Medical Fraud

Medical Fraud

SIGNS OF MEDICAL FRAUD
The Food and Drug Administration and the National Council Against Health Fraud recommend that you watch for the following claims or practices. These are often warning signs of potentially fraudulent herbal products or other "natural" treatments:

Red flag words. The advertisements or promotional materials include words such as breakthrough, magical or new discovery. If the product were in fact a cure, it would be widely reported in the media and your doctor would recommend it.

Pseudo-medical jargon. Examples include words such as detoxify, purify or energize. Claims such as these are difficult to define and to measure.

Cure-alls. The manufacturer claims that the product can treat a wide range of symptoms, or cure or prevent a number of diseases. No single product can do this.

Unstudied. The product is supposedly backed by scientific studies, but references aren’t provided, are limited or are out-of-date.

Imbalanced view. The product promotion mentions no negative side effects, only benefits.

False accusations. The manufacturer of the product accuses the government or medical profession of suppressing important information about the product’s benefits. There is no reason for the government or medical profession to withhold information that could help people."

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Affinity fraud
From Wikipedia, the free encyclopedia
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Affinity fraud refers to investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme, by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.

These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies, and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment.

Many affinity scams involve "Ponzi schemes" or pyramid schemes, where new investor money is used to make payments to earlier investors to give the false illusion that the investment is successful. This ploy is used to trick new investors to invest in the scheme and to lull existing investors into believing their investments are safe and secure. In reality, the fraudster almost always steals investor money for personal use. Both types of schemes depend on an unending supply of new investors - when the inevitable occurs, and the supply of investors dries up, the whole scheme collapses and investors discover that most or all of their money is gone.

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Examples of affinity frauds
Affinity frauds can target any group of people who take pride in their shared characteristics, whether they are religious, ethnic, or professional. The U.S. Securities and Exchange Commission has investigated and taken action against affinity frauds targeting a wide spectrum of groups. Some of the cases include the following:

"Armenian-American community loses $19 Million": The SEC's complaint alleges that this affinity fraud targeted Armenian-Americans with little investment experience, for some of whom English was a second language.
"Criminal charges against South Florida man for $51.9 million fraud": African American victims of this investment scheme were guaranteed that their investments would generate a 30% risk-free and tax-free annual return.
"'Church Funding Project' costs faithful investors over $3 Million": This nationwide scheme primarily targeted African-American churches and raised at least $3 million from over 1000 investing churches located throughout the United States. Believing they would receive large sums of money from the investments, many of the church victims committed to building projects, acquired new debt, spent building funds, and contracted with builders.
"Baptist investors lose over $3.5 Million": The victims of this fraud were mainly African-American Baptists, many of whom were elderly and disabled, as well as a number of Baptist churches and religious organizations located in a number of states. The promoter (Randolph, who was a minister himself and who is currently in jail) promised returns ranging between 7 and 30%, but in reality was operating a Ponzi scheme. In addition to a jail sentence, Randolph was ordered to pay $1 million in the SEC's civil action.
"More than 1,000 Latin American investors lose over $325 Million": The victims sought low risk investments. Instead, the promoter (who has been sentenced to 12 years in prison) misappropriated their funds and lied about how much money was in their accounts.
"125 members of various Christian churches lose $7.4 million": The fraudsters allegedly sold members non-existent "prime bank" trading programs by using a sales pitch heavily laden with Biblical references and by enlisting members of the church communities to unwittingly spread the word about the bogus investment.
"$2.5 million stolen from 100 Texas senior citizens": The fraudsters obtained information about the assets and financial condition of the elderly victims who were encouraged to liquidate their safe retirement savings and to invest in securities with higher returns. In reality, the fraudsters never invested the money and stole the funds.
An early version of this article was based on the public domain document "Affinity Fraud: How To Avoid Investment Scams That Target Groups" issued by the U.S. Securities and Exchange Commission.

http://en.wikipedia.org/wiki/Affinity_fraud


Guides Against Bait Advertising


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16 CFR PART 238

§ 238.0 Bait advertising defined.
§ 238.1 Bait advertisement.
§ 238.2 Initial offer.
§ 238.3 Discouragement of purchase of advertised merchandise.
§ 238.4 Switch after sale.


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Sec. 238.0 Bait advertising defined.1

Bait advertising is an alluring but insincere offer to sell a product or service which the advertiser in truth does not intend or want to sell. Its purpose is to switch consumers from buying the advertised merchandise, in order to sell something else, usually at a higher price or on a basis more advantageous to the advertiser. The primary aim of a bait advertisement is to obtain leads as to persons interested in buying merchandise of the type so advertised.

Sec. 238.1 Bait advertisement.

No advertisement containing an offer to sell a product should be published when the offer is not a bona fide effort to sell the advertised product. [Guide 1]

Sec. 238.2 Initial offer.

(a) No statement or illustration should be used in any advertisement which creates a false impression of the grade, quality, make, value, currency of model, size, color, usability, or origin of the product offered, or which may otherwise misrepresent the product in such a manner that later, on disclosure of the true facts, the purchaser may be switched from the advertised product to another.

(b) Even though the true facts are subsequently made known to the buyer, the law is violated if the first contact or interview is secured by deception. [Guide 2]

Sec. 238.3 Discouragement of purchase of advertised merchandise.

No act or practice should be engaged in by an advertiser to discourage the purchase of the advertised merchandise as part of a bait scheme to sell other merchandise. Among acts or practices which will be considered in determining if an advertisement is a bona fide offer are:

(a) The refusal to show, demonstrate, or sell the product offered in accordance with the terms of the offer,

(b) The disparagement by acts or words of the advertised product or the disparagement of the guarantee, credit terms, availability of service, repairs or parts, or in any other respect, in connection with it,

(c) The failure to have available at all outlets listed in the advertisement a sufficient quantity of the advertised product to meet reasonably anticipated demands, unless the advertisement clearly and adequately discloses that supply is limited and/or the merchandise is available only at designated outlets,

(d) The refusal to take orders for the advertised merchandise to be delivered within a reasonable period of time,

(e) The showing or demonstrating of a product which is defective, unusable or impractical for the purpose represented or implied in the advertisement,

(f) Use of a sales plan or method of compensation for salesmen or penalizing salesmen, designed to prevent or discourage them from selling the advertised product. [Guide 3]

Sec. 238.4 Switch after sale.

No practice should be pursued by an advertiser, in the event of sale of the advertised product, of "unselling" with the intent and purpose of selling other merchandise in its stead. Among acts or practices which will be considered in determining if the initial sale was in good faith, and not a stratagem to sell other merchandise, are:

(a) Accepting a deposit for the advertised product, then switching the purchaser to a higher-priced product,

(b) Failure to make delivery of the advertised product within a reasonable time or to make a refund,

(c) Disparagement by acts or words of the advertised product, or the disparagement of the guarantee, credit terms, availability of service, repairs, or in any other respect, in connection with it,

(d) The delivery of the advertised product which is defective, unusable or impractical for the purpose represented or implied in the advertisement. [Guide 4]

Note: Sales of advertised merchandise. Sales of the advertised merchandise do not preclude the existence of a bait and switch scheme. It has been determined that, on occasions, this is a mere incidental byproduct of the fundamental plan and is intended to provide an aura of legitimacy to the overall operation.

Footnotes

1. For the purpose of this part "advertising" includes any form of public notice however disseminated or utilized.

http://www.ftc.gov/bcp/guides/baitads-gd.htm