Ken Paxton

Tips for Consumers

  • Looks are only skin-deep: Don't confuse glitz with legitimacy. It costs very little to set up a Web site that looks expensive.
  • Businesses are not police officers: Don't assume internet service providers police their bulletin boards and chat rooms for scams.
  • Don't talk to strangers: Don't volunteer your name, phone number, real user ID, or computer address - this may get you onto a list that is shared by con artists.
  • Don't give your password out to anyone for any reason. Also, stress the importance of this to children in your family who use the Internet.
  • Don't assume that all Web sites have the same level of security.
  • Never give out credit card or financial information to anyone who approached you through an unsolicited email (also known as junk email). If you are required to give out bank account information when responding to a legitimate offer, do so by U.S. mail, not by email. And be very cautious: scam artists often use junk email to lure consumers into scams or to get access to credit card numbers.
  • Keep snoops out of your computer: Be vigilant about protecting your privacy. Some companies automatically collect information about you and your computer each time you visit their Web site and sell it to other retailers, advertising firms and marketers.
  • Be familiar with the privacy policy of each Web site you visit. Ask for an explanation of anything you do not understand. If you are not comfortable with revealing personal information, consider turning off the "cookies" function of your Internet browser
  • Certain information, like a social security number or a woman's maiden name, can be used to confirm identity. Be wary of Web sites that ask for this type information when it is not essential to the transaction.
  • You still can not get something for nothing: Be wary of claims that sound too good to be true, or which offer huge returns for little or no effort or risk (e.g. "200 to 600 % annual returns - risk free!")

Online Shopping

  • Always deal with recognized retailers and vendors. Be cautious of companies with unfamiliar names and vendors who only identify themselves using an online nickname. Watch out for Web sites with names that closely resemble well-known companies - these may be tools for tricking you into revealing personal information.
  • Be wary about giving out your credit card number, especially to a Web site or online vendor you are not familiar with. Make sure you understand and are comfortable with the company's online security and payment system. Ask the company to explain anything you do not understand. If you still have concerns, consider paying by mail instead of online or shopping elsewhere.
  • Make sure you understand a company's refund and return policies before you place an order.

Online Investments

  • Get all promises in writing. Ask for documentation in writing for every objective claim (i.e. last year's profits).
  • Take your time, and don't fall for high-pressure sales tactics. A good deal today will still be a good deal tomorrow.
  • Thoroughly research all claims made about obscure investments. Don't assume sales people have checked out an investment just because they say they have; do your own homework.
  • Print out and save all information about on-line investments.
  • Be wary of claims of "inside information" or the illusion that you've stumbled onto someone else's insider conversation. These conversations are often staged for the sole purpose of getting you hooked.
  • Never invest in anything you heard about through unsolicited email until you have thoroughly researched the offer, even if it appears to come from a well-known company. Call the company to make sure they really sent you the solicitation.
  • Never do business with any outfit that can't or won't give out a street address, 1-800 number, or other form of verifiable information. Before making an investment, find out where the firm is based, whether it is regulated, and which country's laws will apply in case a dispute arises.
  • Print out a copy of the company's prospectus for securities offerings and private placements, and have it reviewed by a lawyer, accountant or your business advisor.
  • Contact the Texas State Securities Board to see if the the person offering the investment and the investments are registered.
  • Check whether complaints have been filed against the investment or the the person offering the investment. You can check with the Better Business Bureau, the Securities and Exchange Commission, the State Securities Board, and the OAG Consumer Protection Division.
  • Remember that most people promoting a stock or making an investment tip have a vested interest in what happens to the stock, even when it is legitimate. They may be using other investors to manipulate the stock for their own gain, not yours.

Pyramid Schemes

  • Beware of offers that promise you a commission for recruiting other Internet users to be sellers or distributors. This is a common sign of a pyramid scheme.
  • Be wary of online business or work-at-home offers that require you to buy expensive inventory or equipment up front, unless you have an ironclad written buyback guarantee.
  • Find other investors and ask about their experience with the company. Don't rely solely on lists of references supplied by the company - they could be paid to promote the company.

Online Auctions

  • Avoid offers that require payment in cash. If you pay by credit card, make sure you use a secure connection when transmitting account information.
  • Contact the seller by email first. Ask any questions you may have about the goods or services offered. If you do not get a response, reconsider placing a bid.
  • Read any comments posted by previous buyers, and avoid those who have high negative ratings. Many auction services have a rating system that lets you evaluate a seller before making a purchase.
  • Fully understand the terms of the sale before you agree to purchase anything.
  • Only buy from vendors who are fully registered with the auction site. Some con artists email unsuccessful bidders, claiming to have the goods you failed to win in the auction.
  • Use a credit card: whenever possible, not a debit card, a wire transfer, a check, or cash. Credit cards protect you from loss when other methods of payment do not.

    If you believe you have been defrauded by a seller, first report the incident to the management of the Web site. Many online auctions investigate complaints about selling practices, and some now have insurance programs to compensate fraud victims.

    For more tips about specific types of online scams and transactions, visit the Consumer Protection section of the Federal Trade Commission Web site.

    If you have a complaint about an online business transaction, you can file a consumer complaint with our office. To report possible illegal online activity, call us at (800) 252-8011.