CONSUMER ABUSE: Realtor Fraud and The Charter School Hoax
Consumer abuse includes, but is not limited to, fraudulent acts intended to deceive a user, or a buyer, of goods and services. In most cases, we think of consumer fraud in connection with business transactions. But it also includes deception in the public realm. It takes many forms—but none so insidious as frauds based on violation of personal or public trust. The most notorious frauds have usually been criminal acts committed by imposters who blatantly steal money through various scams. The less spectacular, but no less significant, civil frauds tend to go unnoticed even though thousands of families are affected every year. Civil fraud occurs when there has been false representation of a material fact, with the intent to deceive, and which is reasonably relied upon by another person to that person's detriment. This includes a false statement of a known fact, or an opinion based on a fact known to be false, or an opinion made with no reasonable basis for making it. This type of fraud is especially egregious when committed by someone claiming, or implying to have, special knowledge, which includes realtors, and editorial writers, scientists, researchers, educators, and public officials.
Realtor Fraud
I have written two papers representing extreme types of consumer fraud. At one extreme is economic fraud connected with the largest purchase that most families will ever make: family houses. Realtors base their business on cultivating personal relationships with potential buyers, who in turn are necessarily dependent on the information provided by the realtors. Violations of this trust relationship do not usually make headlines, but they can be nonetheless devastating to the victimized families. Realtors with powerful lobbies have established special status in at least some states that shield them from oversight and prosecution. Consequently, they are seldom publicly exposed for misrepresenting property; and I have learned through personal experience that real estate ethics hearings can be shams that actually protect offending realtors. It is noteworthy in this connection that writers and other analysts looking for the reasons behind the recent wave of foreclosures in the housing market dwell only on shady lenders, but they never, ever mention the realtors who are major participants in the predatory practices. Experienced realtors, along with colluding appraisers, are well aware of the shaky credit of many homebuyers they have eagerly sold to, and they should be held accountable. But that is not likely to happen because of their protected status.
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The other paper is about the fraudulent and largely unchallenged hoaxes being pawned off by school choice hucksters. In this case, the fraud is based not on personal trust relationships in an economic transaction, but on false public statements being spewed out by trusted researchers, public authorities, and editorial writers. The victims are concerned parents looking out for nothing more than the best interests of their children. The more than $400 billion from all sources spent on elementary and secondary education in this country every year is big business. It accounts for almost four percent of the GDP and ranks up there with military expenditures and the cost of social security. Unlike other big public programs, school choice programs give taxpayers some choice in how the money will be spent. However, oversight has been circumvented and crippled by school choice legislation that gives charter schools and vouchers immunity from most of the laws that govern school districts. Under the guise of “competition,” this independence has contributed nothing to the achievement of students, but it has opened the door to abuses. The millions of dollars the federal government allocates to charter schools and vouchers is an attractive target for both well-meaning and unscrupulous figures who want a piece of the pie, some of whom are willing to deceive the public about what these alternative programs will do. At least four percent of the hundreds of charter schools now operating have been shuttered for mismanagement and fraud. Undoubtedly there are many others that have not been caught. Perhaps more important, some researchers themselves have rigged research designs or distorted implications of their modest evidence. And editorial writers pushing school choice are among the worst offenders. The public is being deceived about school choice.
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