It sounded too good to be true. And it was.
Postcards proclaiming, "You Are a Winner," sent to hundreds of thousands of consumers nationwide, told them that a Marina del Rey yacht club had awarded each of them a "sportster runabout outboard motorboat." All the lucky winners needed to do was send $165.17 to cover shipping and handling charges.
But instead of getting a seagoing motorboat, recipients got a cheap, inflatable rubber raft. The yacht club was fictitious. The fraud's perpetrator, William Melville Harris of Los Angeles, was charged with false representation and agreed in a settlement to refund $500,000 to 4,000 victims.
Free-prize scams like Harris' are among the most common variations of a growing problem of mail-marketing fraud. Pitching anything from free vacations to miracle health cures, unscrupulous operators are fleecing victims of hundreds of millions of dollars each year. Often, the goods are never delivered or are blatantly misrepresented.
Mail-fraud scamsters also use telemarketing to make their pitches, as greater sales pressure can be applied to potential victims over the phone.
"As a general rule, mail fraud is more of a problem today," says Donald Obritsch, an inspector in the Postal Inspection Service's regional office in Pasadena, which is investigating several hundred mail-fraud cases in the Southern California area.
Fortunately, local, state and federal authorities have been moving aggressively against such scamsters. Last year alone, some 1,488 arrests and 1,015 convictions were obtained against mail-scam operators nationwide, Obritsch says.
Southern California judges also are handing out stiff sentences of as much as 25 years in prison and are ordering restitution awards amounting to millions of dollars, says Terree A. Bowers, chief of the major fraud unit at the U.S. Attorney's Office in Los Angeles.
But despite such efforts, scams will continue until consumers know enough to spot them and avoid getting ripped off. Mail fraud has many variations, but among the most common are:
- Free-prize scams. They are probably the most popular fraud scheme, Obritsch says. They usually come as mailings that offer prizes ranging from television sets to recreational vehicles to burglar alarms. To win the prizes, however, you may be required to buy a product such as a water purification system, or visit a faraway resort offering vacation time-shares, or send a check to cover postage and handling.
Usually, however, the product you buy is either inflated in value, poor in quality or not much in demand. The same is usually true of the prize. "Finely carved" grandfather clocks offered as prizes may turn out to be flimsy wooden boxes with cheap battery-operated timepieces.
Sometimes you may be required to donate money to a charity in exchange for a prize. But the charity may be fictitious, or it may never receive your money.
In one recent case, a Southern California company told customers that part of the money they spent buying high-quality pens and key chains would go to the Statue of Liberty fund. Instead, none of the money did, and the pens and key chains were worth far less than advertised. Customers also were told they had won fishing and hunting boats but instead got cheap rubber rafts. The perpetrator of the fraud was sentenced to five years in prison.
- Free-vacation schemes. These usually promise a free vacation in an exotic location. The rub is that you must cough up money to join a travel club, or buy a second airline ticket. The total cost may be greater than if you simply bought the ticket from a legitimate travel agent.
- Merchandise frauds. These frauds simply sell products that are grossly overvalued or misrepresented. Examples include $59.95 "professional tool kits" that turn out to be cheap pieces worth 95 cents. Or $4.95 "bronze and copper busts of President Lincoln" that instead are single Lincoln pennies. Or $3.50 "handy paint mixers" that end up being 10-cent wooden sticks.
- Health frauds. These include pitches for medical products that don't perform as claimed or may not have been tested. In some cases they may even be dangerous to your health.
Examples of such frauds, Obritsch says, include pitches for special teas promising to lower cholesterol. Or "Fat Magnet" weight-loss pills promising to attract and flush fat out of your body.
Of course, not all mail pitches are bogus. There are many legitimate mail-order firms selling decent products. How do you tell the difference?
First, use common sense. If it sounds too good to be true, it probably is. If a pitch says you've won a free prize, but then asks you to send money to claim it, throw it away. And be aware that pitches offering you free prizes as an inducement to look at a distant condominium complex or buy a new product may be touting items that may be overvalued or of poor quality.