the company 

should ship your order within 30 days of 

receiving it. If the company can’t ship within 

the promised time, they must give you an 

“option notice,” which gives you a choice: 

You can agree to the delay or cancel your 

order and get a prompt refund.

There is one exception to the 30-day rule: If 

a company doesn’t promise a shipping time, 

and you’re applying for credit to pay for your 

purchase, the company has 50 days to ship 

after receiving your order.

Door-to-Door Sales

Buying a product from someone who comes 

to your home can be convenient and enjoyable. But there may be times when you 

change your mind about a purchase you 

made in your home. The Cooling Off Rule 

gives you three days to cancel purchases of 

$25 or more made at your home, workplace 

or dormitory, or at a place the seller rents or 

uses on a temporary short-term basis, like 

hotel or motel rooms, convention centers, 

fairgrounds, and restaurants.

There are some exceptions to the Cooling 

Off Rule. For example, you cannot cancel 

sales that:

• are under $25

• are made entirely by mail or telephone 

• are the result of prior negotiations at the 

seller’s permanent location where the 

goods are sold regularly 

• are needed to meet an emergency 

• are made as part of your request for the 

seller to do repairs or maintenance on your 

personal property (purchases made beyond 

the maintenance or repair request are 

covered)

In addition, sales are exempt if they involve:

• real estate, insurance, or securities 

• automobiles, vans, trucks, or other motor 

vehicles sold at temporary locations, 

provided the seller has at least one 

permanent place of business 

• arts and crafts sold at fairs or locations, like 

shopping malls, civic centers, and schools 

The salesperson must tell you about your 

cancellation rights at the sale, and must give 

you two copies of a cancellation form (one 

to keep and one to send back) and a copy 

of your contract or receipt. The contract or 

receipt should be dated, show the name and 

address of the seller, and explain your right to 

cancel. The contract or receipt must be in the 

same language as the sales presentation.

Your Consumer Rights
20 READ UP!

Billing Errors 

Suppose you use your credit or charge card 

to pay for purchases. If you find a mistake 

on your billing statement, you can dispute 

the charge and not pay the amount in question while the charge is in dispute. It can be 

a charge for the wrong amount, for something you did not accept, or for an item that 

was not delivered as agreed. You still must 

pay any part of the bill that isn’t in dispute, 

including any finance charges on the undisputed amount.

If you decide to dispute a charge:

• write to the creditor at the address on the 

monthly statement for “billing inquiries.” 

Include your name, address, credit card 

number, and a description of the error. 

• make sure your letter is timely. It must 

reach the creditor within 60 days after 

the first bill with the error was mailed to 

you. The creditor must acknowledge 

your complaint in writing within 30 days 

after receiving it, unless the problem has 

been resolved. The creditor must resolve 

the dispute within two billing cycles 

(but not more than 90 days) after 

receiving the letter.

You also may dispute charges for unsatisfactory goods or services. To take advantage of 

this protection, you must:

• have made the purchase in your home state 

or within 100 miles of your current billing 

address, and the charge must be for more 

than $50 

• make a good faith effort to resolve the 

dispute with the seller first

Unordered Merchandise

If you receive merchandise you didn’t order, 

the law says you can keep it as a gift. No one 

can force you to pay for the item or return it. If 

you decide to keep the merchandise, you may 

want to send the seller a letter to let them 

know you are keeping the gift, even though 

you’re not legally obligated to do so. Your 

letter may discourage the seller from sending 

you repeated bills, or it may clear up an error. 

Send the letter by certified mail and keep the 

return receipt and a copy of the letter. These 

records will help you establish that you didn’t 

order the merchandise.

Two types of merchandise may be sent legally 

without your consent: free samples that are 

clearly marked and merchandise mailed by 

charities asking for contributions. In both 

cases, you may keep the shipments. These 

companies know you have the right to keep 

any merchandise they send without paying 

for it.
how to be an Informed Consumer 21

Resolving Disputes

If problems come up after you make a purchase, try to resolve your dispute with the 

seller first. Make sure you act quickly. Some 

companies may not accept responsibility if 

you don’t complain in a timely way. 

Send a letter of complaint. It puts your complaint on record and lets the company know 

you are serious about pursuing the dispute. 

Be sure you keep a copy for your records.

If you can’t get satisfaction, consider contacting the following organizations for more 

information and help:

• State and local consumer protection offices. 

• Your local Better Business Bureau (BBB).

• Action line and consumer reporters. Check 

with your local newspaper, TV, and radio 

stations for a contact.

• Postal Inspectors. Call your local U.S. Post 

Office and ask for the Inspector-in-Charge. 

• Federal Trade Commission.

• For telephone orders only, write: Direct 

Marketing Association (DMA), 1111 19th 

Street, NW, Washington, DC 20036.

(Your address)

(Your City, State, Zip Code)

(Date)

(Name of Contact Person)

(Title)

(Company Name)

(Street Address)

(City, State, Zip Code)

Dear (Contact Person):

On (date), I purchased (or had repaired) a (name of the product with the serial or model 

number or service performed). I made this purchase at (location, date, and other important 

details of the transaction). 

Unfortunately, your product (or service) has not performed well (or the service was 

inadequate) because (state the problem). 

Therefore, to resolve the problem, I would appreciate your (state the specific action you want). 

Enclosed are copies (copies, NOT originals) of my records (receipts, guarantees, warranties, 

cancelled checks, contracts, model and serial numbers, and any other documents).

I look forward to your reply and a resolution to my problem, and will wait (set a time limit) 

before seeking third-party assistance. Please contact me at the above address or by phone 

(home or office numbers with area codes).

Sincerely,

(Your name)

(Your account number)

SAMPLE COMPLAINT LETTER
22 READ UP!

Reducing Unwanted 

Telemarketing Calls

You might receive dozens of calls each week 

from telemarketers pitching a wide array of 

products from dream vacations and dating 

services to low mortgage rates and new siding. But you can stop telemarketing calls you 

don’t want by registering your home or cell 

phone numbers on the National Do Not Call 

Registry. Telemarketers covered by the National Do Not Call Registry have up to 31 days 

from the date you register to stop calling you. 

You can register for the National Do Not Call 

Registry online or by phone for free. If you 

have a valid email address, you can register 

online by visiting www.DoNotCall.gov. Once 

you submit your registration, the FTC will 

send you an email message with a link in 

it. You need to click on the link in the email 

within 72 hours to finalize your registration. 

You may register up to three telephone numbers at one time online.

To register by phone, call toll-free 1-888-382-

1222 (TTY: 1-866-290-4236) from the phone 

number you wish to register. You can register 

only one phone number each time you call 

the National Do Not Call Registry. Your phone 

number will remain on the Registry for five 

years from the date you register (unless you 

choose to take it off the Registry or your 

phone number is disconnected). 

Organizations That May Call

Placing your number on the National Do Not 

Call Registry will stop most — but not all 

— telemarketing calls. You still can get calls 

from or on behalf of political organizations, 

charities, and surveys. Organizations with 

whom you have an established business 

relationship can call you for up to 18 months 

after your last purchase, payment, or delivery 

— even if your number is on the National Do 

Not Call Registry. And companies to which 

you’ve made an inquiry or submitted an application can call you for three months. 

Think before you submit any entries, surveys 

or questionnaires, sweepstakes, forms, or 

requests for “free” products. The company 

may be trying to establish a business relationship with you, or get your written permission 

to be called.

If you place your number on the National Do 

Not Call Registry, you still can give written 

permission for particular companies to call 

you. And, even if you have an established 

business relationship, you can ask a company 

not to call you. The company must honor 

your request, regardless of any prior written 

permission. If you don’t put your number on 

the national Registry, you still can prohibit 

individual telemarketers from calling by asking each one to put you on their company’s 

do not call list.

Filing a Do Not Call Complaint 

If your number has been on the National 

Do Not Call Registry for at least 31 days 

and you receive a call from a telemarketer 

that you believe is covered by the 

Telemarketing Sales Rule, file a complaint 

at www.DoNotCall.gov or by phone at 

1-888-382-1222 (for TTY, call 

1-866-290-4236). You will be asked for 

either the name or telephone number of 

the company that called you, and the 

date the company called you.
how to be an Informed Consumer 23

As a consumer, you see or hear hundreds of 

ads a day on the Internet, on TV, on the radio, 

in newspapers and magazines, on buses, 

and sometimes in other places you wouldn’t 

expect. Ads making fraudulent claims can 

— and often do — show up in these places, 

and it’s up to you to sort through them and 

determine which ones are scams so you can 

ignore them. You’ve probably heard the saying “if it looks too good to be true, it probably 

is too good to be true,” but there is more to 

spotting a fraudulent claim.

Be wary when you see ads that:

• use asterisks, footnotes, or lots of fine print. 

Any disclaimers about the product must be 

large enough for you to read. If they’re not, 

the advertiser may have something to hide.

• include glowing testimonials from 

consumers or “famous” doctors. Whether 

they deal with dramatic weight loss, disease 

cures, or extravagant financial success, 

they usually are a tip-off to a rip-off.

• do not list an address or location. Ads 

listing only phone numbers or websites 

may do so to make it harder for you to track 

them down if you have a problem with their 

product or service.

• advertise merchandise way below market 

value for a limited time only. This technique 

often is used to advertise electronics, 

computers, or other high-ticket merchandise 

that can be ordered only by phone.

• feature merchandise with names that sound 

or look like nationally recognized brands. 

• offer vague descriptions of products.

• promote name-brand merchandise at 

ridiculously low prices or through 

unusual ways.

Current Scams

Unfortunately, there are scam artists out there 

trying to dupe consumers into paying hardearned money for products and services that 

aren’t what they are advertised to be. By learning about some current scams, you’ll be able 

to recognize and avoid them and report them 

to the appropriate authority for investigation. 

Work-at-Home Scams

Many people are looking for opportunities to 

make some money working from home. While 

ads for work-at-home opportunities seem to be 

everywhere — from the street light and telephone pole on the corner to the newspaper 

and the Internet — you need to proceed with 

caution. Not all work-at-home opportunities 

deliver on their promises. Many ads don’t tell 

you that you may have to work many hours 

without pay or inform you of all the costs of 

starting their program. Countless work-athome schemes require you to spend your own 

money to place newspaper ads, make photocopies, or buy the envelopes, paper, stamps, 

and other supplies or equipment you need to 

do the job. The companies sponsoring the ads 

also may demand that you pay for instructions 

or “tutorial” software. Consumers deceived by 

these ads have lost thousands of dollars, in addition to their time and energy. The promoters 

are often “fly by night” operators who get your 

money and disappear. 

Some classic work-at-home schemes involve 

medical billing, envelope stuffing, and assembly or craft work.

Avoiding Scams and Rip-offs
24 READ UP!

Medical Billing Scams

Ads for pre-packaged businesses like billing 

centers are in newspapers, on television, 

and on the Internet. If you respond, you’ll 

get a sales pitch that may sound something 

like this: There’s “a crisis” in the health care 

system, due partly to the overwhelming task 

of processing paper claims. The solution is 

electronic claim processing. Because only a 

small percentage of claims are transmitted 

electronically, the promotions say, the market 

for billing centers is wide open.

The promoter also may tell you that many 

doctors who process claims electronically 

want to “outsource” their billing services to 

save money. Promoters will promise that you 

can earn a substantial income working full 

or part time, providing services like billing, 

accounts receivable, electronic insurance 

claim processing, and practice management 

to doctors and dentists. They also may assure 

you that no experience is required, that they 

will provide clients eager to buy your services, or that their qualified salespeople will 

find clients for you. The reality is that you will 

have to sell. These promoters rarely provide 

experienced sales staff or contacts within the 

medical community.

Few consumers who purchase a medical 

billing business opportunity are able to find 

clients, start the business, and generate revenues — let alone recover their investment 

and earn a substantial income. Competition 

in the medical billing market is fierce and 

revolves around a number of large and wellestablished firms.

Before you respond to an ad for a medical billing business opportunity: 

• Talk to other people who have bought into 

the program. Ask the promoter to give 

you the names of many or all previous 

purchasers. Interview these references 

in person and ask for the names of 

their clients and a description of their 

operations. If the promoter wants to 

provide only a few references, be wary. The 

promoter may be telling you to call people 

who are paid to say good things about the 

program. 

• Consult with organizations for medical 

claims processors or medical billing 

businesses and with local doctors. Ask 

them about the medical billing field: Is there 

a need for this type of work? How much 

work does it entail? What kind of training is 

required? Do they know anything about the 

promotion or promoter? Would they hire 

you to do this work?

• If the medical billing opportunity sells 

another company’s software, check with 

the software company to find out whether 

company representatives know of any 

problems with the medical billing promoter. 

• Check with the state Attorney General’s 

office, consumer protection agency, and the 

Better Business Bureau in your area and the 

area where the promoter is based to learn 

whether any unresolved complaints about 

the business opportunity or the promoter 

are on file. But be aware that the absence 

of complaints doesn’t necessarily mean the 

company is legitimate. 

• Consult an attorney, accountant, or other 

business advisor before signing any 

agreement or paying any money.
how to be an Informed Consumer 25

Avoiding Work-at-Home Scams

Before you send money for a workat-home program, ask the promoter 

these questions. 

• What tasks will I have to perform? 

(Ask the program sponsor to list 

every step of the job.) 

• Will I be paid a salary or will my pay 

be based on commission? 

• Who will pay me? 

• When will I get my first paycheck? 

• What is the total cost of the work-athome program, including supplies, 

equipment, and membership fees? 

What will I get for my money? 

Envelope-Stuffing Scams

Promoters of these scams usually advertise 

that, for a “small” fee, they will tell you how 

to earn money stuffing envelopes at home. 

Once you have sent in your money, you find 

out that the promoter never had any employment to offer. Instead, you get a letter telling 

you to place the same “envelope-stuffing” 

ad in newspapers or magazines, or to send 

the ad to friends and relatives. The only way 

you’ll earn money is if people respond to your 

work-at-home ad. 

If you’re tempted by an envelope-stuffing 

“opportunity,” before you send any money, 

ask yourself why anyone would pay you, a 

stranger, thousands of dollars to stuff envelopes.

Assembly or Craft Work Scams

These programs often require you to invest 

hundreds of dollars in equipment or supplies. 

Or they require you to spend many hours 

producing goods for a company they claim 

has promised to buy them. For example, you 

might have to buy a sewing or sign-making 

machine from the company, or materials to 

make items like aprons, baby shoes, or plastic 

signs. But after you’ve purchased the supplies or equipment and performed the work, 

fraudulent operators don’t pay you. In fact, 

many consumers have had companies refuse 

to pay for their work because it didn’t meet 

“quality standards.” But none of the work is 

ever “up to standard,” leaving workers with 

relatively expensive equipment and supplies 

— and no income. To sell their goods, these 

workers must find their own customers. 

Read Up!

For more information on work-at-home 

schemes, visit www.ftc.gov/workathome.

Reach Out!

Post the FTC’s brochure about work-athome scams, Work-at-Home Schemes, 

on bulletin boards where local jobs are 

posted or hand them out at sites where 

people go to look for work. 
26 READ UP!

International Driver’s License Scams

If you’re tempted by ads claiming that you 

can use an international driver’s license 

(IDL) or an international driving permit (IDP) 

in place of a state-issued driver’s license, 

don’t fall for it. Ads and offers for fake IDLs 

and IDPs show up on websites and as spam 

email. Fake IDLs and IDPs also are sold “on 

the street.” The price for one of these fake 

documents can range from $65 to $350. Many 

local operations target non-native speakers 

through ads in foreign-language newspapers 

that direct consumers to websites or local 

storefronts. 

Although an IDP (sometimes incorrectly 

called an international driving license) is a 

real document when issued by the proper authorities, it is not a legal alternative to a stateissued license. If you’re caught using an IDP 

in place of your state-issued driver’s license, 

the consequences can be severe. You could 

be charged with driving without a license or 

driving with a suspended or revoked license. 

If you can’t produce proof of your identity 

(for example, a valid driver’s license, a stateissued identification card, valid immigration 

documents, or a passport), the officer may

assume that you’re trying to hide your identity and arrest you. 

To learn about driver’s license requirements 

in your state, contact your local department 

of motor vehicles. Check the Blue Pages of 

your telephone directory for the number, 

or visit the American Association of Motor 

Vehicle Administrators at www.aamva.org. 

Green Card/Visa Lottery Scams

If you or someone you know is trying to get 

a green card — the right to live in the United 

States permanently — be aware that some 

businesses and attorneys offering to help you 

may not be honest. They’ll claim that, for a 

fee, they can make it easier for you to enter 

the U.S. State Department’s annual Diversity 

Visa (DV) lottery — also known as the “green 

card lottery” — or increase your chances of 

“winning” the DV lottery.

They also claim that:

• they are affiliated with the U.S. government 

• they have special expertise or a special 

entry form that is required to enter the 

lottery 

• their company has never had a lottery 

entry rejected 

• their company can increase an entrant’s 

chances of “winning” the lottery

• people from ineligible countries still are 

“qualified” to enter the lottery

In addition, some companies may jeopardize 

your opportunity to participate in the lottery 

by filing several entries. These companies 

also may charge lottery-winning applicants 

substantial fees to complete the application 

process. 

The best way to protect against green card 

lottery scams is to understand how the State 

Department’s lottery works. 

• Each year, the State Department conducts a 

lottery through its DV program to distribute 

applications for a limited number of 

immigrant visas. 
how to be an Informed Consumer 27

• “Winners” of the lottery are selected 

randomly and have a chance to apply for an 

immigrant visa, which can be used to enter 

the U.S. There is no fee to enter the lottery.

• There is no charge to enter the green 

card lottery. You can enter on your own 

at the State Department’s website — 

www.dvlottery.state.gov. 

• You may submit only one entry. If you submit 

more than one, you will be disqualified.

• Selection is random. Spouses who are eligible 

for the DV lottery can apply separately; 

a spouse can enter the country on the 

Diversity Visa of the spouse who “wins” the 

DV lottery. This is the only legitimate way to 

significantly increase your chance of entering 

the U.S. through the DV lottery.

Many fraudsters promote green card lottery 

services online. Beware of websites that: 

• promise government travel or residency 

documents online or by mail. Except for 

entering the DV lottery, applications for 

visas, passports, green cards, and other 

travel and residency documents must be 

completed in person before an officer of the 

U.S. government.

• pose as U.S. government sites. They may 

have domain names similar to government 

agencies, official-looking emblems (eagles, 

flags, or other American images like the 

Statue of Liberty or the U.S. Capitol), 

the official seals or logos of — and links 

to — other government sites, and list 

Washington, D.C., mailing addresses. If the 

domain name doesn’t end in “.gov,” it’s not 

a government site. 

• charge for government forms. Don’t pay. 

Government forms and instructions for 

completing them are available free from the 

issuing U.S. government agency. 

For details about the State Department’s Diversity Visa lottery, visit www.travel.state.gov

and www.unitedstatesvisas.gov or call the 

State Department at 202-663-1225. This 

number has recorded information with an 

option to speak with a visa specialist during 

business hours. 

Read Up!

For more information about international 

drivers’ license scams and the Diversity Visa 

lottery (also known as the green card/visa) 

scam, visit www.ftc.gov/consumer and 

search for “international driver’s license” or 

“Diversity Visa.”

Reach Out!

Partner with a representative from the local 

police department or the local consumer protection agency to hold a community briefing 

on these two scams and give consumers information about how to avoid becoming victims.

Vacation Package Scams

Every year, consumers in the U.S. spend 

more than $1.3 trillion on travel and tourism. 

Scam artists go where the money is. But you 

can take steps to avoid a vacation scam.

• Buy your vacation package from a business 

with a proven track record. Ask family and 

friends to recommend a company. Don’t use 

a company if you can’t get someone on the 

phone to answer your questions or if an ad 

doesn’t include a street address. 

• Unsolicited faxes or emails for deeply 

discounted travel packages are tempting, 

but rarely deliver on their promises. It’s 

very rare to get something of value for next 

to nothing.

• Call to verify your reservations and 

arrangements. Get the details behind vague 

promises that you’ll be staying at a “fivestar” resort or sailing on a “luxury” cruise 

ship. When you have the names, addresses, 

and telephone numbers of the airlines, car 

rental companies, and hotels, confirm all 

the arrangements yourself. 

• Get the details of your vacation in writing. 

Get a copy of the company’s cancellation 

and refund policies, and ask “What if...?” 

Consider whether some form of travel 

cancellation insurance may be appropriate. 
28 READ UP!

• Use a credit card to make your purchase. If 

you don’t get what you paid for, you may be 

able to dispute the charges with your credit 

card company. Remember not to give your 

account number to a business until you’ve 

verified that it is reputable.

• Ask questions before joining a travel club. 

Find out what you’ll get for your money and 

how you can cancel your membership. 

• If you get an offer for a “free” vacation, 

resist the temptation. Scam artists tell you 

you’ve won a “free” vacation, but then they 

claim to need your credit card number for 

“verification.” If the promotion is legal, you 

never need to pay for a prize you win.

Pre-Paid Calling Cards

Many people use pre-paid calling cards, 

whether they are on vacation and want to call 

home or stay in touch with friends and family 

who live far away. Pre-paid phone cards represent telephone time you buy in advance. You 

pay from $5 to $15 or more up-front for a card 

that allows you to make local or long-distance 

calls; the amount of time you buy depends 

on the rate per minute you’re charged. For 

many people, pre-paid phone cards offer the 

ultimate convenience. The phone time is paid 

for in advance; the card can be used from any 

phone; and there’s no need to think about 

carrying change or paying a bill later on. 

But pre-paid phone cards can have hidden 

costs. Because you pay in advance, you may 

be out of luck if you discover a problem when 

you use the card. That’s a big difference 

between pre-paid phone cards and traditional 

long distance calling cards, where charges 

don’t appear on your bill until after you’ve 

made the call.

When you buy a pre-paid phone card from 

a store, remember that the store doesn’t 

control the quality of the service. To make 

sure you get what you pay for, try buying a 

card for a small amount first to test out the 

service.

Before Buying a 

Pre-Paid Calling Card

• Look for the rate for domestic and international calls on the card’s package 

or on the vending machine. These rates 

may vary depending on where you call. 

If you can’t find the rate, call the card’s 

customer service number.

• Look for disclosures about surcharges, 

monthly fees, and per-call access. Some 

cards add a surcharge to the first minute of use. Others charge an activation 

fee for recharging cards. 

• Check on expiration dates. Most cards 

expire one year after the first use. If 

there is no expiration date, a card usually is considered “live” until all phone 

time is used. 

• Look for a toll-free customer service 

number. If the customer service number isn’t toll-free or displayed, it may 

be difficult to contact the company if 

you have a problem with the card. 
how to be an Informed Consumer 29

Misleading Health and Weight Loss 

Claims 

Medical advancements and improved technology make it possible to cure more diseases 

today than ever before. New treatments are 

being discovered, new studies are being 

released, and new drugs are being approved. 

Ads for drugs on TV, in magazines, and on the 

Internet have made information on medical 

advancements readily available to consumers. But it can sometimes be hard to distinguish between treatments that are proven to 

work and those that are exaggerated or 

bogus claims.

Health fraud promoters often target people 

who are overweight or have serious conditions for which there are no cures, including multiple sclerosis, diabetes, Alzheimer’s 

disease, cancer, HIV/AIDS, and arthritis. To 

avoid becoming a victim of health fraud, it’s 

important to assess the product claims and 

always check with a health professional. 

Signs of Fraudulent 

Health Claims 

• Statements that the product is a quick 

and effective cure-all or diagnostic 

tool for a wide variety of ailments. For 

example: “Extremely beneficial in the

treatment of rheumatism, arthritis, infections, prostate problems, ulcers, cancer,

heart trouble, hair loss, hardening of the

arteries and more.”

• Statements that suggest that a product 

you can buy without a prescription can 

treat or cure diseases.

• Promotions that use words like “scientific breakthrough,” “miraculous cure,” 

“exclusive product,” “secret ingredient,” or “ancient remedy.”

• Text that uses impressive-sounding 

terms like these for a weight-loss product: “hunger stimulation point” and 

“thermogenesis.” 

• Undocumented case histories or 

personal testimonials by consumers or 

doctors claiming amazing results. For 

example:“My husband has Alzheimer’s

disease. He began eating a teaspoonful

of this product each day. And now, in just

22 days, he mowed the grass, cleaned out

the garage, and weeded the flower beds,

and we take our morning walk again.”

• Limited availability and advance 

payment requirements. For example:

“Hurry. This offer will not last. Send us a

check now to reserve your supply.”

• Promises of no-risk “money-back 

guarantees.” For example: “If after 30

days you have not lost at least 4 pounds

each week, your uncashed check will be

returned to you.”
30 READ UP!

Medical Clinics

If you’re considering getting treatment at a 

clinic you haven’t heard of that is in another 

city, state, or country rather than at a local 

hospital or clinic, check it out with your doctor first. Although some clinics offer effective 

treatments, others run by scam artists prescribe untested, unapproved, ineffective, and 

possibly dangerous “cures.” Call to confirm 

that the healthcare providers who work in 

these clinics are licensed and have the appropriate credentials. 

For information about a particular hospital, 

clinic, or treatment center, contact the state 

or local health authorities where the facility 

is located. If the facility is in a foreign country, 

contact that government’s health authority to 

see that the facility is properly licensed and 

equipped to handle the procedures involved. 

Weight Loss Claims

Do you need to lose weight? If you do, you 

are not alone. Some people want to lose a 

few pounds to feel and look better, but for 

many, being overweight is a serious health 

problem. Unfortunately, there is no magic 

bullet when it comes to losing weight and 

burning fat. Some people fall for bogus ads 

that promise weight loss without sacrifice or 

effort. When you evaluate claims for weight 

loss products, be skeptical. Before you spend 

money on products that promise fast and easy 

results, judge the claims carefully. Some ads 

for so-called miracle weight loss products are 

full of empty promises. 

False Weight Loss Claims

Don’t believe a claim that says the 

product will:

• cause weight loss of two pounds or 

more a week for a month or more 

without you dieting or exercising

• cause substantial weight loss no matter 

what or how much you eat

• cause permanent weight loss (even 

when you stop using the product)

• block the absorption of fat or calories 

to enable you to lose substantial weight

• safely enable you lose more than three 

pounds per week for more than four 

weeks

• cause substantial weight loss for 

everyone who uses it

• cause substantial weight loss by 

wearing it on the body or rubbing it 

into the skin

Doctors, dieticians, and other experts 

agree that the best way to lose weight is 

to eat fewer calories and increase your 

physical activity so you burn more calories. A reasonable goal is to lose about 

a pound a week. For most people, that 

means cutting about 500 calories a day 

from their diet, eating a variety of nutritious foods, and exercising regularly. 

Read Up!

For more information about fraudulent health claims, visit www.ftc.gov/cureall.

For more information about weight loss and how to spot false weight loss 

claims, visit www.ftc.gov/dietfit.

Reach Out!

• Distribute FTC brochures about weight loss or miracle cures at fairs, town hall 

meetings, and community seminars that your organization participates in.

• Write an article about false weight loss claims in your newsletter.
how to be an Informed Consumer 31

Identity Theft

Identity theft is a serious crime. It occurs 

when someone uses your personal identifying 

information, like your name, Social Security 

number, or credit card number, without your 

permission to commit fraud or other crimes. 

People whose identities have been stolen 

can spend hundreds of dollars and dozens 

of hours cleaning up the mess thieves have 

made of their good name and credit record. 

They may lose out on job opportunities or 

be denied loans for education, housing, or 

cars because of negative information on their 

credit reports. They may even be arrested for 

crimes they did not commit. The potential for 

damage, loss, and stress is considerable.

The FTC estimates that as many as 10 million 

Americans have their identities stolen each year. 

In fact, you or someone you know may have 

experienced some form of identity theft. While 

there is no guaranteed way to avoid identity 

theft, you can minimize your risk and minimize 

the damage if a problem occurs. You can:

• deter identity thieves by safeguarding your 

personal information 

• detect suspicious activity by always 

monitoring your financial accounts and 

billing statements

• defend against ID theft as soon as you 

suspect a problem

Deter

Deter identity thieves by protecting your 

personal information. 

• Shred paperwork and financial documents 

with personal information before you 

discard them.

• Protect your Social Security number. Don’t 

carry your Social Security card in your 

wallet or write your Social Security number 

on a check. Ask to use another identifier; 

give your Social Security number out only if 

absolutely necessary. 

• Don’t give out personal information on 

the phone, through the mail, or over the 

Internet unless you know who you are 

dealing with. 

• Keep your personal information in a secure 

place at home, especially if you have 

roommates, employ outside help, or are 

having work done in your house. 

• Never click on links sent in unsolicited 

emails; instead, type in a web address you 

know is the real thing. Some computer 

programs “hijack” you to a look-alike page 

to try to get you to give your personal 

information.

• Use firewalls, anti-spyware, and anti-virus 

software to protect your home computer; 

keep them up-to-date. 

• Don’t use an obvious password like your 

birth date, your mother’s maiden name, or 

the last four digits of your Social Security 

number. 

Detect

Detect suspicious activity by routinely monitoring your financial accounts and billing 

statements. Look for charges you didn’t make 

or authorize. Inspect your credit report to 

make sure all the information is accurate and 

up-to-date. 

It’s Your Right to Request 

a Free Credit Report Every Year

• Visit www.AnnualCreditReport.com

• Call 1-877-322-8228

• Write to Annual Credit Report Request 

Service, P.O. Box 105281, Atlanta, GA 

30348-5281

INFORMATION Security
32 READ UP!

Defend

Defend against ID theft as soon as you suspect it. 

• Place a “Fraud Alert” on your credit reports, 

and review the reports carefully. 

• Close any accounts that have been 

tampered with or established fraudulently.

• File a report with law enforcement officials 

to help you with creditors who may want 

proof of the crime.

• Report the theft to the FTC at 

www.ftc.gov/idtheft or 1-877-ID-THEFT. 

Your report helps law enforcement officials 

across the country in their investigations.

How ID Theft Can Happen

Skilled identity thieves use a variety of 

methods to steal your personal information, including:

1. Dumpster Diving. They rummage 

through trash looking for bills or other 

paper with your personal information 

on it.

2. Skimming. They steal credit or debit 

card numbers by using a special storage device when processing your card.

3. Phishing. They pretend to be financial 

institutions or companies and email 

spam or send pop-up messages to get 

you to reveal your personal information.

4. Changing Your Address. They divert 

your billing statements to another 

location by completing a “change of 

address” form.

5. “Old-Fashioned” Stealing. They steal 

wallets and purses; mail, including 

bank and credit card statements; preapproved credit offers; and new checks 

or tax information. They steal personnel records from their employers, or 

bribe employees who have access.

Read Up!

To learn more about how to 

Deter, Detect and Defend against 

identity theft, visit www.ftc.gov/idtheft.

Reach Out!

For tips on how to talk to others in your 

community about identity theft, get the 

FTC’s ID Theft Consumer Education Kit

at www.ftc.gov/idtheft. This kit includes 

tips on getting the word out at work, in 

your community, and through the media. 

It has materials to use when you speak to 

others about identity theft.

Practicing Online Safety

Access to information and entertainment, 

credit and financial services, products from 

every corner of the world — even to your 

work — is greater than earlier generations 

could ever have imagined. Thanks to the 

Internet, you can order books, clothes, or 

appliances online; reserve a hotel room across 

the ocean; download music and games; check 

your bank balance 24 hours a day; or access 

your workplace from thousands of miles away.

The flipside is that the Internet — and the 

anonymity it affords — also can give online 

scammers, hackers, and identity thieves access to your computer, personal information, 

finances, and more. 

If you are aware of and know how to protect 

yourself against certain online scams, like 

phishing emails, spyware, and viruses and 

worms, you can reduce your chances of falling victim to them or having them damage 

your computer. 
how to be an Informed Consumer 33

Phishing Emails

Phishing is a scam where Internet fraudsters 

send spam or pop-up messages to lure 

personal and financial information from 

unsuspecting victims. To avoid a phishing 

scam, don’t reply to email or pop-up messages 

that ask for personal or financial information, 

and don’t click on links in the message. Don’t 

cut and paste a link from the message into your 

web browser — phishers can make links look 

like they go one place, but that actually send 

you to a different site. 

Some scammers send an email that appears to 

be from a legitimate business and ask you to 

call a phone number to update your account or 

access a “refund.” Because they use Voice Over 

Internet Protocol technology, the area code 

you call does not reflect where the scammers 

really are. If you need to reach an organization 

you do business with, call the number on 

your financial statements or on the back of 

your credit card, or type in the web address 

yourself. 

Forward spam that is “phishing” for 

information to spam@uce.gov and to the 

company, bank, or organization impersonated 

in the phishing email. Most organizations have 

information on their websites about where to 

report these kinds of problems.

Spyware

Many free downloads — whether from people 

you know or businesses you don’t — come 

with potentially undesirable side effects. 

Spyware is software installed without your 

knowledge or consent that adversely affects 

your ability to use your computer, sometimes 

by monitoring or controlling how you use it. 

To avoid spyware, resist the urge to install 

any software unless you know exactly what 

it is. Your anti-virus software may include 

anti-spyware capability that you can activate. 

If it doesn’t, install separate anti-spyware 

software, and use it regularly to scan for and 

delete any spyware programs that may sneak 

onto your computer.

Email Viruses and Worms

Most viruses sent over email or instant 

messenger won’t damage your computer without your participation. For example, you would 

have to open an email or attachment that 

includes a virus or follow a link to a site that 

is programmed to infect your computer. So 

hackers often lie to get you to open the email 

attachment or click on a link. Some virus-laden 

emails look like they come from a friend or colleague; some have an appealing file name, like 

“Fwd: FUNNY” or “Per your request!”; others 

promise to clean a virus off your computer if 

you open it or follow the link — but instead 

infect your computer with a virus.

Don’t open an email or attachment — even 

if it appears to be from a friend or coworker 

— unless you are expecting it or know what 

it contains. You can help others trust your 

attachments by including a text message 

explaining what you’re attaching.

Internet Auctions

Internet auction sites are a great resource 

for buyers and sellers. They give buyers 

a “virtual” flea market with new and used 

merchandise from around the world, and they 

give sellers a global storefront from which to 

market their goods. But the online auction 

business can be risky business. Here’s how to 

use these sites wisely:

• Evaluate how soon you need to receive 

the item you’re bidding on, and whether 

you can tolerate it being delivered late, or 

not at all. Many complaints about Internet 

auctions fraud involve late shipments, no 

shipments, or shipments of products that 

aren’t the same quality as advertised. 

• Carefully consider your method of payment. 

Learn what recourse you have if something 

goes wrong. Don’t send cash, and don’t use 

a money wiring service. 

• Know who you’re dealing with. Avoid doing 

business with sellers you can’t identify, 

especially those who try to lure you off the 

auction site with promises of a better deal. 

Confirm the seller’s telephone number in 

case you have questions or problems. 
34 READ UP!

7.Learn who to contact if something 

goes wrong online. Visit 

www.OnGuardOnline.gov to learn 

how to respond if problems occur 

when you’re online.

Teach Your Kids 

Online Safety

As a parent, you can teach your kids how 

to be safe online. Use the Internet with 

them and talk to them about their online 

habits, like the use of social networking 

sites. Tell them why it’s important to 

keep their name, Social Security number, 

address, and phone number to themselves. 

For more tips, visit www.OnGuardOnline.

gov/socialnetworking.html.

Read Up!

To learn more about how to be on guard 

when you’re online and other issues like 

wireless network security, social networking sites, scams sent through spam, 

online shopping, peer-to-peer (P2P) file 

sharing, Internet-based telephone service 

(VoIP), and cross-border scams, visit 

www.OnGuardOnline.gov.

Reach Out!

• Gather your friends, family, 

or colleagues and test your online 

knowledge by playing the interactive 

games and quizzes at 

www.OnGuardOnline.gov/quiz.

• Host a training session using the 

tutorials and videos at 

www.OnGuardOnline.gov/tutorials.

• Know exactly what you’re bidding on. Read 

and print a copy of the seller’s description 

of the product closely, especially the fine 

print. Save copies of all emails you send and 

receive from the auction site or seller, too. 

Seven Tips for Online Safety

You can reduce the chance of an Internet 

mishap by following these tips.

1.Protect your personal information. It’s 

valuable. To minimize your risk of identity 

theft, don’t share your personal information 

unless you know how it will be used and 

protected. Don’t reply to — or click on — 

links in any email asking for your personal 

information.

2.Know who you’re dealing with. When 

shopping online, look for a seller’s physical 

address and a telephone number. Call 

to see if the number works. Before you 

download free software or programs, read 

the fine print — some downloads come with 

spyware.

3. Use anti-virus and anti-spyware software, 

as well as a firewall, and update them 

all regularly. Look for anti-virus software 

that removes or quarantines viruses, and 

for anti-spyware that can undo changes 

spyware makes to your system. Make sure 

your firewall is on and set up properly. If 

your firewall was shipped in the “off” mode, 

turn it on.

4. Be sure to set up your operating system 

and web browser software properly. Select 

security settings high enough to reduce 

your risk of being hacked. Make sure to 

regularly update your system with the 

latest patches.

5.Protect your passwords. Keep your 

passwords in a secure place, and don’t 

share them on the Internet, over email, or 

on the phone. When it comes to passwords, 

longer is better.

6. Back up important files. If you have 

important files stored on your computer, 

copy them onto a removable disc, and store 

it in a safe place.
how to be an Informed Consumer 35

Filing a Consumer Complaint 

If you think you’ve been a victim of fraud, 

there is a way for you to get even with the 

scam artists who cheated you: report it. By 

reporting your complaint to the FTC at 

www.ftc.gov/complaint or by calling 

1-877-FTC-HELP, you are providing important 

information that can help law enforcement 

officials track down scam artists and stop 

them. Spanish-speaking counselors are 

available.

While the FTC does not resolve individual 

consumer problems, your complaint helps 

authorities investigate fraud, and can lead 

to law enforcement action. The FTC enters 

Internet, telemarketing, identity theft, and 

other fraud-related complaints into Consumer 

Sentinel, a secure online database available 

to hundreds of civil and criminal law 

enforcement agencies in the United States 

and abroad. 

Filing Complaints

• To file a complaint about 

a violation of the National Do Not Call 

Registry, go to www.DoNotCall.gov

• To file a report about 

Identity Theft, use the Identity Theft 

Complaint Form available at 

www.ftc.gov/idtheft

• To file a complaint about an 

online transaction, go to 

www.OnGuardOnline.gov

• To file a complaint about an online 

transaction that involves a foreign 

company, use the complaint form at 

www.econsumer.gov

The FTC has a variety of free consumer 

publications about the issues in this guide 

and many more. Most publications are 

available online at www.ftc.gov. For Spanish 

publications, visit www.ftc.gov/espanol.

How to Order Publications

For limited quantities of publications

(1-49 copies per title):

For immediate delivery, you can view, 

print, and save publications from 

www.ftc.gov/consumer. And to request 

a copy in print, you can send your name, 

organization, address, telephone number, 

the publications you want, and the 

quantities of each to:

Consumer Response Center

Federal Trade Commission

600 Pennsylvania, NW, H-130

Washington, DC 20580

For bulk orders of publications

(50 or more of any title):

Please visit www.ftc.gov/bulkorder and 

select the publications and quantities 

you want. 

More Resources from the FTC