Do your own investigation. Avoid scams. Live free.
CHAPTER 6
Fraud.
Con artists commonly use the same scams.
Here's how to recognize them.
Consumers lose about $40 billion a year to con artists, and the most common scams largely remain the same.
The figures are stunning: Consumers lose about $40 billion a year to con artists who spend all their waking hours figuring out how to make their latest score. Knowing that, ask yourself this question: Faced with a crook and his or her fraudulent scheme, would you easily recognize the danger? Think so? Maybe you would, but just to make sure, let's layout the facts.
What Is Fraud?
We hear about fraud on television, radio and in the newspapers. It can happen in the business arena, political circles and to you, the consumer. Fraud is defined as intentional or deliberate deception for unfair or unlawful gain. What it comes down to is your getting ripped off. That means losing your money, property or anything else that's rightfully yours.
Who Are The Operators?
Usually, they're smooth, savvy criminals who know how to make you feel comfortable. They're cunning and expert at how to read you and expose your weaknesses. They're experienced at taking advantage of people like you.
Who Are The Targets?
Just about everyone. Common targets include women, people who live alone and those who need to supplement their income. The elderly tend to be the easiest prey. In fact, three-fourths of victims are senior citizens who, because they may be lonely or vulnerable, are open to such crooks.
Often we're called in to locate a con artist who has absconded with a couple's nest egg, like the elderly couple who lost $50,000 in a bogus investment.
The easiest way to protect your pocket? Protect your home. About seventy percent of the elderly have homes in need of a handyman, which is just the recipe for a con artist working a house repair angle.
Want to read about more schemes?
25 Frauds And How To Avoid Them
Targeting Your Home
Your home seems to have a bull's-eye on it when it comes to criminals. Here are the ways they try to take advantage.
1. City Inspector
A person with a clip board shows up, saying he or she needs to inspect the electrical wiring, heating unit or plumbing. After the inspection, you're told the situation is dangerous and repairs are needed. The inspector has a friend, though, who can help out. You can get stung twice: you probably didn't need the repairs and the repair work they do is of poor quality. Either way, you end up reaching into your wallet or purse.
Anyone who claims to be a government official or an inspector will carry identification. Checking it is smart, but keep in mind that IDs can be fake. Call the person's department for verification by looking up the government number in the White Pages phone directory or using 411 information. Don't accept the number from the "inspector" or get it off the business card.
2. Pest Control
An "inspector" or "exterminator" visits your home to check for termites or other pests. You may be told that there have been problems in the building or neighborhood. The exterminator finds signs of infestation and shows it to you. But the insect- or termite infested wood he claims came from your home, he brought with him.
A good place to check credentials is the Better Business Bureau; the local number is found in the White Pages. Bottom line: Be wary of anyone who just shows up and volunteers to inspect your home.
3. Home Improvement
Then there's the one where a "contractor" offers to work on your home (adding a room, improving landscaping or repairing electrical or plumbing) or inspect for problems, such as radon or gas leaks. Maybe he says he can do the work cheaply because of "leftover" materials from a previous job. Once paid, he does a poor or incomplete job.
Have home repairs and inspections performed by qualified professionals-only after you've requested their services. Also, research the contractor's background and check references with previous customers. Finally, determine whether he or she is licensed with the State Licensing Board and inquire about them at the local Better Business Bureau.
Out And About
Here's more criminal trickery that can happen anywhere and to most anyone.
4. Bank Examiner
You're approached by someone who says he works for your bank and needs help catching an employee suspected of embezzling. To do this, he needs you to withdraw some of your money as part of a sting operation. Maybe he says that he'll take your money in exchange for a receipt and promise to redeposit it after the employee is caught. But instead, you never see your cash again. No matter how convincing the story sounds, remember that reputable banks don't work this way.
5. Pigeon Drop
This is when the crook says he found a wallet carrying a lot of money. He offers to share the cash with you later, if no one claims it. But first, you have to give him some of your money as a good faith gesture. Of course, he disappears with your money.
6. Lottery
Someone who says she's an undocumented alien or otherwise living illegally in this country approaches you, claiming she has a winning lottery ticket. Because of her status, she can't cash it. She offers to sell this worthless ticket to you for a portion of its huge "value."
In another slant on this, a "law firm" calls to say you've been given or willed a winning ticket. But before receiving it, you must pay for a bogus computer verification of your identity.
Common Frauds
A true-life story
Mr. and Mrs. Harvey Nielson are a lovely couple who have been married for 42 years. Their story is simple, short and typical of many of our clients. They place large sums of money into investments that always look too good to be true.
What is unique about the Nielsons is that they have hired us nine times to perform background investigations on companies or individuals with whom they are about to invest. On each and every occasion from 1992 through 1996, we have prepared a full written report with recommendations that they not invest with the individuals or companies. Each and every time they ignore our advice, place the money in the investment and ultimately lose all their principal.
It is simply baffling to me that people will pay for our advice, ignore it and then come back and do it all over again. This falls into the category of "felony stupidity." May you be wiser by remembering the Nielsons' foolishness.
7. Obituary
This "con" is especially insidious because it targets widows or others who have just lost a loved one. The criminal gets your name from the newspaper obituary section and tells you that he has merchandise or a C.O.D. package your relative ordered before dying. The con artist wants you to pay the remaining charges, and you, in a vulnerable state, feel obligated to do so. You aren't obligated.
8. Magazine Subscriptions
Someone, probably a young person, comes to your door and asks you to buy a magazine subscription to help him win a sanctioned prize or get funds for his high school or youth club. But the subscription is bogus and you never receive one issue.
9. Product Demonstration
A salesperson tells you she's having a bad day and asks if you can help. She wants to let her boss know she's a hard worker, so you're asked to sign a form verifying that the salesperson demonstrated a product to you. Actually, you're putting your signature on an order form for the product you had no intention of buying.
10. Unknown Visitors
A stranger-who appears harmless, maybe a pregnant woman or a mother and child, shows up at your door. She needs to make a call, maybe because her car has run out of gas. Once in, she asks for a glass of water or otherwise distracts you while robbing your home. Instead of allowing a stranger into your home, offer to call for help or direct her to a public phone.
11. Need Help
A variation on this is when a person or a couple tells you they have an emergency. They need a bit of money, maybe $5 or $10, to buy gas or fix a flat tire. They promise to pay you back and hand over a driver's license or some other identification as collateral. But the ID is a fake and you never get repaid.
12. Theft Of Credit Card Number
You receive a call that there's been unauthorized use of your credit card, phone card, bank card or checking account. For verification, the caller needs your correct card numbers. But what she really needs the numbers for is to charge goods, services or calls to your account.
Looks Good, Look Again
False or misleading advertising is as fraudulent as any of the scams we've already exposed.
13. Work At Home
You respond to an advertisement or offer to work at home. You'll be paid once the project is done and, often, you have to give some up-front money before receiving your work instructions. Or maybe you have to buy certain tools or machinery to complete the work. More often than not, the arrangement is bogus. Steer clear or first check out the company with the Better Business Bureau.
14. Charity Organizations Or Fundraisers
Some crooks say they belong to charities, even though such charities don't exist, hoping you'll give a donation. Or they only give a small part of your donation to a certain cause or charity. Only contribute to known charities or groups. Once again, the Better Business Bureau can help; they keep records on charities as well as businesses.
You can also get a "Wise Giving Guide" by visiting give.org.
15. Contest Winners
After being reached by phone or mail, you're told you've won a prize, maybe a TV or a vacation. But to collect, you first have to send money, possibly only $5, to cover shipping and handling. But there is no prize.
Or they might ask you to call a toll-free number to register as a winner. But once they get you on the line, they try to get you to buy other, very expensive products. Remember, "free" means free and does not require any advance payment for shipping and handling, registration or taxes. Legitimate sweepstakes withhold taxes from cash prizes or report winnings to the Internal Revenue Service.
16. Travel Clubs
You pay for a group or wholesale vacation in advance through a "Travel Club" or "Discount Travel Company." They offer you reduced rates or bargain airfare/hotel packages because you bought in advance or with a group and they say they can get you wholesale rates. So far so good, but often your vacation turns into a disaster.
The arrangements were never made or only partially done. The flight may only be one-way. There are hidden charges, usually to the person or people who come with you. Maybe your trip is canceled, but your deposit is non-refundable. The trip is not rescheduled.
Once again, check out the agency with the Better Business Bureau. Also, ask your regular travel agent about them. In California, reputable travel agencies abide by the Seller of Travel Law, an agency-financed restitution fund to reimburse residents who are victims of travel fraud or who lose money when an operator goes out of business. See if the travel group is registered with the state.
And, remember, read contracts closely.
17. Bait And Switch
You respond to an ad that makes a great offer. But once you're in the store, you're told that the item is sold out or is being back-ordered. Then the salesperson tries to sell you a similar, but more costly product.
18. Carpet Cleaner
Again, false or misleading advertising promises bargain rates for carpet cleaning. But once the workers arrive at your home, you're told the carpet is too old or its condition is too poor to justify the special rate. They'll do the work, but at higher cost.
19. Health Care
Advertisements promise miracle medical cures, weight-loss solutions or remarkable beauty aids. Some even include endorsements or testimonials from supposedly satisfied customers. Don't take these claims at face value; ask your doctor about them.
20. Computer Dating
There are many dating services that charge high prices and provide poor results. Matches may be made at random, perhaps without a computer, to help link people with shared interests and expectations. Check the Better Business Bureau for legitimate services.
21. 900 Numbers
Don't forget that a 900 call is not toll-free, like an 800 or 888 call. You're charged by the minute. You can request that 900 numbers be blocked by notifying your local telephone company. If you do use these services, be prepared for a high bill. They make money by keeping you on the line. You call to buy a product or use a service and they put you on hold and run up the charges.
22. Job Training Schools
These schools offer you job-specific training to prepare you for a career. Some of these schools are not licensed and the certificate you receive upon completion is bogus.
Before you enroll, investigate the school through the local Department of Education. Is it licensed, accredited? Will the certificate be worth anything? You could also call a respected company in the field you're interested in. Do they know the school? Would they accept certification from it?
Also, be wary of home study or correspondence courses and investigate them as well.
“Don't let anyone rush you into a decision, whether it's on the phone or face-to-face.”
23. Automobile Repairs
Everyone worries about this one. Did we get charged too much? Were there unnecessary repairs? Was the workmanship (or the parts) shoddy? The same fears arise with repairs on computers and other electronics.
Get recommendations from friends who are happy with their repairmen. Then, verify that the repairmen are licensed with the state Bureau of Automotive Repairs.
Once you've decided on a mechanic, get a written estimate first and have him call you before he makes any repairs. Finally, if you believe the costs are high or the work is poor, file a complaint with the state Bureau of Automotive Repairs, visit the National Highway Traffic Safety Administration's Web site, or call the Automotive Safety Hotline at (800) 424-9393.
24. Talent Agencies
Talent scouts or agencies may ask for a big retainer or registration fee up front then provide no service and little or no possibility of placement. Or they may seem to be professional and legitimate at first, perhaps providing a free screen test or photographic services. Later, they may tell you what you or your child need to become successful are workshops or photographs that cost more than they are worth.
To get work in films, TV, commercials, print ads or theater, you need to have an agent. If a talent agency can't guarantee to get you signed with a legitimate, Screen Actors Guild agent, walk away.
25. Publication/Business Directories
You buy advertising space or a business listing in a publication or directory that is never published. Or you may receive what appears to be an invoice from your local Yellow Pages for a business listing. But it's really a solicitation for another, less well-known business directory.
Don't pay for advertising in unfamiliar publications. If you haven't heard of them, who has?
As with anything you receive that appears to be a bill, check for this cautionary notice required by the U.S. Postal Service: "This is not a bill. This is a solicitation. You are under no obligation to pay the amount stated above unless you accept this offer."
General Tips
- Don't give cash to strangers.
- Investigate fully and seek additional advice before signing a contract or investing money. Remember, in most states, you have a three-day "cooling-off period" to change your mind once you have signed a contract.
- Don't let anyone rush you into a decision, whether it's on the phone or face-to-face. Don't be an impulse buyer. Shop around and price items and services. Check Consumer Reports and online forums for feedback on just about any product or service.
- Never discuss your personal finances with strangers. Be wary of phone and email requests to verify your credit card or checking account numbers. Are you 100 percent certain this person is who she claims to be? Did you call her or did she call you?
- The Internet has given rise to a whole new level of con artistry - although the scams are usually variants on the same old tricks. In your email, never click on links or attachments from questionable or unknown senders. Research programs on Google or Yahoo before you install them, to make sure they are reuptable.
Also, be warned that you may not always recognize advertising. A seemingly innocent "chat" between two "strangers" about a product or service could be a solicitation that salespeople-acting like strangers hoped you'd read on your computer screen. Report any complaints regarding online advertising or promotions to your commercial service provider. Report fraud immediately to the proper authorities.
Addresses
You can research or file fraud complaints with your state Attorney General or Consumer Protection Office. Here are some Web sites of agencies that can help:
- The Alliance Against Fraud in Telemarketing (National Consumers League) combines the efforts of state, federal, trade-union, industrial, law enforcement and consumer groups. They will forward your consumer fraud complaint to the agency that investigates and prosecutes fraudulent operators.
- The Better Business Bureau, Advertising Self-Regulatory Council, Council of Better Business Bureaus. A local extension of this organization exists in your state. They accept and file complaints on fraudulent operators in your area but have no power to prosecute. You can contact your state's Better Business Bureau or one in the state where the company you suspect is located to get information on any reports filed against a company. Check the White Pages or the national number to get the local number of the Better Business Bureau. Also, be aware that a business still may not be legitimate even if no complaints have been filed with the bureau.
- The Federal Trade Commission investigates and prosecutes advertising and investment frauds. You can file complaints online or by writing to the Correspondence Branch. The FTC does not pursue individual disputes, but the information is valuable in helping the organization enforce its regulations.
- The Fraud.org (National Consumers League) offers free assistance on telephone, mail solicitations, and online scams. They also answer questions, provide information on how and where to report fraud, and provide help in filing complaints.
- The U.S. Postal Inspection Service investigates and pursues complaints of mail fraud, including mail-order investments and any companies that use, advertise or sell through the mail. Any fraudulent business requiring that payment be sent through the mail can be charged with mail fraud. You can direct complaints to the attention of Manager, Fraud and Prohibited Mailings Group.
- USA.gov: Identify and Report Scams and Frauds - Learn how to identify and report frauds and scams.
“The art of becoming wise is knowing what to overlook.” Willam James
