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They keep springing back to life: age-old scams, sometimes with new twists.
Here's how to avoid getting bamboozled.
By
Amy C. Fleitas, Bankrate.com
There are no new scams -- just new suckers. Scam artists add new spins to
age-old scams and go in search of victims. Yesterday's snake-oil salesmen
are today's e-mail hucksters for nutritional supplements.
Only today, these shysters don't personally swoop down on small towns with
loud, rapid-fire, slick pitches. They slither through dial-up and cable
connections and crouch in your e-mail inbox, on Web sites, or attack by
telephone, disguising their identities behind nameless, faceless modern
technology.
Don't get sucked in. By learning the eight basic scam types, you will be
able to spot any scam -- no matter what new spin it's given by clever con
artists.
Advance fee scams
Advance fee scams are easy to spot: You pay a fee in advance for receiving a
credit card, loan or scholarship. In return, you get nothing valuable --
either the scammer disappears or you get a bunch of worthless junk.
For
example, one reader called to tell us about an advance-fee credit card scam
that had tricked her. She paid a fee in advance to receive a new credit
card. What she got was a list of banks that have credit cards -- all for the
hefty price of $198. You should never pay in advance for a credit card. Even
credit cards that have a fee will include the fee in your first billing
cycle -- after you have received the card. (To compare fees and rates on
credit cards, try
MSN Money's Credit Card Analyzer.)
Searching for a loan may lead you down a similar path. Recently, the Federal
Trade Commission spotted several fake loan ads. The ads look real and even
use the logos of real banks and credit unions. But the phone number in the
ad will lead you to an imposter on a cell phone who asks for your personal
information, tells you where to wire money for a fee, then disappears --
stealing your cash and identity.
You
should also be wary of offers for scholarship searches that require paying
an upfront fee. You can find most of this information yourself -- also for
free. Ask your local librarian or school counselor for help in researching
scholarships. (For more, read "The
insider's guide to scholarships.")
The
prize that will cost you
It
should go without saying that if you get an e-mail saying you won something
-- and you didn't enter -- you should just delete it. This is a common scam.
Here's how it works: The e-mail says you've won, but to receive your lottery
winnings or whatever the prize is, first you must pay the taxes or a
handling fee. You hand over your cash and you never hear from this person
again. Or, you are told you won a hotel or resort stay, but in order to use
your prize, you have to pay for your own airline ticket -- booked through
the agency that is awarding you the "prize." The ticket price will be
inflated to cover the cost of the hotel.
If
you didn't enter anything, you didn't win anything. And even if you did
enter, taxes go to the government, not to the organization running the
contest.
Also, do not give out personal information such as your Social Security
number or bank account number to anyone to claim a prize. They're just
trying to steal your identity. (For more on protecting yourself, read "Safeguard
your Social Security number" and "Keep
thieves out of your bank account.")
Be wise
about online auctions
There are several things to be careful of when bargain-shopping online. Even
a noodle-brain can research an item quickly and discover its worth. If you
find an item priced far too low, it may be a scam -- a fake item, a stolen
item, an item in really bad condition or something you will pay for and
never receive. This is especially important in online auctions, where the
pressure may be high as the bidding reaches the closing time.
Never agree to pay by cash or money order -- these methods of payment are
untraceable and offer you no protection. You may also want to be wary of
escrow companies because they are easily faked. In the best scenario, an
escrow company takes your payment and holds it until the seller sends you
the item. However, auction scammers have set up Web sites for fake escrow
companies. This means you send the escrow company the money and you never
get anything in return.
When paying for an item in an online auction, you should pay with a credit
card if possible.
And
no matter how great a bargain it may seem to be, never buy anything online
from someone who approaches you through instant messaging or e-mail. Often,
what happens is the contact person will tell you they have the item you are
bidding on and will sell it to you for less. They may even lead you to fake
Web sites they set up. By registering on the site, you provide them with all
the information they need to steal your identity -- and of course, you never
receive the items you paid for at their site.
To
stay safe, only shop sites you know and trust. (For tips on safe buying,
read "The
smart bidder's guide to auctions.")
Watch
for jobs and employment cons
There are several types of employment scams. The most notorious tricks
include being recruited for an illegal job, identity theft through job
applications and bogus employment fees.
Fraudulent job opportunities often involve work-at-home offers. One of the
newest appearing on job boards is the "reshipper." You are offered a good
salary for receiving packages at your house and reshipping them overseas.
The scam has several complicated layers, but basically, you pay
out-of-pocket to ship the packages overseas, you get paid with a fake check
and the packages were paid for with stolen and fake credit cards.
An
added hit to this scam: The information you provided in your job application
made you a victim of identity theft. The scammers then use your information
to apply for credit cards to buy more merchandise.
Other scammers don't bother to create the elaborate reshipping scheme --
they just tell you that you got whatever fake job they posted, then request
your personal information "for the human resources department" and use it to
steal your identity.
While hunting for a job, you may encounter someone who promises you a job,
but only if you will pay a fee for processing, administration or uniforms.
Steer clear of these people, even if they promise you a money-back
guarantee. Use employment services that charge the employer -- not the
potential employee. Don't pay fees for uniforms. If you must pay for a
uniform, ask that it be taken out of your first paycheck.
If
you do decide to pay a company to help you find a job, ask for all details
of its services in writing before you agree to anything. Some companies may
promise jobs, but just deliver a stale list of job openings they found in
newspapers or online.
Ignore offers that promise insider information for federal government jobs.
All federal government jobs are announced to the public, and your local
library can help you find the listings.
Get rich
quick! and other bamboozles
When people are down on their luck, they may turn to get-rich-quick or
money-making schemes. Somehow the scammers make old scams, such as the
Nigerian scam and pyramid schemes, seem like plausible ways for you to make
a lot of cash in a hurry.
You've probably been courted by the Nigerian scam, also known as the 419
scam (named after the section of the law pertaining to it). It comes in
e-mail or letter form and may start, "Dear Sir, I got your information from
a confidential source. . ." The letter then goes on to tell you a story of a
huge amount of money hidden overseas that the writer of the letter wants to
put in your bank account. In return, he promises you a big cut of the cash.
Long story short: Any checks you receive from this person will be fake. The
con will ask you to keep part of the money and send him the difference.
Shortly after you send him the difference by mail or wire, his check bounces
and you owe the total amount to your bank. Warning: Sometimes, people are
told by their banks that the check has cleared, so they wire the difference
to the Nigerian scammer. But don't be too sure: The scammers sometimes forge
a cashier's check, which fools the bank into prematurely reporting the check
as "cleared." Once the forgery is discovered, the bank will try to hold you
liable.
Secrets
of pyramid schemes
Like the Nigerian scam, pyramid schemes seem like a fast way to make a lot
of money.
If
you've never heard of pyramid schemes, here's how they work: One person
convinces several people to join a club or business. The only way to make
money is to get more people to sign up, too.
For
example, certain groups that call themselves "gift parties" require that
everyone who joins donate $4,000. All the cash goes to the person who is at
the "top." You are told that as soon she has received a certain amount of
money, she will step down and nominate the next person to be on top.
While these schemes seem like an easy way to make cash, inevitably, the only
person to make money is the one at the top -- who usually gets busted or
blows town before the group figures out that the math doesn't work.
The
old axiom is true. If it's an easy way to make money, it's probably illegal,
a scam or just a really bad idea.
Bypass
the bogus charity
No
one wants to be the bad guy -- the selfish lout who can't spare a little
change for the orphans of Sept. 11 or children who are cancer patients. But
that doesn't mean you have to be a sucker. If you want to give to charity,
by all means, give away -- but check out the charity first.
Never give payment information to anyone calling or e-mailing you, claiming
to be with a charity. Ask them to send you paperwork on their organization.
Then research the organization online and with the Better Business Bureau to
make sure it's legitimate -- and that you've got the right contact
information. For example, an e-mail circulated in 2001 claimed to be from
the Red Cross. It said it was raising money for victims of Sept. 11. While
the Red Cross is a legitimate charity, the e-mail led people to a Web site
set up by con artists.
If
the charity representative pressures you to give immediately, get even more
suspicious. Legitimate charities withstand scrutiny, and never hesitate to
prove they are who they say they are. (For more on wise charitable giving,
read "How
to tell a good charity from a bad one.")
Keep
your eye on identity theft
Identity theft is not new, but it is on the rise, running rampant over the
Web at breakneck speed. The thieves need only a few elements to victimize
you -- usually, your name and Social Security number will do. Obtaining this
information is often intertwined with other crimes -- advance fee scams and
bogus job offers among them.
The
name for this scam is "phishing" -- as in fishing for your information but
with a "ph" as in "phony."
Almost any scam can be sprinkled with a smattering of identity theft --
advance fee scams, fraud jobs and online auctions included. All it takes to
become a victim of identity theft is a leak of your personal information.
Your garbage may be targeted. (That's why you should shred anything that has
your account numbers, Social Security number or that says you are
"pre-approved" for credit -- before you throw it away.)
Telemarketers and e-mail spammers may attack you under the guise of
protecting your accounts, auction transactions and credit cards. Some even
pretend to be law enforcement or government agents. (Read "22
ways to foil credit card thieves.")
If
anyone from any company you do business with or that claims to be a
representative of a government agency (like the police or FDIC) demands your
personal information or an immediate payment for any reason, ask for a
number and tell them you will call them back. Then get the number from a
different source (bank statements, credit card statements or the phone book)
and ask if the call was for real. Four bazillion dollars says it wasn't.
If
this bet is wrong and there is some particularly friendly company making
these sorts of calls, it won't mind if you say you need to call back.
Remember that clever phishing con artists are always looking for a new angle
-- they may say they are from various different companies or agencies. Don't
get caught off guard. (For an in-depth look at how to protect yourself from
phishing scams, read "Protect
yourself from the Internet's biggest fraud.")
Products
that are too good to be true
If
it seems too good to be true, it probably is. Remember that a con artist
makes a career of using excuses and explanations to lead you away from your
common sense. When dealing with your money and personal information, never
allow yourself to be rushed, threatened or persuaded against your judgment.
Don't believe offers that claim to have found a way around the law -- like
reasons you don't have to pay your bills or taxes, promises to clean up your
credit history or claims that you can get a new Social Security number or a
new driver's license if yours was revoked. And claims of "miracle diets or
pills" that can enhance your features or help you lose weight should be
regarded with skepticism at best. (For details on one popular marketing
trend, read "Low-carb
gimmicks leave you fatter and poorer.")
Keep in mind that offers that are too good to be true aren't confined to the
Internet or telemarketers. They can also be found in mail offers, the ads in
the back of magazines and in brick-and-mortar stores. Stay vigilant and
trust your gut. |