Fraud Alerts

Top 10 Financial Scams for 2008

According to by Mark Huffman
  1. Foreclosure Rescue Scam. As the economy began to slow in 2008, only to fall into meltdown mode in September, the foreclosure "rescue" scam snared an increasing number of victims. The FBI reported in May that mortgage-related fraud was up 176 percent year over year.

    A foreclosure rescue scam typically works this way: The "rescuer" approaches a desperate homeowner and promises to help to ward-off foreclosure. The homeowner has to make payments to the rescuer, as well as sign over the deed to their home. That supposedly stops the bank from foreclosing. Of course, it doesn't. And to make matters worse, the homeowner has signed over his home, losing any equity he might have.

  2. Unauthorized Charges.  Unauthorized charges can take many forms, from sneaky negative option marketing to outright cramming. In that latter, an unscrupulous company simply places a small charge on your credit card or phone bill and hopes most people won't notice.

    But authorized charges can also occur when a supposedly legitimate business offers you a "free trial" of something. It usually occurs when you've just made a credit card transaction with another merchant. What consumers don't know is the business offering the "free" trail has a relationship with the company you've just given your credit card to. Next thing you know, you're being charged $9.95 a month for something you've never heard of. The companies most often complained about with this scam are ILD and Trilegiant.

  3. Work at Home Scams. Work at home schemes have proliferated to the point government agencies this year launched a coordinated offensive against them. Project Fal$e Hope$ was a Federal Trade Commission (FTC)-led effort that targeted bogus business opportunities and work-at-home scams and resulted in more than 100 law enforcement actions by the FTC, the Department of Justice, the U.S. Postal Inspection Service, and law enforcement agencies in 11 states. 

    A stalwart of the work-at-home schemes this year is the "secret shopper" scam. The secret shopper is a legitimate tool for retailers. Consumers are recruited to visit a place of business and report back on service, the appearance of the store, and other things. It's hardly a lucrative or glamorous occupation.

    In recent years scammers have tried to present secret shopping as fun, exciting and lucrative, hoping to enlist people looking for a fun, easy job. At best, these victims are required to pay an assortment of advance fees and end up with neither money nor promised merchandise.

    At worst, these scams enlist "shoppers" to wire large sums of money through MoneyGram, to "test" the effectiveness of the service. They are given a check to cover the funds, but the check turns out to be counterfeit.

  4. Phony Government Official Scam. Some consumers are easily intimidated by anyone who claims to be from a government agency. Scammers are increasingly turning that to their advantage, masquerading as officials of agencies like the Food and Drug Adminstration (FDA), FTC, and that most fearsome agency, the Internal Revenue Service (IRS). 

    The FDA says it has received numerous reports of calls enticing consumers to purchase discounted prescription drugs by wiring funds to one of several locations in the Dominican Republic. No medications are ever delivered. A subsequent call is received from a fraudulent "FDA special agent" informing the consumer they've broken the law and must send a fine of several thousand dollars to an address in the Dominican Republic to prevent incarceration or other legal action.

    The FTC has received reports that people who claim to work for the agency call to say they have won a lottery or sweepstakes. To receive the prize, all they have to do is pay the taxes and insurance. But there is a catch - you have to wire money or send a check for an amount between $1,000 and $10,000. It's a new wrinkle in the old tried and true false lottery scam.

  5. Financial Meltdown Scams. In mid-September the financial world seemed to come unglued. Congress was told it had to "bail out" the banks to the tune of nearly a trillion dollars to keep the economy from collapsing. The stock market went into a swoon and businesses began cutting jobs as fast as they could.

    By early October the New York State Consumer Protection Board (CPB) was tracking an increase in scams related to the financial crisis. The agency spotlighted credit counseling scams, payday loans, phony job offers, and investment scams as increased threats to consumers.

  6. Campaign 2008 Scams.  The historic 2008 presidential election energized millions of new voters, and where there is interest and enthusiasm for something, scammers won't be far behind.

    No sooner had Barack Obama been elected than online "brokers" were offering to sell tickets to his January 20, 2009 inaugural. There were just two problems with that - tickets are free, and are only available through Congress and the new administration.

    Another scam involved Obama's election night victory speech from Grant Park in Chicago. A spam email went out that invited recipients to view an online video of the speech. Visiting the site required users to install an "Adobe Flash Players" in order to watch the speech.

    However, the downloaded program is not an Adobe Flash player. It's actually a "keystroke logger" or "keylogger." Installing it will cause all user IDs and passwords, whether for online banking, online stores, email, or even chat programs, to be sent to the criminal's computer.

  7. Fake Lottery Scam. As in years past, most of these scams are based in Canada. This year, scammers masquerading as the Atlantic Lottery have snared victims south of the border.

    There actually is an Atlantic Lottery Company in Canada, which warned in August that scammers were using its name. The real Atlantic Lottery says that to win any of its cash prizes, you must have purchased a ticket from an authorized retailer in New Brunswick, Nova Scotia, Prince Edward Island or Newfoundland and Labrador, or on their PlaySphere website. The company said it is not authorized to operate lotteries or games of chance outside of Canada.

  8. Charity Telemarkeing Scam. Scammers claim to be raising money for a certain charity while very little or no money goes to the charity. 

  9. EPPICard Scam. A number of states have turned, in recent years, to administering payments and benefits electronically, through the EPPICard. Instead of receiving checks, recipients access their payments with the EPPICard, much as they would a debit card.

    Scammers have recycled an old credit card/debit card scam and targeted EPPICard holders. Using bogus text, voice and email messages, scammers warn of a problem with the victim's EPPICard account and say it will be closed down unless they act.

  10. Kevin Trudeau's "Weight-Loss Cures They Don't Want You to Know About" Book. Kevin Trudeau has been on the top 10 list for years. He has been banned from infomercials and order to pay more than $5 million in profits from his book. When consumers purchase the book, the FTC charged, they find it describes a complex, plan that requires severe dieting, daily injections of a prescription drug that consumers cannot easily obtain, and lifelong dietary restrictions.