8 common scams: How to spot them and
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
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. And, by the way, you can search Bankrate
for lists of fee
and no-fee credit cards -- for free.
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.
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
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.
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 online. 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
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.
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.