Category Archives: Scams

Pension Advance Schemes

If you receive monthly payments from a pension, settlement, lottery winnings, or other similar source, it’s a good idea to be aware of schemes that offer a lump sum cash payment in return for some or all of your income.

There can be good reasons for considering it. Living on a fixed income, such as Social Security plus a modest pension can make an unexpected expense (medical event, major house repair, etc.) difficult to pay for. By exchanging some of your pension payments over a certain amount of time for cash, you can cover those expenses without completely upending your life. It’s rarely an ideal situation, but it can work out.

(It can work out. It doesn’t always work out. It often doesn’t work out.)

It is extremely important to know exactly what you’re agreeing to before signing anything. No matter what language it’s dressed up in, these plans are loans. They are giving you a certain amount of money, and you’re paying back a larger sum over time.

There are a lot of companies offering this type of product, and I’m sure some of them aren’t actively trying to inflict harm. But there are tons of unscrupulous lenders offering pension advances that thrive by ripping people off.

Before jumping into a pension advance, I first would recommend looking for literally any other option. Got a credit union nearby? Start there. Ask about a personal loan.

If you really still want a pension advance, go in with the understanding that you are getting a loan, and proceed with extreme caution. What is the effective interest rate you’ll be paying? Some pension advance schemes are effectively charging a nearly 100% annual interest rate. If they deny that it’s a loan or won’t tell you a rate, walk away. Exactly how much will they take each month, and for exactly how long will you be paying them back? Get everything in writing, and the second something seems fishy, bail out and do not proceed any further.

Scams That Target College Students

I may be biased here, but I can’t be the only one who thinks a couple hours of “How To Recognize a Scam” training every year would be of great benefit to high school students. Of course, such an undertaking is easier proposed than implemented, but it seems like an important life skill that needs to be touched on at some point.

There are a variety of scams that prey upon current and incoming college students. Here is a brief rundown of a few common ones.

Federal Student Tax Scam

This scam begins with a phone call that may use caller ID spoofing to look like it came from the IRS. The caller will inform the recipient that they haven’t paid their “Federal Student Tax” and will face dire consequences if the tax is not paid immediately. The caller will demand payment via wire transfer or prepaid cards (iTunes, Green Dot, etc.).

Of course, there is no such thing as a “Federal Student Tax,” and the IRS doesn’t call you on the phone about unpaid taxes anyway. Plus, even if you do owe back taxes, it’s impossible to pay them via wire transfer or prepaid cards.

Unpaid Tuition Scam

Another telephone-based scam, this one appears to come from the college admissions office and claims that tuition has not been paid and the student will be un-enrolled if payment is not made immediately via credit card, wire transfer, or other unusual method. A variation of this scam impersonates an FBI agent and claims that the student will be arrested if the bill isn’t paid right away.

If you really have not paid your tuition, they’re not going to call you on the phone and insist that you pay immediately, especially with a credit card or wire transfer (and especially especially with an iTunes card). Your college probably doesn’t take credit card payments over the phone. You should also never reveal personal information to someone who contacted out of the blue; if you’re truly convinced the call might be legitimate, hang up and contact the admissions office directly. Also, the FBI doesn’t get involved in matters of late college tuition payments.

Advance Fee Scams

College students are often bombarded with alleged opportunities for student loans, scholarships, financial aid and jobs. Some of these are perfectly legitimate, but many are not. There are a lot of individuals and companies charging fees for things you can do on your own for free, such as filing FAFSA paperwork or filling out job applications. Some won’t even provide the service claimed, they just want your banking information to set up a recurring charge.

Never trust an offer of “just give us the money and we’ll do the rest,” and remember that legitimate scholarships are never “guaranteed” (and they usually have requirements beyond you having a pulse).

Avoiding Vacation Rental Scams

So you’ve found the perfect vacation rental for an amazingly low price. You contact the owner of the property and, unbelievably, the price shown on Craigslist is correct and the unit is available for the dates you need. The owner was a bit hard to reach, but he travels all over the world for business (and of course he does—who else but a successful international businessperson could afford such a house in such a location to begin with?).

Payment is arranged by wire transfer (a little unusual, you think, but again—world traveler business type, right? He probably has reasons for his preferences, and they’ve obviously served him well, right?).

You make your payment and pack for your vacation, still not quite believing the deal you’re getting. Oceanfront! And that pool…

You arrive at the property on a Sunday morning and are delighted to find it looks even better than the pictures. You ring the doorbell to be greeted by…the permanent residents of the house, who aren’t renting it out to anyone, and who are wondering why there are a bunch of weird people with suitcases at their front door.

You’ve been taken in by a classic vacation rental scam, and good luck getting your money (that you wired to a stranger) back. What could you have done differently?

First, you could have been more wary of a price that’s too good to be true. There’s no real reason for the owner of a rental property in an extremely popular location to offer a huge discount as long as that demand exists.

Now, I’m not a huge fan of Craigslist for finding vacation rentals, but I’m also not a huge fan of Craigslist in the first place due to the overall potential for fraud. I’m sure there are plenty of legitimate rental listings. However, Craigslist should not be the only place the property is listed. Check vacation rental websites in the area and make sure the property is represented elsewhere as available.

The owner being hard to reach or unresponsive is a red flag. If the entire conversation takes place via email, that’s also suspect. There should always be a phone number with a name attached to it that you can verify with a search. A legitimate business should want to be easy to find and reach. If you find yourself leaving a message every single time you call, that can be another sign of trouble.

Finally, the unusual payment method is a warning that something is not right. You should never wire money to a stranger for any reason. Some rental scammers request that you purchase gift cards and pay by relaying the card information to them. Don’t do it. You want a payment method that leaves paper trail and has some fraud protection, and you want a buffer between the transaction and your deposit (checking/savings) account. In other words, if you can’t pay with a credit card, look elsewhere.

Fear and Fraud

Humans are an emotional animal. No matter how advanced our technologies or societies become, no matter how objective or logical we believe we are, primal emotions can still affect our behavior, and when someone manipulates those feelings into a heightened state, we find ourselves at risk of making mistakes.

Many types of fraud work by stoking one of our most basic emotions: fear. The assumption goes: if you can make someone afraid, they’ll believe anything you say, even if it makes no logical sense.

Here is a list of several common scams and how they use fear to trick victims into handing over money or personal information:

  • Phishing: uses the fear of losing access to money (“your debit card has been deactivated”) to trick victims into visiting a website that harvests personal information
  • Medicare scam: uses fear of losing access to health care to convince victims to reveal personal information
  • Tech Support scam: uses fear of malicious software to trick victims into handing over control of their computer
  • IRS scam: uses fear of imprisonment to get victims to load prepaid gift cards, then pass along the card information to the scammer
  • Missed Jury Duty scam: uses feat of imprisonment to obtain credit or debit card information
  • Grandparent scam: uses fear of loved ones’ safety to lure victims into wiring money or loading prepaid cards with cash
  • Lottery scam: mostly appeals to greed (another primal emotion), but also stokes fear of missing out on a once-in-a-lifetime opportunity to trick victims into falling for a counterfeit check scheme
  • Ransomware: uses fear of losing access to important files to extort payments from victims

In other words, a lot of scams operate by inciting fear.

The key is to understand that the use of fear is an extremely common (if not the most common) tactic, and to be able to recognize when someone is trying to make you afraid. This requires a certain amount of self-awareness, and I’m not really sure how one goes about developing that, other than to just slow down and take a moment whenever a stranger is presenting you with alarming information, instead of reacting immediately.

Unless they’re shouting “duck!”

Watch out for fake utility workers

It seems like as good a time as any to once again remind everyone to beware of burglars posing as utility company workers.

The usual setup starts with a knock on the door. The person standing on your doorstep claims to work for the electric or gas company, telephone company, or some other utility. They tell you they are in your neighborhood working on some or other problem, or performing routine maintenance, and ask to be shown to your circuit breaker (or whatever piece of hardware makes sense). Often they’ll even look like a real utility company employee, with a clipboard, nametag and possibly even a uniform.

While you’re showing them to the circuit breaker-or-whatever, an accomplice you didn’t see slips into your house looking for valuables or money.

It doesn’t really matter which type of company they claim to represent, the important thing to remember is that if a utility provider is going to need access to the inside of your house (which they almost never will), they will contact you ahead of time. They will not show up unannounced.

If someone is at your door and you were not contacted in advance, ask to see a badge or official identification, which they should gladly provide. Then politely ask them to wait while you close your door, lock it, lock any other doors, and call the utility company to ask if they’ve sent people to your house. Whatever you do, don’t let them in or call them out on being a crook. This type of scam differs from most in that it involves actual, physical proximity to the perpetrators, which can put you in danger of bodily harm.

Utility worker scams often target senior citizens, so make sure your friends, family and neighbors are aware of this type of crime, what to watch for and how to respond.

Beware of unsolicited offers

The phone rings. A caller identifies himself as representing a well-known and trusted local business. He’s calling to offer you a discount on their services.

“Hey, great, I need those services anyway,” you think, and agree to the offer and arrange for the work to take place.

And another scam is set in motion.

It’s been happening here in Northwest Indiana. A heating/cooling contractor from Illinois (with an F rating at the Better Business Bureau, maybe not-quite-incidentally) has  apparently been calling homeowners and claiming to be a well-known local business (with an A+ rating, also maybe not-quite-incidentally), with an offer for discounted duct cleaning. Workers show up, perform a shoddy duct-cleaning, then ask for more than the agreed-upon price.

So my fraud prevention tip today is this: be wary of unsolicited offers from local businesses. If you get a call, make sure to double-check with the actual business before you agree to anything. Use an official, published number from the real company’s website or trusted online source (or the phone book, if you didn’t just carry it directly from your front porch to the recycling bin) instead of the number that shows up on caller ID or the number given by the caller. If there’s a discrepancy, it could be a different (and unscrupulous) business posing as the real one.

Car Wrap Advertising Scam

There are times when a scam is completely new, but those instances are exceedingly rare. For the most part, “new” scams use tried-and-true methods to lure victims, and it usually doesn’t take long for a “new” scheme to enter familiar territory.

One “new” con is the Car Wrap Advertising Scam. It starts with an emailed offer to earn $400+ per week just to drive your own car with graphics from an energy drink or other company plastered all over it. It’s a novel offer, and it appears many of the emails are well-written and devoid of the broken English, weird tabbing/spacing and initial “Greetings!” salutation.

However, there are already three warning signs, and that’s without even looking at an actual example:

  1. The offer arrives via email
  2. They’re offering a lot of money for zero work
  3. Energy drink companies are, above all else, extremely image-conscious; they’re not going to send random people offers to wrap their cars if there’s any chance their logo might end up on some sketchy old pickup with rust holes a house cat could climb through.

So that last one’s a bit trickier, but still: at this point your inner “Scam Radar” should at least be registering that something isn’t quite right.

What happens if you respond to the message?

They send you a cashier’s check for a few thousand dollars. They tell you it’s your first payment in advance, and that the excess is for the graphic designer who will be applying the graphics to your car.

Can you guess what the victim’s next instructions are? (Hint: at this point, your inner Scam Radar should be on the brink of blowing up, because you’ve heard of this one before.)

If you said, “Wire the excess money to a stranger,” you win a shiny new silver dollar.*

It’s the secret shopper scam all over again: cash this check, wire it to us, find out a week later the check was fraudulent and you’re out several thousand dollars.

So today’s lesson is: beware of old scams wrapped in new, hip, edgy energy drink graphics.

*You don’t actually win a shiny new silver dollar.

IC3 Scam Alerts

The latest batch of scam alerts from the Internet Crime Complaint Center, a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NW3C) came out yesterday, and there are some interesting things going on out there.

I won’t past the entire text here, but the “Triangle Credit Card Fraud” was a new one to me. It works this way:

The first party is the fraudster who acts as a seller on a popular auction or marketplace site. The fraudster “sells” a product to the second party, the buyer that knows nothing about the scam. The buyer pays the seller for the product or service. The seller then needs to deliver the product or service to the buyer and does so by placing an order with the manufacturer of the product or service to the buyer and does so by placing an order with the manufacturer of the product or service, the third party. That order will contain the buyer’s information for shipping and stolen credit card information for billing. When the company receives the order, the billing and shipping information is all legitimate, thus it looks like an order being placed as a gift, so the company delivers the product or service.

That’s a big ball of text that takes a minute to decipher (and it seems to repeat itself at least once, but the underlying message is clear: you have to be really, really cautious when buying things from online auction sites.

The alerts also point out a new take on the old work-at-home scheme. This time, crooks are telling victims they submitted a resume online and using the names of well-known financial institutions and agencies (instead of the usual out-of-the-blue offer for mystery shopper work), then sending victims a fraudulent cashier’s check to purchase software or other supplies. Naturally, the victim then wires back the overage and ends up losing money. This time they’re finding victims because a vast number of people have been submitting resumes online, and I can tell you from experience: unless you’re a record-keeping ninja, it can get hard to keep track of what jobs you’ve applied for.