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Saturday, October 24th, 2009

Beware of ‘Free’ Trial Offers from Online Ads

A recent report from msnbc.com tells the cautionary tale of online shoppers who were intrigued by ads offering "free samples" of a new kind of toothpaste. Many of these people clicked the ad to receive a sample – and instead lost hundreds of dollars.

After entering their credit card numbers for "shipping costs," victims found that monthly deductions of $58 showed up on their accounts.

Warning Signs & Red Flags

This scam had elements in common with other online scams we've written about here before. Generally speaking, any of the following should signal to you that the "free" offer in question is most likely a way to take your money.

  • Minimal payment upfront. In the case most recently documented (in the article), victims were asked to pay a five dollar shipping charge.
  • Use of credit card. If an offer requires you to enter your credit card information, close that screen and walk away from the computer. Any truly free offer should not involve payment.
  • Fine print. Many Internet users skip right over "terms of agreement" texts, often because they're long and boring-looking. But that section contains important information – and it may reveal the "free" offer to be a costly deal.

The Internet can be difficult to navigate, because nefarious links often appear on otherwise trustworthy sites – in fact, in the msnbc.com story, victims reported just such an occurrence.

So take caution: Just because you trust a site doesn't mean you can trust the ads that appear on it.

What to Look Out For

Online scams often sound tempting to consumers because they're designed to appeal to our weaknesses. Products commonly seen as part of online scams include:

  • Beauty and weight-loss products: Supplements, diet systems and even whitening toothpaste may be presented in "free trial" form.
  • Work at home offers: Bogus opportunities for self-employment (with guaranteed hefty paychecks) crop up frequently.
  • Fads and trends: Products or services that allow you to sample a new trend for "free" can be fraudulent, too.

Remember: if something is really worth having, it's worth paying for. And if you wouldn’t pay for it in the first place, you really don't want to overpay in hidden costs and "membership fees" that offer you little or no real benefit.

Additional Resources

How to Avoid a Scam (PDF)

Avoiding Online Fraud (PDF)

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Posted in Financial Literacy | 3 Comments »

Tuesday, September 15th, 2009

FTC’s Ban on Robocalls in Effect

The FTC reported last week that its rule prohibiting automated phone calls about vehicle maintenance took effect September 1, 2009. What does that mean for you? Hopefully, one more way to prevent scammers from tricking you into giving away your money.

The Scam: Threats of Ending Car Warranty

According to the FTC, the scam worked like this:

  • Customers received pre-recorded phone calls suggesting that their vehicles’ warranties were about to expire.
  • Scammers then prompted victims to pay for pricey and unnecessary car service contracts unrelated to their original warranties.

Thanks to legal action taken by the Federal Trade Commission, such telephone calls are no longer legal, and the companies accused of setting them up could face criminal penalties.

Who’s Involved and the Penalties They’ll Face

The chief company named by the FTC is Transcontinental Warranty, Inc. It and its parent company have reportedly been banned from making any more prerecorded calls. The first of September was significant to this case because it marked the beginning of the FTC’s planned enforcement of the ban on prerecorded commercial calls enacted a year ago.

Some organizations are exempted from the prerecorded call ban, though. These include:

  • Groups delivering strictly informational messages
  • Politicians
  • Banks
  • Telephone Carriers
  • Most charitable organizations

Debtors should know that debt collection agencies fall under the "informational" group, and will still be allowed make make automated calls. Debtors may only be able to end these calls by making arrangements to repay the debt or by filing bankruptcy.

Groups that choose to ignore the restriction could face fines up to $16,000 per call.  Telemarketers may be able to place automated calls to customers who opt-in to receive them.

It seems that Transcontinental has temporarily been excused from paying the proposed settlement ($24 million) because the company lacks sufficient funds to make payments, but that information is subject to change.

Your Consumer Rights

The Federal Trade Commission and other government entities exist to protect you the consumer from deceptive and unfair business practices. If you suspect you have been victimized by an illegal scam, consider telling a lawyer or filing a complaint online with the FTC.

To learn more about what types of protection you can expect, check out this page on your consumer rights.

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Posted in Bankruptcy and Predatory Lending, Financial Literacy | No Comments »

Saturday, August 29th, 2009

Consumer Alert: Fake Bill Collectors and Rebate Checks

As you hopefully know, a well-informed consumer is a tricky target for a scammer.

Here’s a summary of are two new scams that have been reported in various parts of the country, and what you can do to protect yourself from them.

Phony Bill Collectors

Reports suggest that scammers are posing as debt collectors and threatening consumers over the phone while demanding payment.

  • Fake agency affiliation: One con artist apparently claimed he was from the “Federal Investigation Authority,” an organization that does not exist.
  • Bogus claims about consequences: Sources indicate that consumers have also reported threats of jail time if they didn’t pay debts – often, debts they no longer owed. NOTE: You cannot be sent to jail for debts. Your home may be foreclosed on, you may have your car repossessed and your wages could be garnished, but debtor’s prison is a thing of the past.
  • Worrisome knowledge of personal information: Perhaps the most troubling characteristic of this scam is that, according to sources, scammers call with a frightening knowledge of the victim’s life: SSN, friends’ names, home address, etc.

These scams can be dangerous for a variety of reasons, the least of which is that scammers might call your work phone and force you to explain an embarrassing situation to your colleagues.

  • Protect Yourself. If you’re called by a suspicious collector:
  • Don’t give out any information. Even if he already knows your digits, refuse to verify any of it.
  • Don’t agree to anything. Demand to see written proof of your debts before proceeding with the conversation.
  • Contact the original company. If you truly still owe a debt, you can find out by calling whatever company the caller names.

Rebate Check Scam

After using a credit card to purchase a number of Snuggies, one consumer reportedly received a check for $8.25 in the mail.

It appeared to be a rebate check, and had the Snuggie logo on the envelope. It was not.

  • Read the fine print. The check in question apparently indicated that, by endorsing it, consumers agreed to a month-long trial membership to “Great Fun,” a discount travel company.
  • Proceed with caution. While that may not seem so bad, the rest might. After the trial month, consumers would be automatically enrolled for full-time membership – at a cost of $150 per year, to be charged to the credit card used for the Snuggie purchase.

If you’ve received one of these checks or been victimized by a similar scam, take action by filing a complaint with the Federal Trade Commission.

Protect Yourself: Never sign a check (especially one you weren’t expecting) without reading all fine print associated with it. If that means finding a magnifying glass, then so be it!

Additional Resources
Fair Debt Collection Practices Act (PDF)

Have you been a victim of a scam? Consider filing bankruptcy.

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Posted in Financial Literacy | 4 Comments »

Sunday, July 19th, 2009

FTC Cracks Down on Scammers Targeting Job Seekers

The high unemployment rate and therefore high volume of online job seekers has led to scams tailored to the conditions of the current recession.

Scammers are apparently preying on struggling and out-of-work Americans in two major ways:

  • Identity theft scams: Some scammers pose as employers and post fake job opportunities on employment websites or hack into legitimate companies to get job seekers’ sensitive information.
  • Get-rich-quick scams: Others are posting lucrative-seeming job offers, knowing that many people are desperate to recover their lost finances. After a victim makes his or her initial “investment,” the scammer keeps the money.

“Operation Short Change” to Aid Consumers

At the beginning of the month, the FTC announced that it has initiated eight new lawsuits and settled or resolved seven others against companies responsible for conning consumers out of money.

The announcement is particularly poignant because many of the scams in question involved consumers already struggling to pay bills, thanks to rough economic conditions.

As part of its consumer protection efforts, the FTC has posted this video for consumers to view.

It includes confessions from a scammer who eventually went to jail for his misdeeds and personal accounts from Americans who were victimized by costly scams.

Protecting Yourself from Scams

BusinessWeek reported that scammers have used stolen information in a variety of ways.

Some fraudsters sell stolen information to illegal immigrants who need Social Security Numbers for employment; others opt for more traditional identity theft crimes.

In one troubling case, online jobseekers’ sensitive information was apparently compromised in a data breach at a company called Aetna.

So what can you do to minimize your potential for getting scammed or becoming the victim of identity theft?

  • Guard your personal data. Treat any identifying numbers (credit card, SSN, bank account, etc.) like gold. Legitimate companies generally don’t need your identification digits unless you’ve been offered a job (which means you’ve spoken to a person!) or need high-security clearance.
  • Be skeptical of too-promising offers. If a business or investment opportunity sounds too good to be true, it’s likely a scam. The video above has some tips on how to identify and avoid costly and dangerous “opportunities.”
  • Get thee to a job fair. If you’re looking for jobs, a job fair can be a great place to make contact with actual humans. Afterwards, you’ll have a better sense of who’s receiving your application (as opposed to risking sending it to a malicious scammer).

The good news is that the FTC has taken action to protect your consumer rights.

Remember, though, that you play the biggest role in actively protecting yourself.

--If you've become a victim of identity theft and your finances have been trashed by a crook, it may be time to learn about the filing bankruptcy option.

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Posted in Financial Literacy | No Comments »

Friday, June 5th, 2009

Expensive Scams & How to Avoid Them

Day-to-day life demands enough of your hard-earned money: between bills, food costs, and unexpected expenses - sickness, injury, Grandma’s 80th blowout bash … - many people like they have a leak in their checking accounts already.

So scams and schemes that drain your funds without giving you anything in return should be avoided at all costs.

Your best bet for doing so? Educate yourself.

Fake Check Scams

A recent report on msnbc.com revealed that scams involving phony checks are on the rise.

Apparently, these scams involve three main elements: you receive a check in the mail, you’re instructed to cash the check and wire money to someone, and you end up losing a few thousand dollars.

Unfortunately, millions of Americans have already been taken in by these scams, which often seem legitimate. Common tricks scammers use include the following:

  • Fake buyer offers: Some checks arrive in response to an ad you’ve placed to sell an item, like a car or a piece of furniture. These may follow an email or letter explaining that the person will send a check for more than your asking amount (RED FLAG!), and ask you to wire the extra money to a third party.
  • Fake lottery wins: Other bad checks come as your “prize money” for a lottery game you never played. After depositing the money, you’ll be asked to pay some taxes and fees to collect. Legitimate organizations would never require you to do this.
  • Mystery shopper tasks: Yet another scheme involves identifying you as a “mystery shopper” who needs to deposit a check and wire most of it (you’ll keep some for your trouble) from a specific location – ostensibly to evaluate that location’s services.

THESE OFFERS ARE SCAMS

As a basic rule of thumb, never agree to wire money to or for someone you don’t know.

This is serious. In fact, one reason some people turn to filing bankruptcy is because they became victims of scammers. Don't be fooled.

And, while many of us consider ourselves fairly savvy about the scams out there, they can be treacherous because they’re often very clever. Sources indicate that:

  • 59 percent of respondents to a poll incorrectly thought that a bank will make sure a check is good before letting you withdraw the money
  • 40 percent thought they couldn’t be liable for transactions made after depositing a bad check

In reality, neither of these is true. In fact, even asking whether a check has “cleared” is not enough to make sure you’re safe: “clearing” only means that you have access to the money involved – it has nothing to do with whether or not a check is valid.

Be an active, informed consumer, and know your consumer rights.

People will continue to develop new scams to trick the unsuspecting. The best thing you can do to protect yourself and your hard-earned cash is to learn as much as you can about what’s out there and how to avoid it.

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Posted in Identity Theft | 1 Comment »