Issue Date: March 17, 2002
Don't get scammed
The federal government's fraud squad zeros in on con jobs you need to know about.
The signs are everywhere: Work from home, they say. Earn up to $1,500 a month part time, up to $5,000 a month full time. With rampant layoffs and the sluggish stock market, who could resist a second glance? But if you call the 800-number or visit the Web site listed on the sign, you'll get the real story. It'll cost you $39 to get the information to make a decision whether to do the work; until you pay, they won't even tell you what kind of business it is. If you're not willing to take that risk, then you're not the kind of person who would fit in with their corporate culture: "Don't bother contacting us again. Really."
That "home business opportunities" scheme, now playing around the country (a Google Internet search yielded several million hits), is on the Federal Trade Commission's list of the Top 10 Consumer Fraud Complaints of 2001. Thanks largely to the Net, more people than ever are complaining they've been scammed, to the tune of billions of dollars a year.
"Today you have to be a much smarter consumer than 20 years ago," says Frank Abagnale, author of "The Art of the Steal: How To Protect Yourself and Your Business From Fraud" (Broadway, $24.95) and a reformed thief himself. "You have to be careful about where you go on the Internet, who you give information to, who you believe."
The good news, notes the FTC's Hugh Stevenson, is that many scams can be prevented by practicing smart consumer behavior. Don't give out your credit card number or commit money over the phone unless you initiated the call. Get all details in writing before making a payment. And if it sounds too good to be true, it probably is. Here's a look at some scams that continue to plague consumers. Knowing what they are and how they work can help you avoid them.
SCAM: Internet auctions. As Internet auctions have grown in popularity, so have problems, although Stevenson is quick to say there are a lot of satisfied customers, too. The big complaint is with merchandise that isn't delivered, either as promised or at all. How can you steer clear? Deal only with merchants who have solid recommendations from other customers. Ask all questions by e-mail before bidding. And use an escrow service (the auction house can hook you up) to make sure you get the right goods before the seller pockets your cash.
SCAM: Foreign money orders. Perhaps you've received an e-mail asking you to help a person from Nigeria (Afghanistan is also quite popular now) who has substantial assets stuck in that country and needs money from you to get those assets out. This scam has been perpetrated for several years by snail mail, according to the FTC, and now it has hit the Internet. What should you do? Obviously, don't send money. But you'll also want to report this one to the FTC by calling their Consumer Response Center at 1-877-382-4357. Both the Secret Service and the U.S. Postal Inspection Service are on the case.
SCAM: Advanced-fee loans/credit repair. Say you need a loan for a new car, house, whatever. But your credit rating is so abysmal you know you'll never qualify. Advanced-fee scamsters say you can get that loan if you pay them a processing fee ($40 to $70) to work their magic. Unfortunately, Stevenson notes, "you never get the money, and you're out the fee, as well." The bottom line: There is no magic that can repair your credit. You simply have to pay your bills on time until late payments are so far in the past that lenders are willing to ignore them. If you've partially recovered, find a mortgage broker to help you obtain financing. There are lenders who are willing to talk to people whose credit isn't pristine. Check www.namb.org, the National Association of Mortgage Brokers' Web site, for a referral in your area.
SCAM: Internet services/computer complaints. An Internet service provider offers you a trial subscription at a great rate. But when that teaser runs its course (and you learn you could do better elsewhere), you have trouble canceling the subscription. In general, Internet service scams can be avoided by reading the fine print, Stevenson says. If it's a local company hassling you, report them to your Better Business Bureau or state attorney general's office. They often can help.
Finally, this year brought some Sept. 11-related scams: people peddling treatments for anthrax, gas masks, protective clothing and air filters. Not only might those "remedies" be a waste of money, but they also could cause harm.
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No. 1 SCAM: Identity theft
Identity theft was by far the biggest consumer scam of 2001; it accounted for more than 42% of the complaints received by the Federal Trade Commission (more than the next seven items on the list combined). As anyone who has been victimized will tell you, having your identity stolen is absolutely no fun. It may not cost you much in actual dollars (credit card companies often absorb the losses), but knowing there's someone else out there buying merchandise, applying for loans, even looking for jobs under your name feels worse than having someone rifle through your drawers. Or your private papers. Or both.
According to the Privacy Rights Clearinghouse, 500,000 individuals are victims of identity theft each year, and that number is growing. How can you make sure you're not next? Frank Abagnale, author of "The Art of the Steal", suggests:
Guard your numbers. Specifically, your Social Security number. Don't give it out randomly unless the person asking for it has a reason to need it -- if you're applying for a credit card, for example. Never put it on your personal checks.
Don't leave a paper trail. Cut up pre-approved credit solicitations, don't use preprinted deposit slips as scrap paper (they contain valuable information), and pay attention to your credit card billing cycles. If a bill is late, report it (a thief could have changed the address, for instance).
Monitor your credit report. Look it over once a year to make sure all the information it contains pertains exclusively to you. You can order credit reports on the Web at equifax.com, www.experian.com and www.transunion.com.
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