CONSUMER PROTECTION
If you have been the victim of fraud or have information about illegal or unlicensed business practices in the City of Los Angeles, please contact the Los Angeles City Attorney's Office at (213) 978-8040.
The City Attorney's Office is working to protect consumers from fraud and illegal activities committed by unlicensed and illegal businesses. The City Attorney's Consumer Protection Unit prosecutes unlawful commercial practices ranging from unlicensed conduct to outright fraud.
The following guide was created for consumers to protect themselves from becoming victims of these crimes.
- Immigration Fraud
- Contractor Fraud
- Auto Repair Fraud
- Illegal Soliciting
- Immigration Fraud Strike Force
- Loan Scams
- Credit Repair Fraud
- Home Equity Loan Scams
IMMIGRATION FRAUD
Under California law, an immigration consultant cannot provide you with any advice on your immigration matters. They are not lawyers and should not and cannot give you advice. An immigration consultant may only provide assistance with translating information, locating and securing documents on your behalf, completing forms with answers that YOU provide.
An immigration consultant MUST provide you with a written contract (in English AND in Spanish) that, among other things:
Highlights services to be performed;
Provides costs of the services;
Includes a statement that he/she is not an attorney;
Identify the documents that the immigration consultant is to prepare; and
States the purpose for which the immigration consultant had been hired.
Suggestions:
Do Not Sign a Contract Unless You Understand It. You may be committing a crime if you sign INS or other official documents if they contain false statements.
Get a receipt. Make sure the immigration consultant signs the receipt.
Make copies of all your documents. Keep original documents in a safe place. Only provide copies of original documents to an immigration consultant.
You may cancel a contract with an immigration consultant within 72 hours for a full refund. Always cancel a contract in writing.
Beware of common scams, including: (1) taking a consumer's money and not delivering any services; (2) making false promises and implying special influence over the INS (absolutely no one can guarantee you a work permit or any other immigration benefit); (3) filing a frivolous application that leads to the deportation of the client.
CONTRACTOR FRAUD
Check a Contractor's License, Bond Status, and record of any complaints before signing a contract.
Since the home is usually one's most precious asset, it is wise to check on the qualifications of a contractor before agreeing to have work done. If you do your homework, you may avoid being a victim of shoddy work or contractor fraud. To check on the contractor's license, bond and record of complaints, you should contact the Contractors State License Board at (800) 321-2752 or "www.cslb.ca.gov". The phone number and Web-site also provide advice about what you should know before hiring a contractor.
AUTO REPAIR FRAUD
Check an auto repair shop's license and discipline record before agreeing to have the shop perform work on your car.
Check before it is too late. To check on an automobile repair shop's registration status, history of confirmed violations of the auto repair act and any disciplinary actions, please contact the State Bureau of Automotive Repair at (800) 952-5210 or "www.smogcheck.ca.gov". The number and Web-site also provide advice to consumers and a listing of registered shops within geographical areas.
IDENTITY THEFT
Protect personal information from identity theft.
One of the fastest growing crimes in the United States is identity theft. Identity theft occurs when someone steals your identity and proceeds to ruin your credit or commit crimes in your name. The easiest way to safeguard against the crime of identity theft is to protect your personal information by not intentionally or unwittingly giving it out to businesses or persons. Personal information includes your name, address, social security number, driver's license and mother's maiden name. Here are some precautions you can take:
Shred all mail or documents containing personal information before throwing it into the trash. This includes all mailed offers of credit. Persons committing identity theft will often go through people's trash for credit applications and obtain credit cards at a different address.
Do not give out personal information over the phone, Internet or in response to a solicitation. Be particularly cautious about giving out personal information when you register at malls or fairs for contests, raffles or free screenings, such as vision tests, mammograms, or blood pressure checks. Your information may become part of a marketing database, which will then be sold over and over again.
When you have to give out personal information, such as when setting up a checking account, ask that the information be kept confidential and not sold to marketers.
ILLEGAL SOLICITING
Be aware of scam artists soliciting donations.
Scam artists soliciting charitable donations, prey on those persons wishing to help others. The public is advised to be leery of unsolicited calls, door to door or Internet solicitations, and other approaches by unknown groups claiming to be accepting money on behalf of charities. Angelenos should be on the watch for solicitations by persons claiming to represent victims of terrorism, local hospitals, or police or sheriff departments. Beware of any solicitor who offers to pick up your donation at your home or office, or who asks you to make out your check to names other than the charity they claim to represent.
To insure that your donations benefit actual charities , it is better to make your donations directly to the charity after verifying its legal status. Under the law, charitable groups must have a legal status with the IRS and have an information card issued by the Los Angeles Police Commission if soliciting donations within the City. If you feel that you have been approached or victimized by a bogus organization, please contact the Consumer Protection Section of the City Attorney's Office at (213) 485-4515, California Attorney General's Office, Registry of Charitable Trusts at (916) 445-2021 or the Charitable Services Section of the Los Angeles Police Commission at (213) 978-1155.
LOAN SCAMS
Be aware of "Advance Fee" loan scams.
A different breed of "loan shark" is out there taking unwary consumers' money for the promise of a loan, credit card or other extension of credit. Remember that con artists will say anything to get you to pay money up-front. Their con usually works as follows:
Advertisements and promotions for advance fee loans "guarantee" or suggest that there's a high likelihood of success that the loan will be awarded, regardless of the applicant's credit history. But, to take advantage of the offer, the consumer first has to pay a fee.
A common scam is once the consumer pays the fee, the scam artist takes off with the money, and the loan never materializes.
In order to avoid falling prey to this scam, you should know that:
Legitimate guaranteed offers of credit do not require payments up front. Legitimate lenders may require consumers to pay application, appraisal or credit report fees, but these fees seldom are required before the lender is identified and the application completed. In addition, the fees generally are paid to the lender, not to the broker or arranger of the "guaranteed" loan. If you don't have the offer in hand or confirmed in writing and you're asked to pay, don't do it. It's fraud and it's against the law.
Legitimate lenders may guarantee firm offers of credit to credit worthy consumers, but they rarely do this before evaluating a consumer's creditworthiness. Legitimate lenders never "guarantee" or say that you are likely to get a loan or a credit card before you apply, especially if you have bad credit, no credit, or a bankruptcy.
Because advertisements for these fraudulent advance fee loans generally appear in respectable publications or media outlets, please be mindful that this is no guarantee of the legitimacy of the company behind the ad.
Here is advise to avoid being taken by advance fee loan sharks:
Don't pay for a promise. It's illegal for companies doing business by phone 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 an advance fee. Legitimate lenders never "guarantee" or say that you will receive a loan before you apply, especially if you have bad credit or no credit record.
CREDIT REPAIR FRAUD
Be aware of Credit Repair Fraud
No matter what anyone says, you cannot erase bad credit. Individuals or companies making this claim are engaged in fraud.
Here are legitimate things you can do to improve your credit or reduce payments to creditors:
Under the Fair Credit Reporting Act, you can question an item in your credit file and your complaint must be investigated. However, the negative information will be removed only if an investigation determines it's incorrect. A credit repair company, no matters what it claims, cannot compel the credit bureau to remove negative information from your file, if that information is accurate.
Some companies claim they will work with your creditors to consolidate your debts, or reduce the size of your monthly payments. Before you pay large sums of money to these companies, call the Federal Trade Commission's toll free number (1 877 382 4357) for referral to non profit counseling services that provide free or low cost help.
HOME EQUITY LOAN SCAMS
Be aware of Home Equity Loan Scams
If you own your home, it's likely to be your greatest single asset. Unfortunately, if you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk. Homeowners particularly elderly, minority and those with low incomes or poor credit should be careful when borrowing money based on their home equity. Why? Certain abusive or exploitative lenders target these borrowers, who unwittingly may be putting their home on the line. Abusive lending practices range from equity stripping and loan flipping to hiding loan terms and packing a loan with extra charges. The Los Angeles City Attorney's Office urges you to be aware of these loan practices to avoid losing your home.
Typical Home Equity Loan Scams:
Equity Stripping You need money, but have built up equity in your home. A lender tells you that you could get a loan, even though you know your income is just not enough to keep up with the monthly payments. The lender encourages you to "pad" your income on your application form to help get the loan approved. Beware, this lender may be out to steal the equity you have built up in your home. The lender doesn't care if you can't keep up with the monthly payments. As soon as you don't, the lender will foreclose taking your home and stripping you of the equity you have spent years building. If you take out a loan but don't have enough income to make the monthly payments, you are being set up and will probably will lose your home.
Hidden Loan Terms: The Balloon Payment You've fallen behind in your mortgage payments and may face foreclosure. Another lender offers to save you from foreclosure by refinancing your mortgage and lowering your monthly payments. Look carefully at the loan terms. The payments may be lower because the lender is offering a loan on which you repay only the interest each month. At the end of the loan term, the principal that is, the entire amount that you borrowed is due in one lump sum called a balloon payment. If you can't make the balloon payment or refinance, you face foreclosure and the loss of your home.
Loan Flipping Suppose you've had your mortgage for years. The interest rate is low and the monthly payments fit nicely into your budget, but you could use some extra money. A lender calls to talk about refinancing, and using the availability of extra cash as bait, claims it's time the equity in your home started "working" for you. You agree to refinance your loan. After you've made a few payments on the loan, the lender calls to offer you a bigger loan for, say, a vacation. If you accept the offer, the lender refinances your original loan and then lends you additional money. In this practice often called "flipping" the lender charges you high points and fees each time you refinance, and may increase your interest rate as well. If the loan has a prepayment penalty, you will have to pay that penalty each time you take out a new loan.
The end result is that you now have some extra money and a lot more debt, stretched out over a longer time. The extra cash you receive may be less than the additional costs and fees you were charged for the refinancing. And what's worse, you are now paying interest on those extra fees charged in each refinancing. Long story short? With each refinancing, you've increased your debt and probably are paying a very high price for some extra cash. After a while, if you get in over your head and can't pay, you could lose your home.
The "Home Improvement" Loan A contractor calls or knocks on your door and offers to install a new roof or remodel your kitchen at a price that sounds reasonable. You tell him you're interested, but can't afford it. He tells you it's no problem he can arrange financing through a lender he knows. By saying no now, you will save yourself a lot of grief. The lessons here are to be leery of unsolicited approaches and to never agree to have a contractor arrange for financing.
If you had gone along with the contractor's proposition, he would have begun the project and then at some point asked you to sign a lot of papers. In the usual scenario the papers may be blank or the contractor may rush you to sign before you have time to read what you've been given. The contractor threatens to leave the work on your house unfinished if you don't sign. You sign the papers and only later, realize that the papers you signed are a home equity loan. The interest rate, points and fees seem very high. To make matters worse, the work on your home isn't done right or hasn't been completed, and the contractor, who may have been paid by the lender, has little interest in completing the work to your satisfaction.
Signing Over Your Deed If you are having trouble paying your mortgage and the lender has threatened to foreclose and take your home, you may feel desperate. Another "lender" may contact you with an offer to help you find new financing. Before he can help you, he asks you to deed your property to him, claiming that it's a temporary measure to prevent foreclosure. This is the beginning of the end, because the promised refinancing that would let you save your home never comes through. Once the lender has the deed to your property, he starts to treat it as his own. He may borrow against it (for his benefit, not yours) or even sell it to someone else. Because you don't own the home any more, you won't get any money when the property is sold. The lender will treat you as a tenant and your mortgage payments as rent. If your "rent" payments are late, you can be evicted from your home.
In order to avoid becoming a victim of home equity fraud , you can protect yourself by remembering the following "DON'TS":
Never agree to a home equity loan if you don't have enough income to make the monthly payments;
Never sign any document you haven't read or any document that has blank spaces to be filled in after you sign;
Never let anyone pressure you into signing any document;
Never let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it; and
Never deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.
