Fraud Warning: Common Scam Examples

Don't lose your hard-earned money. This article will teach you to recognize eleven common scams and how to avoid them.

You work hard for your money. Problem is, there are other people who are also working hard for your money. They are con artists, and the schemes they use to attempt to separate you from your hard earned cash range from basic to brilliant. Read on to learn eleven common scams and how to avoid becoming a victim of them.

1. PHISHING SCAMS

THE SETUP: You get an official looking e-mail from a reputable site such as your bank or an online auction or payment site. The email informs you the information on your account is outdated and provides a link to a page where you can update your information.

THE ZINGER: The link will take you to a webpage that looks identical to the reputable site, but in reality has been set up by a scammer to collect your personal information. The result can range from charges on your credit card to identity theft.

AVOID THIS SCAM: If you get an email asking for updated account information, don't click on the link.

2. BANK EXAMINER SCAM

THE SETUP: You receive an e-mail, phone call, or even a visit from someone claiming to be investigating fraud at your bank. The person asks you to assist in the investigation by providing your account number or withdrawing money from your account and turning it over to the examiner as evidence.

THE ZINGER: The "examiner" will keep your money and use your account information to make unauthorized withdrawals.

AVOID THIS SCAM: Always remember that police and internal investigators don't involve civilians in their investigations.

3. NIGERIAN FEE SCAM

THE SETUP: This scam has seen a thousand different incarnations, but they all involve the same basic premise. You receive an email from a foreign official or attorney stating that you have a chance to make millions of dollars if you allow money to be laundered through a foreign account which you will open with a "good faith" deposit of $10,000 or more.

THE ZINGER: If you open the account, your money will disappear.

AVOID THIS SCAM: Don't become involved with anyone asking you to open an account so that money can be processed through it.

4. PRIZE SCAMS

THE SETUP: You receive a postcard stating you've won a new car, an entertainment center, a dream vacation, or some other fabulous prize. In order to collect the prize, you need to pre-pay some taxes, pay a transfer fee, or purchase a few products to the tune of several hundred dollars.

THE ZINGER: Your prize, if it arrives at all, will be practically worthless. For instance, the entertainment center may in reality be a cheap plastic cassette recorder.

AVOID THIS SCAM: No legitimate contest will charge you money to collect a prize.

5. VACATION SCAMS

THE SETUP: These scams work in several different ways, but the bait is the same: get a fabulous vacation for an unbelievably low price.

THE ZINGER: The things that happen after you send in your money vary, but none of them are good. You may never receive the promised tickets. Or you may find out that the money you sent covers only part of the cost of the trip (e.g., getting there, but not accommodations or getting back). To complete the trip, you may need to pay substantially more. Finally, you may arrive at your destination to find that the accommodations are grossly substandard.

AVOID THIS SCAM: Work with reputable travel companies and agents to find genuine deals on vacations.



6. HEALTH CARE PRODUCT SCAMS

THE SETUP: You receive a solicitation to buy a product that will help you grow bigger breasts, look ten years younger, drop twenty pounds without dieting, regrow lost hair, or cure some horrible disease. Sometimes the seller offers a money-back guarantee.

THE ZINGER: The product you purchase is worthless at best, harmful at worst, and the con artists won't honor your money back guarantee.

AVOID THIS SCAM: Take a few minutes to check out so-called miracle products with reputable sources. Learn the difference between testimonials (a few people speaking glowingly about a product) and scientific research (a controlled study designed to determine whether or not a given product has an effect).

7. CREDIT REPAIR SCAMS

THE SETUP: A company promises to erase your bad credit for a hefty fee in advance.

THE ZINGER: The company may be able to temporarily remove some items from your credit report by overwhelming the credit agency with requests for investigations, but if the items are legitimate they will reappear as soon as they are verified.

AVOID THIS SCAM: There is nothing a credit repair company can do for you that you cannot do for yourself. Federal and state laws dictate how long accurate information will be included in your credit report (usually seven years for charge offs, ten years for bankruptcies, and fifteen years for tax liens). The only way to remove information is to prove that it is inaccurate. You can do that by writing directly to the credit bureau with copies of any supporting documentation.

8. SCHOLARSHIP SCAMS

THE SETUP: There are several variations on this scam, but they all take advantage of students seeking financial aid. One common scheme is to charge students a large application fee to apply for a scholarship that doesn't exist. Another resembles the prize scam mentioned earlier. Students are informed they've won a large scholarship but must pay certain fees or taxes in order to collect it.

THE ZINGER: The promised scholarship never materializes.

AVOID THIS SCAM: Check out any scholarship that charges an application fee to make sure it is legitimate. You should never have to pay money to collect an awarded scholarship.

9. WORK AT HOME SCAMS

THE SETUP: An advertisement promises you can make hundreds or even thousands of dollars a money working from your home doing data entry, stuffing envelopes, etc. A toll free number is provided for inquiries.

THE ZINGER: When you call the number, you'll find you are not speaking to an employer, but rather to someone who wants to sell you information about how to make money working from home. The information, if it arrives at all, generally tells you how to set up a similar scam to trick other people.

AVOID THIS SCAM: Hang up the phone as soon as you realize you are not speaking to an employer but rather to a salesperson--after all, the company has already deceived you with a misleading ad. Why should you trust anything else they have to say?

10. POETRY CONTEST SCAMS

THE SETUP: You see an ad for a free poetry contest that offers great cash prizes. You submit a poem, and get a glowing letter in return. They love your work and are going to publish it.

THE ZINGER: The company then presses you to buy items and services from them, such as a book that includes your poem, a plaque with your poem engraved upon it, membership to a poet's society, a convention where your poem will be read, and so forth. These expenses can add up to several hundred dollars. Meanwhile, these poetry contests do not even offer legitimate feedback. Writers can (and have) submitted gibberish or even strings of random letters and received the same encouraging letters offering publication.

AVOID THIS SCAM: Before submitting poems to a contest, check out the contest online. There are many sites that have information to help writers steer clear of scams.

11. THE CRUELEST SCAM OF ALL: THE RELOADING SCAM

THE SETUP: After you have lost money to a scam, you receive a letter from a company or individual offering to help you recover your funds for a hefty upfront fee.

THE ZINGER: The company or individual is either in cahoots with the original scam artists, or they got your name from a so-called "sucker's list." You will lose any money you give them.

AVOID THIS SCAM: Never pay upfront to recover money lost in a scam. If you have been the victim of a scam, contact your state's attorney general's office, the Federal Trade Commission, your local better business bureau, or the police. If any part of the scam was conducted via U.S. mail, contact your local postmaster.

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