Top 10 Scams of 2010

Scammers in 2010 continued to prey on people's difficult economic conditions and concerns about the general economy as well as follow the financial misfortunes of individuals, according to the Better Business Bureau's (BBB) summary of dishonest business dealings for the past year.

This listing is based on the number of times people requested information and inquiries through personal phone calls or the BBB website, as well as complaints.  These instances of service by the Better Business Bureau serving Chicago and Northern Illinois, including inquiries and complaints about specific businesses.

"Scammers continue to follow the money trail and target the desperate emotions of people," said Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois. "This year the Top 3 scams were again related to personal finances.”

  

The list of the Top 10 most common scams in 2010 include:

1.      Work-At-Home and Fraudulent Employment Opportunities

2.      Credit Repair and Debt Negotiations/Settlement Services

3.      Advance Fee Lenders

4.      Mortgage Foreclosure Rescue/Loan Modification Scams

5.      Timeshare Resellers

6.      Mystery/Secret Shoppers

7.      Grant & Government Job Finding Entities

8.      Not so “Free” Trials

9.      Phishing, Smishing, and Vishing

10.  Check Scams

"We believe the reason we hear more about these Top 3 scams is because people lose money and then complain, rather than being tempted by deals and checking them out before sending money," explained Bernas. "This usually ends badly for people, who never get their money back."

Explanations of these scams are:

1. Work-at-Home and Fraudulent Employment Opportunities - These scams offer big dollars for little work or effort. However, when an interested consumer “applies,” they almost always ask for money up-front to pay for materials, training kits, or investment money. After sending payment, most consumers either have their checks deposited and never hear anything again, or obtain something that is completely useless. Internet employment opportunities looking for “shipping”, “billing managers” or “payment processors” frequently turn out to be fraudulent listings that are looking for victims to commit money laundering by accepting and forwarding payments.

2. Credit Repair and Debt Negotiation/Settlement Services - Due to the continuing economic situation, many consumers seek credit repair or debt negotiation/settlement companies. However, everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. Here are the important facts:

• These services can not ask for money in advance, automatically get legitimate negative reports off your credit report or guarantee to cut your debt by a specific percentage.
• Be extremely cautious about a service that recommends you not pay creditors so it can negotiate.  This could negatively affect your credit report.

3. Advance Fee Lenders - The victims are often contacted by phone or e-mail or respond to fake newspaper or online ads. They are offered quick and immediate loans despite past credit history and with little or no background check. The one requirement is the payment of advance fees. It is illegal for any business to request any fees to be paid up front prior to disbursing a loan. After the victim wires the money, he never sees his loan funds or advance fee payment again.

4. Mortgage Foreclosure Rescue/Loan Modification Scams – Because foreclosure information is publicly available, many scammer contact desperate homeowners and promise to save their homes while loan modification companies promise to renegotiate your loan and reduce your payments. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract.

5. Timeshare Resellers – Consumers are generally contacted by phone or mail and told that their timeshare is in a “hot” market or they have a buyer willing to purchase their timeshare, but first they need to pay a hefty fee in advance or enter into contracts that same day. In a standard real estate transaction, fees are paid from the proceeds of the sale. In a timeshare scam, victims do not end up selling their timeshare and they generally do not hear from the company again.

6. Mystery/Secret Shoppers - Websites or newspaper ads often asks that you “register” and pay a fee in order to receive information about a certification program, a directory of mystery shopping companies, or baseless guarantees of obtaining mystery shopping positions. Most don’t exist, have already expired, or have nothing to do with legitimate secret shopping offers.

7. Grant & Government Job Finding Entities - Offers of “free” government grants or assistance with research, grant applications, or government employment should all be regarded with caution. The majority of these entities charge for services, applications, or information that can be easily obtained for free by doing online searches or visiting school financial aid offices.

8. Not so “Free” Trials – Online offers often do not disclose the billing terms and conditions or do not have such details prominently displayed online. Consumers often end up being repeatedly billed for products and services they didn’t want.

9. Phishing, Smishing, and Vishing – “Phishing” is a crime that uses spam e-mails to deceive consumers into disclosing their personal or financial information.

”Smishing” is the practice of sending a phishing message to steal credit card or identity information via cell phone text messaging.

The latest form of identity theft is “vishing” which uses Voice over Internet Protocol (VoIP) to gain access to private and personal financial information. Recipients hear automated recordings that alert them to fraudulent or suspicious activity on their credit card or bank accounts which instructs them to call and input their personal information.

10. Check Scams – Consumers receive a check in the mail, allegedly for winning a sweepstake, lottery or promotion. They are urged to deposit the check, and then write another from their own account to cover alleged taxes or fees. The check that was deposited turns out to be worthless while the check sent by the consumer is good, and that money ends up being unrecoverable.

“Remember, before giving any company credit or debit card information, the BBB recommends reviewing the website fully to avoid potential billing nightmares,” said Bernas. “These scams and others are preventable with the right resources.”  

For more information on these top 10 scams, visit www.bbb.org .

Related articles

• Consumer Ally's Top 5 Scams of 2010 (walletpop.com)
• How to recognize an email scam or phishing attempt (downloadsquad.switched.com)

BBB Warns Against Five Scams Targeting Senior Citizens

Fraud targeting senior citizens by scammers is an ongoing concern. The Better Business Bureau encourages families to keep the lines of communication open with their elders regarding finances and to recognize some common cons aimed at senior citizens.

According to a June 2010 survey by Investor Protection Trust, more than 7.3 million senior citizens—roughly 20 percent of Americans aged 65 or older-- have “been taken advantage of financially in terms of an inappropriate investment, unreasonably high fees for financial services, or outright fraud.”

“Having a serious conversation with your elderly parents and relatives about how they are managing their money is not easy, but it is extremely important in order to help protect them from criminals,” said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. “It’s extremely important to keep the lines of communication open so that you can identify suspicious spending habits, as well as educate your elder family members on recognizing the red flags of common scams.”

The BBB warns against the following scams where seniors often fall victim:

Sweepstakes and Lottery Scams –Typically, the victim receives a letter in the mail stating they have won a lottery or sweepstakes; it might even claim to be from Publisher’s Clearing House or Reader’s Digest. The letter instructs the victim to deposit an enclosed check and then wire a portion back to the company to cover taxes or administration fees. While the funds will initially show up in the bank account, the money will be removed when the bank determines the check is fake. The victim loses whatever he wired back to the scammers—often amounting to thousands of dollars.

·         BBB Advice: Never wire money to someone you don’t know. You should never have to send money to receive any winnings from a lottery or sweepstakes. Be suspect of winning from something you never bought a ticket for or entered.

Medicare Scams – Navigating the Medicare system isn’t easy and some scammers will look for any opportunity to take advantage of the confusion. Commonly, a scammer will claim to be with Medicare and ask for personal information such as Medicare, Medicaid, social security, credit card or bank account numbers. The victim might be given any number of excuses to provide this information including that an error needs to be fixed, that he or she is part of a survey or eligible to receive free products or can sign up for a new prescription drug plan.  

• BBB Advice: Remind your elderly family members that Medicare will never call to ask for sensitive personal financial information. If you suspect fraud contact your local police or the Health and Human Services Office of Inspector General.

Bereavement Scams – Scammers will often try to take advantage of the increased vulnerability of senior citizens who have recently lost a loved one, such as a spouse; one common method is by scouring the obituaries and call looking to claim on the deceased person’s debts.

• BBB Advice: Offer help to elderly family members if they have recently lost a loved one and are inexperienced in managing finances and personal affairs. If you are uncertain about owing a debt when collectors call, ask for written confirmation.

Deceptive Professionals – While many scams targeting senior citizens might not have a face, some scammers will be invited in the front door including technicians, contractors, chimney sweeps, air duct cleaners and other services. Some professionals will lie about the extent of the problem or claim safety issues and then inflate prices for unsuspecting senior customers.

• BBB Advice – Find professionals you can trust by checking out www.bbb.org  Always research a company with the BBB before you hand over any money and report any deceptive services to your BBB, local law enforcement and Illinois’ Attorney General’s office. 

Investment and Work at Home Opportunities - Promises of easy money often target older adults because they may be looking to supplement their income. The pitch might come in the form of an investment opportunity that promises big returns, or as a way to make money at home for an upfront cost. Regardless of the specifics, the victim is offered what sounds like a great opportunity but the extra income never materializes.

• BBB Advice: Always research any work at home opportunity with the BBB prior to agreeing or sending money. Beware of investment or money-making offers that seem too good to be true or use high pressure sales tactics to get you to sign up immediately. Ask a trusted family member or friend to review anything that requires an advance fee be paid.

For more advice on avoiding scams and fraud visit: www.bbb.org