Why Many Refinance Scammers Are Home Free
“Hitting Home” [July 26] deals with fraud by loan firms that contact citizens (many of them elderly) usually through telemarketing and offer them attractive refinancing, which turns out to be fraudulent.
Many of the victims become burdened with huge debts and find themselves on the brink of losing their homes.
What seems to be the worst thing about these scams is that the authorities do not provide adequate protection to citizens. The American public is probably the least protected public among industrialized nations from this kind of fraud.
My colleagues and I are conducting a study of a large-scale telemarketing fraud in California. We found, as the reporter did, that many fraudulent companies operate long after there are many complaints against them, an investigation is launched into their practices and it becomes clear that they have violated the law.
Even after these companies are closed down, it is easy for them to resurrect themselves under a different name, become licensed by a different government agency and to stay in the same business, using the same tactics, operating under the same ownership and employing the same salesmen.
Regulations are less than stringent. There is more than one government agency with jurisdiction over these companies. This results in duplication of functions, lack of communication and a slowing of the regulatory process. In addition, these agencies are severely underfunded and understaffed.
Meanwhile, the perpetrators in most cases continue to operate with impunity, and the few who are punished get away with a slap on the wrist, often in civil courts, making a payment for some monetary damage “without admitting any wrongdoing.”
Regulation, in American society, is a four-letter word. It resonates of “big government,” and even legitimate corporations and business organizations tend to oppose regulations while law-abiding citizens have relatively little protection.
One would think that after the savings and loan debacle of the late 1980s, which was the direct result of deregulation policies, and which cost the taxpayers anywhere between $500 billion and $1 trillion, we would be more concerned with protecting the public.
DAVID SHICHOR
Professor of Criminal Justice
Cal State San Bernardino
