Things you should know about those out there trying to defraud you!

Electronically based, On-Line or Internet scams have been around almost since the world wide web went public.  It is certain that if there is a great system set up to make the world a better place, there will soon be those among us who want to use it to perpetuate bad deeds and fraud using it. 

It seems that some very simple and basic scams just continue to morph into new approaches using the same tired old social engineering tricks on the ill advised or naieve.  Of course, you can loose much more than your money too which makes it all even worse.  It amazes me that little changes -- just the terms or language used in the scam, makes them more efective or the times in which we live or in the crises we face in any given year. 

Of late, that means scammers take advantage of our fear or upset with the stark financial times we are facing as a nation and prey on us if we happen to be jobless or facing a forclosure or too much credit card debt.  So, it is true that the current financial crisis has spawned more scam artists and finely tuned approaches than ever before -- all to get their hands on what's left of our money.

Of course, it is still true that some nations make a national industry out of relieving unsuspecting westerners (especially Americans) of their hard earned money.  They have favorite haunts to ply their trade online and almost never miss an opportunity to do so using eBay or Craig's List web sites.  OK now you have the big picture, let me introduce you to come common scams and variations in which the evening news sets the stage, then scam artists move in to prey on your fears and concerns about bank safety, mortgage foreclosure, and the credit crisis.

This article will introduce you to 8 basic scams and forewarns you on what they are  and how they work.  Once you learn to recognize the basics, you will have a foundation of knowledge to recognize the mutations.  Recognize the basics and you won't be fooled by the derivations.   Do remember that this article shows you the basics -- but the schemes morph, as necessary, to keep succeeding.  So - be aware!

FIRST -- Remember that if there is any doubt at any time -- stop and delete the message or use the phone to verify.  Once you fall prey to a scam it takes a lot to undo it and you are never the same.   Remember also that any financial institution, brokerage, credit card company or online company already has your telephone contact information available.  If there is an account issue or problem, they will CALL you and ask you to come in to the office to fix the problem.  THEY WILL NEVER SOLICIT YOUR PERSONAL INFORMATION ONLINE -- AND I DO MEAN NEVER! 

So, here are the basics:

1.  Phishing (Fishing for Personal Information) Scams

These are emails, that purport to be from legitimate institutions or companies (Your bank, mortgage company, eBay, PayPal, etc.,), that usually claim to have lost your credit card data, password or other personal information.  They ask you to re-enter the information into the link provided (and the website on the other end of the link looks legitimate).  The email requires that you supply the information to them (often with a strict time limit).  They will also conveniently provide a link in the email to take you to the official looking website to enter your information. 

The trick is that everything looks absolutely legitimate BUT is not.  Often, such emails express urgency and/or give you a time limit to comply with the threat that if you don't comply they will freeze or close your account.   This is "social engineering" designed to get you to act before you think….Don't be taken in.  This scam has been taken to new heights in the shadow of the current financial times.  There are new e-mail scams using this approach where the scammers pretend to be from banks, credit unions, mortgage brokers, etc.  The element these emails have in common is that they "phish" for personal information such as your Social Security number, bank and/or credit card account numbers, passwords, etc. The scammer then uses that info with other information they already have from the web (name, address, phone, date of birth etc.) to steal your identity.  Some don't use the identity they have stolen -- they sell it on to easter Europe of Africa by selling the stolen identity (yours) on the web.  This creates a dismal nightmare of epic proportions along with years of time and effort to clean up the mess.  Make it a personal rule that if you get an e-mail that purports to be from your mortgage company, a government agency, bank, PayPal or eBay or other seemingly legitimate company you normally do business with -- DO NOT CLICK ON THE LINK IN THE EMAIL EVER.  If you are worried it could be real -- call the bank, company or agency and ask if the email is from them. Quite frankly, if any e-mails arrives requesting ANY personal information, I ASSURE YOU IT IS A SCAM.  No government agency, reputable company or financial institution will ask you to share confidential information in or via an e-mail or through a web portal.  I can assure you of this because these companies and institutions have been dealing with this type of fraud clean up for years and have paid a hefty price for the upset customers caused by it.   The company or agency, should they need to discuss your account, will call and ask you to come to the office.  NEVER click on the embedded link or respond to the suspect e-mail.  DELETE it immediately.

2.  Bank, Credit Union or FDIC Related Scams

The solvency questions in the news concerning some banks and credit unions offer yet another opportunity for scammers to prey on the fears and insecurities of the public.  The reminders about account insurance limits offered by the Federal Depositors Insurance Corporation (FDIC) of $100,000 or $150,000 depending on the type of account can worry the public about the safety of their savings and retirement funds.  These scams involve official-looking e-mails that claim to be from a bank, credit union or directly from the FDIC claiming that your bank is in trouble or that money has been stolen from your account. Most emails provide a link and ask for your personal information (as above).  The scammers will then use your personal information to steal your identity and/or illegally access your bank account(s). If you receive any such e-mail purporting to be from your bank, credit union or the FDIC, requesting any personal information, contact your bank immediately.  NEVER click on the embedded link, NEVER respond to the e-mail.  DELETE it immediately.

3.  Mortgage or Home "Rescue" Scams

Although these scams have been around for a long time, preying on those who get over their head in debt, the current financial crisis has made this scam more pervasive than ever before.  Mortgage rescue scams target people who are in fear of or under immediate threat of losing their home.  Still others are past worrying about the mortgage but are very worried about the resulting ruination of their credit record due to pending foreclosure. This scam begins with a "real estate investor" contacting you to offer to exchange back mortgage payments in return for you simply signing over the deed and any equity in the home to them.  The owner feels that they have cleverly gotten out from under the debt unscathed by doing so.  The "investor" offers to make back payments and keep making the payments in the future claiming that he will simply rent the house out.  You and your family will move out believing that you have avoided foreclosure and resulting damage to your credit history.  Unfortunately, the "investor" will take possession and rent the house, but he will never make the promised mortgage payments. Eventually, the bank will foreclose on the home, throw the current residents out (who have been paying rent to the scammer)  Then the foreclosure will proceed against you!  You are the mortgage owner and the person liable for the mortgage.  The damage will be on your credit record.  The unsuspecting renter will ace an unexpected eviction and be out rent and deposits.  The only winner in this scheme is the "investor," who collected rent during the many months the bank went through the foreclosure and eviction actions.

3.  Mortgage Renegotiation Scams
This scam begins with the person over his or her head in debt and, as a result, you're behind in your mortgage payments.  Then, a modern miracle occurs and a smooth-talking salesperson emails, calls or appears at your door.  They arrive to deliver the news that they can renegotiate your mortgage with your lender to help you keep your house. The salesperson will, of course, require an up front fee (usually a $1,000 or more) before the process can begin.  Unfortunately, you pay $1,000 (or more) for a renegotiation deal that YOU could have gotten on your own! In some cases, a third party deal won't actually be enough to keep you in your home.  However, since the salesperson did negotiate on your behalf and was "successful" in reducing the terms of the loan, he or she has technically earned the fee you have paid unnecessarily. So getting the money back when it doesn't result in you keeping your house is almost impossible.  Be advised of these simple rules:

-  When you find yourself falling behind financially, the worst thing you can do is say nothing to your mortgage company and other financial institutions to which you owe money.  The Ostrich approach is the worst thing you can do -- pull your head out of the sand and figure out what your options are NOW.

-  Rest assured the bank is not in the real estate business and does not want your home.  They want to work with you to look for a way to protect your investment (and their initial investment in you).  It is in the best interest of both parties that you remain in your home if at all possible.

-  Your credit card companies would prefer you pay them most of what is owed rather than to receive pennies on the dollar they will get after you go through bankruptcy. Therefore, they will often work with you to reduce some of the debt and help with a payment plan toward that goal.  If your bank, mortgage company or credit card companies will not or cannot work with you, don't wait -- seek the services of a bankruptcy lawyer.

4.  Fake Check Scams
If you get a letter and check in the mail telling you that you have won a prize - BEWARE.  If you have received money that you weren't expecting, don't get excited.  Whatever you do -- DON'T CASH THAT CHECK!!  This "windfall" could be one of many "fake check" scams out there today. These fakes involve everything from claiming you won the Publisher's Clearing House Sweepstakes to offering you generous pre-payment for work as a "mystery shopper." These "money arriving from nowhere" schemes all have one thing in common: You get a check, it looks real, it's payable to YOU, it is for a bunch of money and who couldn't use some free money?  The accompanying letter explains that this check is the first installment money to pay for contest taxes or fees, or is your entry fee for becoming a mystery shopper. The letter or brochure goes on to explain that you must deposit the check and then wire most of the money back to another location to pay the taxes or fees before disbursement of the main prize or payment comes to you.

Unfortunately, the original check is no good and will eventually bounce - usually after you have done as the letter required and wired the money onward.  When the check does bounce, you are left without the money you wired forward to the thieves, a bounced check fee from your bank AND the wire transfer fee too!  Here are some warning signs of a fake check scam -- be careful, NOT to be taken in…:

- The check you receive will have the name and address of a company completely unrelated to contest or offer. Scam artists steal the legitimate names and account numbers of real companies so the check won't bounce immediately.  They need to have a few days for you to cash the check and send most of the money back to them (to perpetrate the fraud) before the check bounces.

- Be completely skeptical anytime you are asked to wire money anywhere.  It is a huge red flag that a scam is being perpetrated.  In fact, the transfer of large sums of money for payment of fees, eBay goods etc., is only safe when using reputable intermediaries who will not release the money until the customer has received and approved the goods.  Frankly, the requirement to accept any deal on the word of strangers appearing from nowhere should be immediately suspect in any case.
 
5.  Advance-Fee Credit Card Scams

In today’s tight credit market, getting a new credit card is becoming increasingly difficult.  If you have a median to low credit score, it can be nearly impossible.  As the credit market tightens, this scam will grow and mutate, ultimately costing consumers millions of dollars and a lot of heartache. The basic scam is quite simple: You get an an offer to be given an unsecured credit card with a $7,500 credit limit (and sometimes a remarkably low interest rate too) -- They tell you that this card is guaranteed, regardless of your income or credit history. All you have to do is send in a "processing fee" of $79 to $99.  You pay the fee and wait.  Unfortunately the credit card never arrives. Be advised that there is not a single legitimate credit card issuer that collects its annual fee before the credit card is approved or issued - NONE!! SO, NEVER --NOT EVER should you agree to pay an annual fee or any other fee in advance of receiving a credit card!

6.  Credit Repair Scams
Third party claims to be able to repair your credit rating are completely false.  No third parties can legally remove any accurate and timely negative information from your credit report - period. If you have a low credit rating, there are no shortcuts to rebuilding your credit score.  It will take time, along with responsible and diligent payment behavior.  However, if there are true errors on your credit report, YOU can and should work with the credit bureaus to get them removed immediately.  Only you can take this action.  To see what is on your credit reports request a free copy from each of the three Credit reporting agencies, Equifax, TransUnion and Experion.  They will mail a free copy to you once each year.  You should never seek or involve third parties in any attempts to repair your credit history.

7.  High Income or Other Work-at-Home Scams
As the economic realties of diminished retirement accounts and job losses settle upon us, more of us are seeking ways to go back to work, post retirement, or to make extra money to keep the household afloat. This has given rise to a steady increase in "work at home" scams.  The focus of the scam is to get an “application” or "initiation fee" from you. You will be asked to pay $49 to $99 for the privilege of being added to their group or a list of available home based employees.  You are assured your servuces will be in high demand. The truth is that there are no prospective employers, or real work to do at home. Once the scammer has your money, you will never hear from them again! So, your best defense is to NEVER give any of these "work-at-home" companies money or even the time of day.
 
8.  "Charity" E-Mail Solicitations

The holidays are the time of year when many charities kick up their fund raising efforts and ask us all to open our hearts (and wallets) to help others in need.  Scam artists make sure they join in to take advantage of generosity in the air during the holiday season.  Sadly, they steal from you AND the legitimate charities you plan to help to support each year.  Always beware of any e-mail solicitations from international, well known and/or very large charities such as the Red Cross and UNICEF. The scammers steal and use images, domain names and other information to create realistic but fake (mirror) websites.  These fake websites are so close to the real thing that it's VERY difficult to spot the fakes.  So, if you make a donation to the wrong site, you will know nothing until the hundreds or thousands of dollars in charges appear on your credit card that are completely unrelated to your own activity and/or the charity.  The link actually took you to a fake Web page that has nothing to do with the charity and whose sole purpose was to steal your credit card information.  If you are inspired to give by the solicitation, it is always best to ignore the email solicitation and go directly to the charity site through your own web browser.  Another alternative is to get the toll free telephone number of the charity from the web and make your donation over the phone. 

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