Money Scams: Don’t Get Taken!

By Gerri Detweiler
The Union Credit Doctor 

“Jack” and “Mary” needed a home improvement loan. Scouring the internet, they found a lender willing to given them a loan for $50,000, but were told a down payment would be required. Following the company’s instructions, they wired a total of $2,400 to a firm in Canada. They never received the loan, and have no hope of getting their money back.

It’s no surprise that while the economy is in a slump, scams are prospering. According to the Federal Trade Commission, consumers reported losing over $1.7 billion to fraud in 2009, and the median amount was $399 per person!

Following are some of the top money scams of 2009, from lists released recently by the FTC and the Better Business Bureau. You’ll also find tips to protect yourself, and resources available to union members at UnionPlus.org.

Identity Theft: In the number one position on the FTC list, identity theft continues to claim victims. Although there is no surefire way to protect yourself, the faster you catch it, the less time and money you’ll spend cleaning up the mess. Consider monitoring your financial accounts and credit reports for unusual activity.

• Union members get a 15% discount on all MyFico products, including credit monitoring.

Stimulus/Government Grant Scams: Radio and television ads tell consumers there are special “stimulus” or “bailout” programs for credit card holders who are having trouble paying their bills. That’s simply not true.

• If you need help with your credit card debt, set up a free consultation with a credit counselor through Union Plus Budget and Credit Counseling.

Advance-Fee Loans: Lenders promise loans to consumers with bad credit or limited income. But there’s a catch: before you get the loan, you’ll have to wire a “down payment,” or an “insurance premium to protect the lender.” Once you send that money, though, there’s no loan, and you’ll never hear from the company again.

• If your credit is too poor to qualify for a loan, consider a secured credit card, such as the Union Plus Secured Card. There is no application fee, but there is a $20 annual fee. Your savings deposit will be held in an FDIC-insured account, and returned to you when you pay off your balance and close your account.

Mortgage Foreclosure Rescue/Debt Assistance: The BBB warns that victims are paying hundreds of dollars up front to companies that promise to help them with their mortgage problems. Instead, they lose valuable time and money, and sometimes make the problem worse.

• Union members worried about their mortgage loans should call the Save My Home Hotline at 1-866-490-5361 for free help from a HUD-approved credit counselor.

Lottery/Sweepstakes Scam: It’s your lucky day! You receive a letter saying you’ve won millions from Reader’s Digest, Publisher’s Clearing House or a foreign lottery. A check for a small amount accompanies the congratulatory letter. To get the rest, you are instructed to deposit the check, and wire hundreds of dollars to the scammers to cover taxes or fees.

• Scam artists are the only winners here. Don’t fall for it.

Ways to Stop a Scammer

It’s not always easy to spot or stop a scammer. As the FTC points out, scammers are good at what they do. That’s why it’s critical you do your homework before sending money to a company you don’t know.

Check them out: Research companies through the Better Business Bureau. But don’t stop there. Use a search engine to search online for the “name of the company” + complaint, and “name of the company” + scam. (The plus sign will return results with the name of the company plus the term you are searching for.) While you can’t trust everything you read online, if numerous people are complaining about the company, it could be a sign the offer is not what it seems.

Investigate websites: Crooks can set up an attractive website in a matter of hours, so don’t judge a company by its website. Dig a little deeper. Find out owns the domain name for a website, and how long it has been registered, by researching the domain ownership records. If you are dealing with a fraudulent company, the domain may have been recently registered, or the information for the registrant may be different than the company address listed on the website. These aren’t surefire signs the company is a scam, but should prompt you to investigate further.

Don’t pay to claim a prize: The FTC says that you should not have to pay "taxes" or "shipping and handling charges" in advance to get a prize from a legitimate sweepstakes or contest.

Use your credit card: Of course you don’t want to give your card number to a company you suspect may be fraudulent, but if you are dealing with a company you’ve checked out, use a credit card for additional protection. Under the Fair Credit Billing Act, you have 60 days to dispute a fraudulent charge in writing, and you can withhold payment on that charge while it’s being investigated. If you use a debit card, though, the money will already be taken from your bank account and it may be difficult to get it back. Always void wiring money to a company you don’t know and never give a company you won’t know direct access to your checking account.

Report it: If your credit or debit card has been used in a scam, contact your card issuer immediately. If you think your identity may be compromised, consider placing a fraud alert or freeze on your credit files. Be sure to also file a complaint at Fraud.org, which will automatically send it by electronic means to local, state and federal law enforcement agencies. You can also report your experience to the local Better Business Bureau.