Consumers throughout Chicago area and northern Illinois were targets of scams in 2008 that grew in complexity and sophistication. However, the Better Business Bureau of Chicago and Northern Illinois recommends three easy-to-remember general rules to avoid being a victim of a scam: Don’t pay upfront fees for promised services, always confirm who is asking for personal or financial information, and if it sounds too good to be true, it probably is.
The 10 top scams of 2008 are:
1. Check scams
2. Advance fee lenders
3. Mortgage Foreclosure Rescue scams
4. Illegitimate credit repair & debt negotiation services
5. Work at home and fraudulent employment opportunities
6. Phishing and fake e-cards
7. Mystery/secret shopping scam
8. Phony directories and yellow pages
9. Grant & government job finding entities
10. Deceptive weight loss products advertising
1. Check scams – Consumers report receiving checks in the mail, allegedly for winning a sweepstakes, lottery, or promotion. These checks all look very official and communicate urgency with words such as “Final Notification.” That’s designed to stop the consumer from thinking about what the scammers want the person to do. What’s common to all the variations of this scam is that the consumer is urged to deposit the check, and then write another check from the consumer’s bank 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.
In reality, both the letter and the check are fraudulent, and the consumer forwards his or her own money before realizing that there is a problem. In many instances the consumer’s account winds up being overdrawn and is left with insufficient funds. To worsen the ordeal, the financial institution may hold the consumer criminally responsible for trying to deposit a fraudulent check. Any such checks should be turned over to the US Postal Inspection Service.
2. Advance fee lenders - These scam artists frequently contact consumers by phone after consumers fill out online loan applications or respond to illegitimate newspaper ads. Scammers may have professional-looking websites and contracts, and offer quick and immediate loans, usually “to be wired within 24-48 hours” to a victim’s account. The catch: the consumer is requested to pay advance fees before they receive the loan. After the victim wires the money, he never sees his loan funds or advance fee payment again. Advance fee lenders almost always use fake physical addresses or use real companies’ addresses in an act of identity theft.
The scammer will claim this fee to be for insurance, collateral, or premium, and will ask the consumer to wire the money via Western Union of Money Gram, almost always to a location in Canada. The names on contracts are generic and most likely fabricated, and the phone numbers to contact the scammers are usually 800, 866, or Canadian area codes. Consumers should be aware that is it against the law for any business to collect advance fees for loans before the loan is disbursed.
3. Mortgage foreclosure rescue scams – Due to foreclosure information being publicly available, many scammers contact desperate home owners and promise to save their home. They will claim to know investors or a “loop-hole”, or will claim to be able to bypass the involvement of attorneys or other agents, thereby leaving the consumer in a complex and vulnerable situation. Victims of foreclosure rescue scams are asked to pay upfront funds or provide sensitive personal information. On many occasions the scammer will rob unknowing consumers of their money and do nothing for them in return, while in other cases the consumer may unknowingly sign away their property deed entirely, on pretense that “they’ll be able to buy it back later.”
Once the scam artist has the consumer’s property deed, they are in a position to raise the consumer’s rent so high that the consumer will not be able to afford to make the payments, and may wind up being evicted from their own home. The BBB strongly advises anyone going through foreclosure to thoroughly research any businesses they are dealing with. It is a good idea to contact the Department of Consumer Services to get more information on whom to go to for help.
4. Illegitimate credit repair & debt negotiation services - Due to the troubling economic situation, many consumers seek out credit repair or debt settlement companies- here is what you need to know about them and how to determine their legitimacy.
- These services can not ask for money in advance.
- They can not automatically get legitimate negative reports off your credit report.
- Be extremely cautious about a service that recommends you not pay creditors so it can negotiate. This could negatively affect your credit report.
- A service should never guarantee they can cut your debt by a specific percentage.
1) It is against federal law -- the Credit Repair Organizations Act -- for any credit repair company to charge you in advance for their services. The only time they can ask for payment is after all of the services they were to do for you are completed; whether this takes 3 weeks or 10 months. 2) A credit repair company cannot tell you that they can get negative (but legitimate) items off of your credit report. The main aspect of credit repair organizations’ work is writing to the credit reporting agencies to dispute the items on your report by asking for their validation. If the items on your report are real, such as liens, bankruptcies, etc, the credit reporting agencies will not have a problem validating them. Also, keep in mind that disputing items on your credit report is something you can do by yourself, for free- you can easily find the appropriate dispute letter templates on the internet. 3) Many debt settlement or negotiation companies request that you don’t pay your creditors and wait until you are behind in payments so that they can contact your creditors and attempt to negotiate to have your debt reduced in exchange for making a payment on the spot. While some creditors may agree to this to get at least partial payment, your credit rating will suffer, your interest rates may go up, and you may have trouble obtaining future loans or financing. 4) Debt settlement or debt negotiation companies should not guarantee that by enrolling in their services, they can cut your debt by any specific percentage, such as “40-60%”.
5. Work-at-home and fraudulent employment opportunities - Work-at-home and business opportunity scams are frequently found online as well as in the classified sections. They promise high income for minimal work and minimal 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- essentially junk mail. Internet employment opportunities, mostly found on job boards, looking for “shipping” or “billing managers”, “payment processors”, or anything with a financial sounding name, very frequently turn out to be fraudulent listings that are in actuality looking for victims to commit money laundering by accepting and forwarding payments.
An offer found on a legitimate website might state that it is a developing company in a foreign country, and looking for US employees to accept, process, and forward payments on behalf of the company’s clients. The description might sound innocent enough and require little skill or education, but it is actually a very serious crime which the victim might unknowingly participate in. There are also employment ads that lead the consumer to believe they are applying for office management positions, but upon being
hired by the company many candidates find that they have to do commission-based door to door sales in order to qualify for the job advertised. Consumers should seek a very clear understanding of what the position that they’re applying for entails and what will be expected of them. Lastly, consumers should be wary of any employer that asks them to pay upfront fees- they are to pay you for doing work, not vice versa. Many consumers report to have paid advance fees for “background checks”, training kits, or for investment fees, only to end up losing their money to misleading job offers.
6. Phishing and fake e-cards - Phishing is a crime and a high-tech scam that uses spam to deceive consumers into disclosing their personal information. Scammers create a legitimate looking email from a bank or financial institution, which is then sent en masse to consumers. The email asks for a confirmation of the consumer’s account and personal information. It might state that there has been a security threat and that’s why consumer must verify this info by clicking on a link within the email. If followed, the link subsequently reroutes the consumer to the scammer’s website, which may look similar to a site of an already established institution, and the consumer winds up sending their personal information and bank account to a thief. Scammers also use e-cards to people that cause them to enter personal information that would allow the scammers access to personal data.
Phishing is conducted via difference scenarios, a common one being via a fake e-card. Electronic cards, knows as e-cards, are a popular way to send internet greetings. Unfortunately they are also used fraudulently and may contain directions to follow links to illegitimate sites or that contain trojans or other viruses that can crash a consumer’s computer or install spyware. If you receive email from an unknown recipient that asks you to open an attached document or follow a link, don’t do it! It’s best to delete it immediately.
7. Mystery/secret shopping scam - Fraudulent mystery shopping promoters frequently use newspaper ads and internet solicitations to create an impression that they are affiliated with or work for respectable and reputable companies. The website that you will be led to 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.
When attempting to contact the promoter of the offer, either the business does not return phone calls, the consumer gets the run around, and/or no refunds for the upfront fees are available. It’s wise to contact retailers directly to see if they offer any secret shopping opportunities, or sign up to be a shopper for your local BBB.
8. Phony directories and yellow pages - Phony directories or yellow page scams usually target small to medium sized businesses. The scam manifests itself in the form of solicitors calling businesses and seeking to verify the company’s name and physical location, and allegedly calling to “renew” or “re-enroll” an existent yellow pages listing or advertisement. Many companies or their employees are misled into accepting the alleged “renewals.” The illegitimate directory provider immediately sends an invoice for this service, usually in the amount of hundreds of dollars, and threatens businesses with collections or credit report damage should they dispute the charges or decline to pay.
If you or your business has been victimized by a phony or unsolicited directory, file a complaint with the FTC at ftc.gov
9. Grant & government job finding entities - Now more than ever consumers are looking for ways to cut corners and obtain financial assistance to help them finance projects, debt, as well as paying for school. Entities claiming to assist in grant research, grant applications, or conducting grant or government-oriented seminars with the aim of helping consumers find applicable grants 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.
Also, many such companies go by formal or government-sounding names, making consumers believe that they are somehow affiliated with the government. This is only a marketing gimmick- in practically all cases the companies have no relationship or affiliation with any governmental grant or employment office.
10. Deceptive weight loss products advertising - With the Brazilian acai berry being the new Hoodia to allegedly promote weigh loss, many weight loss pill distributors have been advertising the effectiveness of their weight loss products wildly via the internet and through conventional ads. Most come with flashy yet unsubstantiated statements, lengthy but questionable testimonials, and free trial offers. The BBB would like to alert consumers of an increased volume of complaints against both the effectiveness of the products as well as about the deceptive nature of the free trial offers. The trials themselves are very time sensitive, and consumers must return the unused portions of what is generally a month’s supply of pills before the offer is over- otherwise the consumer’s credit card is immediately charged with pricy monthly fees, which are difficult to cancel or get refunded.
BBB’s nationwide have received thousands of complaints from consumers who thought they were signing up for a free-trial offer of acai berry weight loss products that were supposedly endorsed by Oprah Winfrey, Rachel Ray and other celebrities; in the end, the free trial cost them, month after month.
The BBB would also like to advise consumers that generally none of the statements attached to the heavily advertised weight loss products are evaluated by the FDA or proven to be effective. Remember: if it sounds too good to be true, it probably is.