Consumer Fraud

by

Shanna R. Van Slyke, Leslie Corbo

• LAST MODIFIED: 22 April 2020
• DOI: 10.1093/obo/9780195396607-0279

Introduction

Consumer fraud is a broad category of unethical and illegal marketplace behaviors engaged in by unscrupulous sellers to the detriment of their customers. Consumers might buy a weight-loss product that is advertised as “guaranteed to lead to significant weight loss in just two weeks,” for instance, but then never lose any weight because the product is a fake. Online consumers may provide payment information yet never receive the product they paid for, or people may donate money to a charity that does not actually exist. Although consumer fraud can take on countless forms—from price misrepresentation, unnecessary repairs, and fraudulent business ventures to false stockbroker information, unauthorized use of credit-card information, and credit-repair scams—at its core, consumer fraud involves a violation of trust. Given this violation of trust, the legitimate business setting in which these crimes often occur, the financial goal of these crimes, and the lack of overt violence, consumer fraud can in turn be classified as one form of white-collar crime. This point is important because it means that one can gain the fullest understanding of consumer fraud by supplementing the relatively limited research on consumer fraud with the broader, more developed literature on white-collar crime. Accordingly, this article presents the classic and contemporary literature on consumer fraud and white-collar crime. That said, excluded from this article are white-collar crime studies that address specific forms of white-collar crime other than consumer fraud. A study specifically on embezzlement or worker-safety violations, for example, would not be included here.

Roots, Developments, and Classics

Much consumer fraud literature developed as part of the scholarly recognition of white-collar crime, which in turn was informed by late 19th- and early-20th-century muckraking and investigative journalism on the harmful acts of the robber barons and early US corporations. Ross 1907 identifies a class of criminal called the “criminaloid,” who is different from traditional images of crime in that criminaloids are high-status businessmen and people tend not to react too negatively to their misdeeds. Echoing Ross 1907, Sutherland 1983 names such respected malefactors “white collar criminals” and shows how prevalent law breaking is among them. Focusing on the automobile industry, the exposé Nader 1965 reflects a growing social consciousness of the dangers of unregulated (or under-regulated) science and technology in the consumer marketplace. Clinard and Yeager 1980 similarly reports a high level of illegal activity among major US corporations. Geis 1988 is a historical review that assesses fluctuations in legal responses to three English business crimes (i.e., forestalling, regrating, and engrossing). In contrast to Ross 1907, Sutherland 1983, and Clinard and Yeager 1980—works that stem from a concern with powerful offenders—Blum 1972 exemplifies another source of literature on consumer fraud: an interest in swindlers and confidence men that extends as least as far back as the late 1800s. Holtfreter, et al. 2005 examines the swindler as one type of consumer fraudster in an analysis of how changing market conditions have created new opportunities for consumer fraud. Also noting the importance of marketplace evolution, Johnstone 1998 compares responses to consumer fraud in France with those in England and Wales.

• Blum, Richard H. 1972. Deceivers and deceived: Observations on confidence men and their victims, informants and their quarry, political and industrial spies, and ordinary citizens. Springfield, IL: Charles C. Thomas.

  Comprehensive cataloguing of cons, con men, and their victims, with attention to the role of informants and defectors in deception.

• Clinard, Marshall B., and Peter C. Yeager. 1980. Corporate crime. New York: Free Press.

  Examination of historical corporate crimes in the 20th century, providing an extensive overview of the criminal activities in oil, auto, and pharmaceutical companies.

• Geis, Gilbert. 1988. From Deuteronomy to deniability: A historical perlustration on white-collar crime. Justice Quarterly 5.1: 7–32.

  Traces the concept of white-collar crime through history, identifying and describing major forms of white-collar criminal behavior in the past.

• Holtfreter, Kristy, Shanna Van Slyke, and Thomas G. Blomberg. 2005. Sociolegal change in consumer fraud: From victim-offender interactions to global networks. Crime, Law, and Social Change 44.3: 251–275.

  Chronology of developments in consumer fraud behavior, law, and literature from ancient times to present.

• Johnstone, Peter. 1998. Serious white-collar fraud: Historical and contemporary perspectives. Crime, Law, and Social Change 30.2: 107–130.

  DOI: 10.1023/A:1008349831811

  Thorough examination of historical trends and developments in fraud, including the rise of a class of business-related criminal activity.

• Nader, Ralph. 1965. Unsafe at any speed: The designed-in dangers of the American automobile. New York: Grossman.

  Engaging exposé of the US automobile industry’s routine prioritizing of profit and cost-cutting over safety and the dangerous, sometimes lethal, consequences this approach leads to for American consumers.

• Ross, Edward Alsworth. 1907. Sin and society: An analysis of latter-day iniquity. Boston and New York: Houghton and Mifflin.

  A turn of the 20th century analysis of deviance across all sectors of society, with emphasis on the “criminaloid”—high-status, respected citizens whose misdeeds are seriously harmful and yet fail to elicit social censure.

• Sutherland, Edwin H. 1940. White collar criminality. American Sociological Review 5.1: 1–12.

  Challenges then-prevailing explanations for criminality that focus on street crime and attribute criminal behavior largely to biology, psychopathology, and characteristics associated with poverty. Advocates scholarly attention to the harmful misdeeds of the rich and powerful, to which he gave the name “white collar crime.”

• Sutherland, Edwin H. 1983. White collar crime: The uncut version. New Haven and London: Yale Univ. Press.

  Landmark argument for attention to the misdeeds of high-status, respectable members of society, including revelation of a high amount of law breaking and recidivism among major corporations.