- This is how jobs work: the employer pays the employee, not the other way around. As soon as a job offer involves you paying for “materials,” or even being sent a check to cover said materials, making a purchase, then sending the difference back, that job does not exist.
- On a related note, “cash this check then wire (or bank transfer, or Venmo, etc.) some or all of it back to me,” for any reason whatsoever, is a scam 100% of the time.
- An online seller giving you their life story is a red flag, especially when it involves convoluted reasons they can’t meet in person (they work on an oil rig or are in the military) or can’t talk on the phone (recent throat surgery).
- Never, ever text a verification code to a stranger; the person asking for this has your username and password for something, and is trying to gain access to an account by tricking you into handing over the code that is sent when a website doesn’t recognize the device being used to login.
- Tech Support is never going to call you to tell you your computer has a virus. It does not matter which company they claim to be, but it’s almost always Microsoft (or “Windows Company” when they’re getting it really wrong).
- You did not win the lottery if you did not purchase a lottery ticket.
- Famous billionaires do not pick random people to give huge amounts of cash to.
- A lot of romantic relationships start online now. However, as soon as they start asking you to wire money, or to receive money and transfer the funds to others, cut off all contact because you are being scammed. Tip #3 applies here as well – constant excuses as to why they can’t meet in person or talk on the phone are major red flags.
- Never pay for a pet that you are not allowed to meet in person first. Zero exceptions. The “breeder” having a website with photos of purebred cats or dogs proves absolutely nothing.
- If you ever do fall victim to a scam, beware of recovery scams afterwards. This includes the same scammer calling back to offer a refund (that will still somehow involve you paying them). When you lose money in this way, it’s gone. Anybody offering help recovering your losses is just trying to double-dip.
Spring means a lot of things: longer days, warmer temperatures, trees and flowers (and allergies) in bloom, migratory birds returning from their winter homes.
It also means fixing up all the stuff on your house that broke, fell, cracked, blew away or started leaking over the winter. This also means home repair scammers coming out of the woodwork.
Many homeowners can do some repairs on their own, but most of us need help with bigger issues. Additionally, age plays a role in our ability and confidence to perform certain tasks. At 40 you might be willing and able to climb a ladder onto the roof; at 80 it may not seem like such a great idea. Home repair scammers often target older homeowners for this very reason.
Here are five things to watch out for.
- Someone knocking on your door: this is the number one way non-trustworthy contractors will approach you—out of the blue, at your doorstep, allegedly just having noticed some major problem with your house while in the neighborhood. No legitimate contractor works this way.
- Claiming to have extra materials left over from another job: any contractor worth your business isn’t going to “accidentally” order too much of anything.
- Refusing to put anything in writing: a verbal agreement without a written contract detailing the job and final cost is an invitation for the price to suddenly double or triple when the (likely shoddy) work is done. Get multiple bids, in writing, before beginning any major repair.
- Wanting full payment in cash up front: this is a setup for a classic take-the-money-and-run scheme.
- High-pressure sales tactics: don’t trust anyone trying to make you reach an immediate decision. A good contractor knows most homeowners are not going to go with the first bid, and that price isn’t necessarily the only deciding factor when choosing.
Be extra cautious after any kind of major storm event that caused flooding or other damage. Scammers will hit the streets in droves after a big storm, offering to fix rooves and gutters and siding. But the same rules still apply. You don’t want to end up losing money on some contractor who did lousy (or no) work.
If you use Facebook or Instagram, you’ve probably already seen an ad, shared by someone you know, promising 80-90% off on things like Ray-Ban sunglasses, Nike shoes, Apple devices, or some other premium brand.
And I get it. Who wouldn’t want a pair of Wayfarers for $25? Looking like you might be friends with rock musicians, for an eighth of the cost? What’s there to lose?
Unfortunately, there can be a lot to lose, and somewhere between “nothing” and “a goofy-looking pair of counterfeit Ray-Bans” to gain, because these ads will lead you to nothing but scams, ripoffs, or even worse.
The best-case scenario is receiving fake goods, as long as they don’t use the banking information you gave them to keep making additional charges. You still can’t actually wear that stupid pair of plastic sneakers in two different sizes with the upside-down logo, but at least you’re only out $20 or so.
However, many of these websites are loaded with malware that can infect your computer or mobile device, or they will try to harvest your social network credentials to take over your account and further circulate their scams. Others may simply take your credit or debit card credentials and make fraudulent charges without sending you anything.
This would normally be where I remind you that it’s a good idea to always use a credit card instead of debit when shopping online, but in the case of these “90% Off Nike Jordans!”-type schemes, don’t even let it get that far. Those ads are some kind of scam, 100% of the time. Don’t even consider clicking.
If you did click, it’s time to run a virus scan. If you made a purchase, it’s time to have that card deactivated and get a new one as soon as possible.
2019 is going to be a lot like 2018, and a lot like every other year in recent memory: there will be a couple new ways to become a victim of some form of scam or fraud, there will be a boatload of old, tried-and-true scams still making the rounds (some with slight variations that make them seem new), a few “latest threats” frantically shared on social networks that turn out to be hoaxes, at least one or two major data breaches (and dozens of minor ones), and a whole lot of information, both accurate and inaccurate, about all of it.
And so, as we approach the new year, my advice is to stick to one basic principle, and to always ask yourself, “Is this the way the world really works?” That little bit of skepticism can be your best friend when it comes to avoiding scams and rip-offs, as well as not being the person who spreads false information and hoaxes online.
A lot of people make health-related resolutions this time of year. But before you spend money on a dietary supplement being hawked by some A-list celebrity, ask yourself how you think that A-lister got into the shape he or she is in. Does it seem more likely that they took a pill (that’s only been on the market for a few months, mind you), or could it be the full-time nutritionist on staff, the live-in chef, the million-dollar in-home suite of workout gear, the live-in personal trainer and the fact that their entire job description, when not actively working on a project, is to stay looking as perfect as possible?
When you read a story breathlessly shared on Facebook about robbers using fake perfume samples to subdue victims in parking lots (an urban legend that’s been repeated in various forms since around 1999), take a moment to notice how unlikely the whole scenario seems in light of how quickly most criminals prefer to operate (to say nothing of how ether and chloroform actually work). Notice how many of the “I narrowly escaped this!” stories boil down to, “I saw a man in a parking lot, and then nothing happened.”
When you get an email telling you that you’ve won the Powerball Lottery, remember how lotteries actually work in the real world. You buy a ticket and wait for some ping pong balls to pop out of a big tumbler. You don’t just “have an email address and wait until you win.”
When the phone rings and the caller claims that he’s from the IRS, you didn’t pay your taxes, and that you’re going to be arrested today unless you pay up immediately by purchasing some iTunes cards at the drugstore and calling back with the information, ask yourself if any one part of the situation squares with how the IRS actually functions. (Hint: none of it).
You don’t have to become a cynic, but just remembering to think about a new claim or information before you act on it can be a powerful ally. And remember this: if someone is trying to make you afraid of some immediate (or even abstract) threat, and they tell you the only way to make the fear go away is to give them something (money, personal information, etc.), they are probably not telling the truth.
I sometimes repeat myself, and occasionally I’ll say something I’ve said before, too. But even if you’ve read or heard about charity scams before, it never hurts to have a quick reminder. It’s already November, and charitable giving comes up a lot this time of year.
I’ll keep it short: decide in advance which charitable organizations you wish to support instead of waiting for others to approach you. If you’re looking for a new cause, research before you donate.
When you already know whom you’re giving to, it makes it much easier to turn down those who call or email out of the blue because you won’t feel pressured. You can explain to callers that you’ve already done your giving for the year (and you can just ignore emails—I would hesitate to trust an out-of-the-blue request via email).
If you’re checking out a new charity, the go-to resource is CharityNavigator.org. This website tells you how much a charity spends on marketing and how much money makes it into their programs, gives executive salaries and other financial information, as well as an overall rating of the organization. No mainstream charity manages to have 0% operating expenses, but if you see one that devotes 99.5% of its revenue to salaries and marketing, with only 0.5% going toward programs, you know it’s one to avoid.
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.
At the beginning of Side 3 of Grand Funk Railroad’s 1970 Live Album, Mark Farner shirtlessly tells the audience this (edited for clarity):
Brothers and sisters, there people out there that look just like you, or maybe your brother…but they’re not. And when they hand you something, don’t take it. Don’t take it, okay?
Now, Mark was referring to the kind of party supplies that might circulate at a rock concert in 1970, but he also could have been talking about affinity fraud almost fifty years later.
Affinity fraud targets people who are members of a group, and uses that group identity to lure victims into the scam. Some of the most common targets are religious groups or church members, people with a shared ethnicity, or those who have served in the military. The con artist will be a member of the targeted group, or will claim to be, and attempt to recruit others to help bring in more victims.
Generally, these scams take the form of phony investments or Ponzi schemes.
There are a variety of ways to identify affinity fraud. Here are a few things to look for:
Is the person offering the investment using membership in your group as his “in?”
A shared identity can be a great way to build community, but remember that the human tendency to trust those we see as similar to ourselves can be used against us. Just because someone claims to be a member of your group doesn’t mean they are. There is no physical barrier to lying; “I’m the same as you” can be uttered by anyone, whether it’s true or not.
Are the investment materials (brochures, flyers, etc.) filled with symbols or phrases familiar to your group?
A con artist targeting members of a church might festoon his written information with symbols or scripture (some even go so far as to imply that the “opportunity” has been sent from above). On the other hand, a scammer going after veterans might use flags, ribbons or eagles. Humans are emotional, and we respond strongly to symbols, but be cautious around any kind of investment offer that seems to be hitting those symbols a little too hard.
Are the promised returns extremely high, or is the investment presented as guaranteed or having little-to-no risk?
Real investments carry risk. There is always a non-zero chance you will lose some or all of your initial investment. An investment presented as “risk-free” or “guaranteed” is always going to turn out to be a scam, because that’s not how investing works. Any investment promising double-digit returns is to be taken with a grain of salt.
Do the returns hinge on you recruiting others into the fold?
That’s a Ponzi scheme. You will lose all of your money.
Is the broker licensed to sell investments?
Never invest through an unlicensed broker. Whatever your (or your group’s) opinion of regulations, licensing requirements, or government in general, anyone selling investments without a license to do so is breaking the law. What other laws is this person willing to break? What about the ones that make stealing illegal? And don’t fall for excuses like, “I’m not licensed because the government doesn’t want your group to have access to this amazing opportunity,” either. That’s just someone stoking your emotions to goad you into action.
The U.S. Securities and Exchange Commission has a nice PDF available for download that goes into more detail about affinity fraud and how to report it to the SEC.
(However, it doesn’t contain a single reference to Grand Funk Railroad. You gotta read my articles for those.)
A few weeks ago, I posted an article about the relationship between fear and fraud. Basically, if someone is trying to make you afraid, then asking for money or personal information, it is very likely that they are trying to steal from you.
There is another emotion that scammers will often prey upon: greed. That all-too-human desire to get something for nothing, and to be the one with the most.
The most obvious example I can think of is the old Lottery Scam. By stoking greed with the promise of vast, out-of-nowhere riches, the perpetrators of this scam hope you won’t notice how suspicious the hoops they’re asking you to jump through are. The promise of millions of dollars is misdirection; while you’ve got your eyes on the prize, you might not remember how unwise it is to wire a few thousand dollars to a stranger, or that “cash this check and wire the money back to me” is a weird request to begin with.
Other examples include the Car Wrap Advertising scam, the Pigeon Drop scheme (“I found money, let’s share it!”), and of course the old Nigerian 419 scam (“I’m an exiled prince; help me retrieve my fortune and I’ll share it with you,” which at this point isn’t even a “classic” scam; it’s positively an antique).
It’s the same tip as with fear: if someone is trying to spark greed, then asking for money and/or personal information, they are trying to scam you.
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!”
I still haven’t encountered anything that contradicts this fraud prevention axiom:
“Cash this check then wire the money back to me” is a sure sign of a scam.
It’s a fairly easy pattern to spot when it comes to things like lottery scams, because the scammers almost literally use that exact wording. But there are other times where the “wire the money back to me” stage is a little more obscure.
One such case is the Car Wrap Advertising Scam. Below is a scan of an actual letter used to initiate this scheme after the would-be victim responded to a random email or text message offer. This letter came with a cashier’s check for $2,390.00 (click to enlarge):
In this case, they’re not directly saying “wire the money back to me,” but they are telling you to give it to someone else, in the form of setting up a payment to a “Decal Specialist.”
What happens when you contact this person? You’re instructed to wire the money from the check, which will eventually be returned as fraudulent, putting you on the hook for the cash you gave away. It’s the same pattern as a lottery scam, only with an additional step in between.
One reason this scam continues to work is that there are actual wrapped cars out there. We’ve all seen them. However, even in cases where these aren’t company-owned vehicles, legitimate car wrap advertisers share certain features:
- They don’t randomly contact you out of the blue via text message or email
- They don’t take everyone who applies; they’ll want to know how far you drive each day, where you drive, what kind of car you have, and your driving record
- They’re not going to pay you $500 per week. About $1,000 per month seems to be the ceiling, and that’s for absolute ideal (for the advertiser) circumstances (i.e. you drive hundreds of miles per day in an area extremely densely-populated with people within the ad’s target demographic; I’m guessing your car has to meet certain visibility criteria as well, because I’ve mostly seen these ad wraps on lifted, customized 4×4 pickups)
- You don’t pay them at any point, and you’re not responsible for passing along money to whomever applies the decals (“Hey stranger we’ve never met in person, here’s a few thousand dollars to give to someone else for us. We’ll just trust you to not keep it.”)
If you’re truly interested in turning your vehicle into a billboard, there are a few links to apparently legitimate agencies in this Penny Hoarder article. But before you act on anything online, be sure to do a lot of research first, and always get in writing what you are agreeing to do and how you will be compensated. If it’s too easy to get the gig, it’s probably a fraudulent offer.