Other Divisions FAQ
The Consumer Fraud Division, a sub-division of the Special Crimes Bureau of the Harris County District Attorney’s Office, is a criminal law enforcement agency responsible for investigating and prosecuting criminally fraudulent conduct that occurs, at least in part, in Harris County, Texas. The Consumer Fraud Division often works in conjunction with other law enforcement or regulatory agencies in investigating potentially fraudulent conduct that occurs in the marketplace.
The primary function of the Consumer Fraud Division is to identify, investigate and prosecute criminal offenses occurring in the local marketplace in an effort to obtain criminal convictions and criminal punishment of criminal offenders.
The Consumer Fraud Division does not:
a.) give civil advice to consumers;
b.) act as a private attorney or legal counselor for citizens involved in consumer-merchant disputes;
c.) attempt to recover money damages for consumers;
d.) arbitrate consumer-merchant disputes, or;
e.) compel or seek to compel merchants to perform contracts or agreements with merchants or sellers of services or products.
These civil disputes must be handled by private attorneys or by government agencies having civil jurisdiction such as the Texas Attorney General’s Office Consumer Protection Division, the Federal Trade Commission or consumer assistance organizations such as the Better Business Bureau.
Complaints involving the worthiness of a sold vehicle are generally not criminal. Failure of a mechanic to properly repair a vehicle or poor warranty work is generally not criminal. Used vehicles are generally sold “as is”.
When a consumer purchases a vehicle but does not receive a valid title in a timely manner, it is often an indicator of a more serious, potentially criminal, problem. The Consumer Fraud Division investigates this type of complaint to determine why a good title was not provided.
Texas law does not require mechanics to provide consumers with written repair estimates. Occasionally, an unscrupulous mechanic will take possession of a vehicle on a verbal agreement and then demand much more money be paid before the vehicle is returned to the consumer. Texas law allows the mechanic to keep the vehicle until he is paid the repair price he demands, and even to sell it to himself for the unpaid repair price under certain circumstances. We investigate these complaints, but it is very difficult to prove fraud if there is no tangible proof of the original agreement to show the mechanic is using the law to extort an exorbitant repair price. We do prosecute for vehicle sale fraud and repair fraud if there is sufficient evidence.
Home Construction, Remodeling and Repair
The State of Texas does not require that contractors be licensed. Anyone, regardless of experience, honesty, or competency can claim to be a contractor in Texas. Consequently, we see many complaints each year regarding new homes and repair and remodeling of existing homes. Many of the complaints only involve poor workmanship. Poor workmanship is a civil issue.
Many of the complaints involve contractors receiving substantially more money on the project than they spend on the job, leaving the job in various stages of completion. Often times, the consumer will discover the contractor has not paid sub-contractors or suppliers. These situations are strong indicators that criminal fraud may have occurred. We routinely investigate these types of complaints and prosecute where actual fraud can be proven.
The Consumer Fraud Division receives many complaints each year from consumers who have entered into various types of agreements to buy or lease real property, and then find that the property was not actually owned by the seller, that there was undisclosed additional debt (loans, mortgages, judgments or tax liens) the seller didn’t tell the buyer about, or that the seller had sold the property more than once. Most often these transactions were conducted privately and not through a legitimate title company. Texas law makes it illegal to sell property without disclosing negative claims against the property. We regularly investigate and prosecute these types of cases.
Sale of Consumer Merchandise or Services without Performance or Delivery
It is an unfortunate fact that most new businesses and many existing businesses fail to be profitable and close their doors each year owing money and performance to consumers and creditor businesses. Often, the business will file for bankruptcy protection under federal law. Unless actual fraud is involved, business failure is a civil situation.
We receive and investigate many complaints from consumers who have paid money in advance for merchandise or services and then see the company close, sometimes without any notice, without performing their contractual obligation to the consumer. We routinely investigate such complaints to determine whether the failure of the business was legitimate or if the merchant was just keeping the doors open to collect consumer money, knowing the purchased products or services would never be provided. If we are able to establish with convincing evidence that the failure of the business was not legitimate, we will prosecute.
Occasionally, insurance agents sell insurance and accept premiums from Consumers, but don’t remit the monies received to the insurance company. Sometimes this is due to an oversight and sometimes the agent is just misappropriating the money. Knowingly misappropriating insurance premiums is a crime. The Texas Department of Insurance in Austin investigates many of these complaints. The Consumer Fraud Division also investigates and occasionally prosecutes these matters, often in conjunction with the Texas Department of Insurance.
In recent years, due to the rapid growth of internet sales, including private “auction” sales through eBay and other internet companies, there has been a large increase in the number of people who are defrauding consumers by posing as internet sellers conducting auctions for all types of services and merchandise. Consumers respond to attractive offers, thinking they have won an auction, send large amounts of money by check, credit card, or wire transfer (often through wire services such as Western Union) to some purported seller who does not provide the product in return for payment. Most often the victim and the seller are not even in the same state.
It is very difficult, time consuming, and expensive to investigate and prosecute these frauds. Most often law enforcement agencies, including this office, don’t have the resources to investigate these frauds. We can’t justify spending thousands of dollars of taxpayer money to investigate an interstate fraud of a few hundred dollars. If the defrauding seller is operating from Harris County, Texas and a large pattern of fraud is identified, sometimes we do investigate and prosecute internet auction frauds.
Investment Fraud and Sale of Illegal Securities
We routinely investigate and prosecute investment frauds committed locally. We often investigate in conjunction with the Texas Securities Board in Austin, Texas. There must be a good indication that there is some fraudulent or illegal conduct involved and not just that a particular investment turned out badly.
We routinely investigate promotions that appear to be in violation of our Texas Pyramid laws and we do prosecute pyramid cases. Pyramids are illegal in Texas and most jurisdictions, because they are inherently fraudulent. Generally, a pyramid promotion is just an exchange of money but the law includes any “consideration”. Participants are encouraged or required to pay a consideration and then recruit additional members in a down-line in order to earn a large payout when the later members are recruited. In truth, each new participant has a mathematically smaller chance of recruiting new members than earlier participants had. Inevitably, very quickly, the new participants can’t find enough people to successfully recruit to replace themselves. The promoters (the people who started the scheme or got involved very early) have walked away, taking with them all of the money they have received from gullible participants.
It’s a felony offense in Texas to promote a pyramid. Setting up a pyramid, joining one, or recruiting new members all constitutes illegal pyramiding.
Often pyramid promoters tell recruits that their promotion is not a pyramid and try to distinguish their program from an illegal pyramid. Frequently, promoters will say they have the advice of a lawyer or some law enforcement entity. Many times, these are just lies being told by an unscrupulous promoter to try to lure gullible people into participating. Be warned, it is generally not a defense to prosecution that a promoter or some third party misinformed the participant as to the legality of the scheme.
Pyramid promoters will try to claim their program is not a pyramid because it involves not only the building of a cash down-line but the purported sale of a product or service and that the cash down-line payments are really only sales commissions for the sale of legitimate services or products. The law takes a common sense view of this: Is the purported sale of services or products really just a sham to try to justify what is otherwise just a money down-line pyramid? For instance, would anyone pay $5,000.00 for a few hundred dollars worth of cheap dishes unless they were told they could go sell cheap dishes to down-line participants and earn thousands of dollars each month in down-line commissions? If the purported sale of products or services is just a sham, it’s still an illegal pyramid.
Each year we investigate and sometimes prosecute a wide variety of consumer complaints that don’t fall under the previous categories. Again, the complaint must be criminal in nature for our office to have jurisdiction and authority to act. The thrust of our investigation is to identify criminal conduct in the marketplace to support a prosecution of a criminal offender.
Since we are a criminal law enforcement agency looking for criminal conduct in the marketplace, if we determine a particular complaint is not potentially criminal, we typically close that investigation and so inform our complainant. It is up to the complainant to decide whether or not they intend to pursue civil remedies against the person or business we investigated, but did not prosecute. We cannot represent complainants in civil disputes, give legal advice to complainants, or refer complainants to specific civil attorneys.
In those cases where we do file criminal charges, we are mindful of and do take into account the monetary loss of the complainants, and frequently restitution is part of the criminal plea bargaining process. However, we do not file criminal charges to coerce restitution. We only file charges in the cases that are criminally prosecutable.
HOW TO FILE A CONSUMER FRAUD COMPLAINT/REPORT
The best way to file a Consumer Fraud complaint/report is to call (713) 755-5836 between the hours of 8:00 am and 5:00 pm, Monday through Friday and request that a complaint package be mailed to you. This package will have some written instructions and a one-page (front and back) form to be filled out and returned. Several members of the Consumer Fraud staff are bilingual (English and Spanish). Our forms are available in English and Spanish. Our staff is familiar with the types of matters that this division investigates and can provide additional information to assist you in filing your complaint, if needed. Since we are a criminal law enforcement agency, we cannot share with the public whether or not we have other complaints against the company or person you want to complain or inquire about.
Once the completed form is returned along with pertinent attached documents, it will be indexed and forwarded to the division’s chief prosecutor in a timely manner. The chief prosecutor will review the complaint and determine whether or not the matter is appropriate for criminal investigation by this division. The consumer will receive a written response to their complaint within seven days of submission informing them whether or not we will investigate the matter, our index number and the name of the staff member assigned to investigate the complaint, or informing them why we are not going to investigate if we decide not to investigate.
We prefer receiving complaints by mail. Most often Consumer Fraud complaints involve some documents (contracts, proposals, correspondence, agreements, checks of payment front and back as negotiated, pictures, etc.). Clear, legible copies of these documents need to be attached to the original complaint in order for the complaint to be properly evaluated.
If there is some genuine urgency that requires we receive your complaint immediately, you are welcome to come to our office at the Harris County Criminal Justice Center, 1201 Franklin, 5th Floor, Houston Texas 77002, Monday through Friday 8:00am to 4:30 pm to fill out a complaint/report form and turn it in.