More Fraud Prosecutions, Please


PJ Rodriguez sent me an article yesterday that he was curious to get my take on in light of recent occupational licensing blogging. As best I can tell, it’s about an open and shut case of fraud:

According to regulators and business watchdog organizations, there is a growing problem nationwide in the locksmith industry where companies are using the Internet and other marketing methods to advertise false addresses to make consumers think they are local businesses when in actuality they are run by call centers, that could be anywhere, and not always using certified locksmiths.

“The number that’s online is usually a local exchange but when you call it, it can be forwarded to an 800 number to someone in New York or California, and they will have people in the local area to send out,” said William Krome, president of the Maryland Locksmith Association.

So if you’re a Maryland locksmith, you’re actually facing two distinct problems here. One is that you’re facing competition from new entrants into the locksmithing market. These new entrants are using an innovative business model that involves some centralization of functions. If that centralization permits greater efficiency, the new entrants may be able to undercut your price or market themselves more effectively and you’ll lose market share. A second, distinct problem is that some of these new entrants seem to be simply lying to the public about where they’re located.

The article goes on to detail some other instances of locksmiths allegedly committing fraud. For example, “Some advertise low rates but once the work is done, clients are often presented with much higher bills.”

But the weird thing about the article is that at the end we don’t have the Association of Locksmiths of America suggesting that people engaged in blatant misrepresentation be prosecuted under existing statutes. Nor do they suggest new laws that more clearly ban such fraud. Instead, they’re calling for a “bill that authorizes a licensing office to regulate locksmiths because the scammers are taking business away from legitimate locksmith companies and hurting their reputations.” It’s almost as if the locksmithing industry is trying to leverage some legitimate complaints into a tool they can use to stifle competition!