NCL’s Fraud Center tracking spike in mystery shopper scam – National Consumers League

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With a still sluggish economy and steady unemployment figures, many Americans are looking for work opportunities, only to be unwittingly scammed in the process. Mystery shopping scams have become an increasingly popular swindle, with complaints to NCL’s Fraud Center regarding fake check scams involving fraudulent mystery shopper and work-at-home schemes up nearly 9 percent in the last six months.Last week, NCL’s Fraud Center was contacted by a woman we’ll call “Gloria.” Gloria has two young children who just returned to school, and with some extra time on her hands, Gloria began cruising online job boards for part time work. Gloria soon came across a mystery shopping position that looked promising—the assignment was to visit a local wire transferring service and send money back to the mystery shopping company, using funds from a check the shopping company would provide. After that, all she had to do was write a brief report about her experience at the wiring service location. She immediately contacted the company and was told she was the “perfect candidate” for the job. Within a few days, she was sent a realistic looking check for $5,700 and was instructed to deposit the money in her personal bank account, keep $200 as payment for her work, and wire the remaining balance back to the mystery shopping company. Gloria gladly did as she was told, only to learn that—instead of a quick payday—the fake check bounced, and she is now on the hook for $5,700 she doesn’t have. To add insult to injury, Gloria even wrote a report about the money wiring service she used—robbing Gloria of not only her money, but her time as well.

Mystery shopping scams work by first luring the consumer with the promise of easy money; in Gloria’s case it was 200 bucks for only a couple hours of work. Victims are then instructed to deposit a fake check, keep the amount that has been designated as their “payment,” and wire the money back to the scammer. Many consumers are unaware that, by law, banks must make the funds from deposited checks available within days, although uncovering a fake check can take weeks. Consumers are responsible for the checks they deposit, so if a check turns out to be a fake, they are responsible for paying the bank back.

The experts at NCL’s Fraud Center are tracking scams like Gloria’s and are reminding consumers of the most common red flags and tips for spotting these fraudulent mystery shopper opportunities, such as:

  • A legitimate company will never ask you to use a money transfer to send cash to them or anywhere else, for any purpose.
  • Remember that it’s never a good idea never to deposit a check from someone you don’t know—especially if the stranger is asking you to wire money.
  • Never pay a fee to become a mystery shopper. Legitimate companies don’t charge people to work for them—they pay people to work for them.
  • Be suspicious of any company that hires you on the basis of an email or phone call, without any interview or background checks.
  • If you are considering becoming a mystery shopper, do your research first. Spend some time online searching for reviews and comments about mystery shopping companies that are accepting applications.
  • Any company that promises you that can make a lot of money as a mystery shopper is almost certainly a scam.
  • If mystery shoppers are asked to make purchases, it’s usually for very small amounts for which they will be reimbursed.
  • Mystery shoppers are paid after completing their assignments and returning the questionnaires to the companies that hired them. Shoppers never receive checks upfront.
  • Businesses often arrange for mystery shoppers through independent companies, many of which are members of the Mystery Shopping Providers Association (MSPA). For more information go to www.mysteryshop.org.

If you think you have encountered a mystery shopping scam, please visit NCL’s Fraud Center and file a complaint.

Online auction scams: Scammers set their sights on sellers – National Consumers League

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PayPal appeals to many consumers by offering a safe, hassle-free way to purchase items online without handing over personal information, such as credit card numbers, to merchants. Unfortunately, enterprising scammers are impersonating PayPal to take advantage of that trust and swindle unwary online sellers.A victim from Texas, who we’ll call Jane, recently contacted NCL’s Fraud Center. As a seller at an online auction site, Jane had done everything right. She listed a woman’s Rolex watch on eBay and was notified that a buyer named Joy Morgan had won the item for $3,800. Jane then received an email, purportedly from PayPal, stating that, in order to get paid, she first needed to send the Rolex in the mail and email the buyer the tracking number. Susan was initially uneasy about sending a valuable item to a buyer without receiving any payment, so she called the number provided in the email and spoke with what she thought was a PayPal representative that assured her that it was a standard procedure for all first-time sellers. Jane sent the item but, after not receiving any money in her account, contacted PayPal’s main customer service line. That’s where she heard the bad news: she had been scammed. Both the official looking email, complete with PayPal logos, and the friendly customer service representative she initially spoke with were frauds. Jane is out close to $4,000 and has little hope of ever getting her money back.

Scammers have become extremely sophisticated with the tools they use to trick consumers into opening their wallets. NCL’s Fraud Center has received reports of scammers creating realistic looking Web sites, emails, and hotlines all designed to fool unsuspecting consumers into believing they are dealing with a legitimate business. Don’t be fooled! Use caution and common sense with any online transaction.

Double-check the company’s information. A familiar name or brand on an email, in a letter or mentioned over the phone doesn’t guarantee that the deal is legitimate. Crooks often pretend to be from well-known companies to gain people’s trust. Find the company’s contact information independently, online or through directory assistance, and contact it yourself to verify the information.

Understand how online auctions works. Make sure you know the procedures regarding the payment and delivery of purchased items. If you get an email or call asking you to do something outside of standard operating procedures, it should be an immediate red flag.

Understand PayPal’s procedures. According to PayPal’s fraud FAQ, emails from PayPal will always address you by your first and last name or the business name associated with the account. Watch out for emails addressed to “Dear PayPal User” or “Dear PayPal Member.”

Inform auction sites and payment services about suspected fraud. They may have policies to remove sellers or buyers from their sites if they use “shills” or don’t live up to their obligations. Forward fraudulent PayPal emails to spoof@paypal.com.

Try mediation to resolve disputes. Not all problems are due to fraud. Sometimes people simply fail to hold up their side of the bargain in a timely manner or there may be an honest misunderstanding. Some auction sites provide links to third-party mediation services that help users resolve disputes. There may be a small fee that is usually paid by the party who requests the mediation.

Check out the seller or buyer Most auction sites have feedback forums with comments about the sellers based on other people’s experiences, but many sites also allow sellers to review buyers, which can provide pertinent information about a buyer who consistently creates payment issues and who is best avoided.

Avoid Fake Check Scams: Five things you should know – National Consumers League

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You’ve won millions in a lottery, or you’ve been offered a job as a “mystery shopper.” Great news, right? All you have to do is deposit the checks or money orders you’ll receive and send the money somewhere, minus your “pay.” Is this your lucky day? NO! It’s a fake check scam that will cost you thousands unless you know the danger signs.The letter says that you’ve won millions in a sweepstakes or lottery, and there is a check or money order enclosed as part of your winnings. All you need to do to get the rest is send money to pay the taxes. Or someone offers you a job working at home as a “mystery shopper” or accounts manager.  It’s easy – you deposit the checks or money orders you’ll receive and send the money somewhere, minus your “pay.” Is this your lucky day? NO! It’s a fake check scam that will cost you thousands unless you know the danger signs.

If someone gives you a check or money order and asks you to send money somewhere in return, it’s a scam. That is not how legitimate sweepstakes operators or other companies operate. If you have really won, you will pay taxes directly to the government. Legitimate mystery shopper or account manager jobs don’t involve using money transfer services to send money.

A familiar name doesn’t guarantee that it’s legitimate. Crooks often pretend to be from well-known companies to gain people’s trust. Find the company’s contact information independently, online or through directory assistance, and contact it yourself to verify the information.

The check or money order may be fake even if your bank or credit union lets you have the cash. You have the right to get the cash quickly, usually within 1-2 days, but your bank or credit union can’t tell if there is a problem with the check or money order until it has gone through the system to the person or company that supposedly issued it. That can take weeks. By the time the fraud is discovered, the crook has pocketed the cash.

When the check or money order bounces, you will have to pay the money back to your bank or credit union. You are responsible because you are in the best position to know if the person who gave it to you is trustworthy. If you don’t pay the money back, your account could be frozen or closed, and you could be sued. Some victims are even charged with fraud.

Sending money using a money transfer service is like sending cash – once the crook picks it up you can’t get it back from the service. It’s not like a check that you can stop after you’ve given it to someone or a credit card charge that you can dispute. But if the money has not been picked up yet, you may be able to stop the transaction. Contact the money transfer service immediately if you think you’ve been scammed.

Want to learn more? Go to www.consumerfed.org/fakecheckscams to read CFA’s Don’t Become a Target brochure, watch the funny videos about sweepstakes/lottery and work-at-home fake check scams, and check out the other materials on the Web site. Visit NCL’s www.fakechecks.org, where you can take a quiz to see how well you can spot this fraud, send an ecard to warn other people, and find information to help you and people you care about avoid losing money to fake check scams.

Planning a vacation? Avoid travel scams – National Consumers League

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As temperatures are heating up, consumers’ thoughts are increasingly turning to making vacation plans. Unfortunately, scammers will be on the lookout as well … for unwary victims.Travel has always been an area where consumers should have their anti-fraud antennae perked. Here are some of the types of travel scams NCL’s Fraud.org staff have been hearing about recently:

Vacation Rental Scams – These scams typically crop up on online classified sites like Craigslist.com. The victim will search for an apartment or home for rent in a desirable destination and find an attractive rental at a very low price. The victim contacts the “renter” (who is in reality a scam artist) who then requests a “deposit” on the rental. Typically it is requested that the deposit be sent via wire transfer. When the victim arrives at the property she finds that it either does not exist, that the condition has been misrepresented, or that it was never available for rent. Efforts to get back the deposit fail. Scammers typically use images from a real property (often taken from real estate sites) to make their scams seem legitimate.

Timeshare Purchase Scams – Victims are lured to a high-pressure sales pitch (sometimes at the timeshare resort itself) with promises of a high-value “free” gift, such as a car, RV, or cruise package. To obtain the gift advertised, the victim must pay a “fee” for delivery or processing. When the gift arrives (if it ever does), it is typically of much lesser value than waht was originally presented to the victim.

Fraudulent Timeshares – The victim receives a package in the mail or via email detailing a timeshare for sale. If the victim invest, they later find that the timeshare does not exist, the timeshare company has “gone out of business,” or otherwise is unable to return the deposit paid.

Fraudulent Vacation Packages – Victims see an advertisements for a deeply discounted vacation package at a luxurious resort or cruise. After the deposit is paid, the victim finds that the quality of the package has been grossly misrepresented and/or there are significant additional fees that must be paid at the destination to take advantage of the “great deal.” Efforts to recover deposits are generally unsuccessful.

Airfare Scams – Victims are lured in by promises of steeply discounted airfares. Once the purchase is made, the victim receives no confirmation or a counterfeit confirmation e-mail or paper ticket. A variant of this scam occurs when the victim purchases the ticket and is then told that their credit card purchase has been declined. A wire transfer is requested which results in no ticket and no way to recover the funds.

Tips for Avoiding Travel Scams

So, before you head out on your dream vacation, bone up on these tips for avoiding travel-related scams:

  • Watch out for unsolicited e-mails, phone calls and faxes offering hard-to-believe deals on travel to desirable locations. If it sounds too good to be true, it probably is.
  • If you are working with a travel agency or vacation planning service, make sure to get all details about the trip in writing. Watch out for vague promises that you’ll be staying at “five-star” resorts or riding on “luxury” cruise ships at cut-rate prices. Get as much information as you can including the total cost, any restrictions that may apply, and the exact names of the promised airlines and hotels.
  • Free is usually not free. Think again before you believe promises that you’ve won a “free” vacation. Often, these are just thinly-veiled ploys to get your credit card information to “verify” your eligibility or to pay a “processing fee.” You should never have to pay to collect a prize.
  • Check out the travel company BEFORE giving them any money. Call the company service yourself to see if the prices match or simply if they legitimately exist. A Better Business Bureau search is a good first step. Also make sure that they company is registered with the American Society of Travel Agents.
  • Watch out for “travel clubs” that offer “free” memberships. Often these services do little except charge your credit card every month and provide few, if any, benefits.
  • Use your credit card when purchasing a trip. If you feel that you’ve been swindled, you can dispute the charge with your credit card company.
  • Beware of any offers that involve high-pressure sales pitches that urge you to commit right away because the offer will “expire” otherwise. For example, Timeshare seminars are often thinly-veiled ways to get consumers to sign up for timeshare often featuring a come-on like “free” lunch or “free” vacation that are full of hidden fees and traps.
  • If you’ll be traveling overseas, call your credit card company and bank to let them know what countries you’ll be visiting and when you plan to return. This way they can be on the alert for any suspicious charges from a scammer that gets your credit card information while you’re on the road or after your get back home.
  • Ask questions and be cautious.Read all of the fine print carefully. Companies need to tell you how your trip will operate. Even if they make their policies difficult to read, look them over before sending any money. If you can’t get answers to your questions, avoid using that company.
  • Read your invoice. Confirm that it includes every cost, including fees. Take the time to understand the purpose and amount of each fee. Some common hidden fees to watch out for: International Departure and Arrival Taxes, Processing Fees, Peak Week Surcharges, Late Booking Fees, Departure City Surcharges, Travel Insurance, Fuel Surcharges.
  • Be aware of cancellation policies. Before sending any money, you should know how much you will lose if you need to cancel.
  • Avoid any company that mandates arbitration for disputes. Don’t give up your legal rights.

File a complaint if you have a dispute. In most states, you can do this through the Attorney General’s office. This calls attention to the company so that future travelers will not repeat your experience. Also, the attorney general may mediate your dispute to help resolve it.

Car shopping? – National Consumers League

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In the market for a new car? Be on the lookout for unscrupulous sellers looking to take you for a ride! In response to an increase in consumer complaints to the National Consumers League’s Fraud Center, and with the arrival of the upcoming peak car-buying season, consumer advocates are warning that car shoppers this spring should consider themselves at an increased risk of falling victim to a scam.“Scam artists prey on consumers in search of a bargain, and these scams are no exception,” said John Breyault, Director of NCL’s Fraud Center. “Unfortunately, the only person that’s getting a steal are the con artists themselves.”

Since the beginning January 2011, NCL’s Fraud Center has received more than 100 complaints from consumers nationwide about these scams, with a total reported loss of nearly $293,674.

The used car scams reported to NCL generally involve a classified listing on any of a number of popular sales and auction sites such as craigslist, Yahoo! Autos, or eBay. The listings are generally for late-model automobiles, often luxury brands, at well below market value. In the schemes, when the victim contacts the scammer, they are told that the seller is not local and that payment for the car itself or for shipment of the car should be sent via wire transfer to the seller. Often, the seller claims to be a member of the armed services who is either already deployed or preparing to deploy. As such, quick payment is necessary to ensure that the buyer receives the “great deal” on the car.

NCL recommends consumers avoid used car sales with the following red flags:

  • The seller asks for payment via wire transfer or bank-to-bank transfer.
  • The car is listed at a price far below common market values (such as Kelley Blue Book value).
  • The seller asks for payment urgently since they are or will soon be relocating overseas.
  • The seller says that they are located overseas, but they have an American middleman or online escrow service that will hold the money until the vehicle is delivered.
  • The seller refuses to meet in person or communicate on the phone.
  • The seller’s email or instant messages contain multiple grammar and spelling errors.
  • The seller claims that the transaction is insured by a “protection program” associated with a real site (such as eBay, Google Checkout, PayPal, etc.) or another online payment system.

Victims of these or any other frauds are encouraged to file a complaint at www.fraud.org.

Disaster in Japan: Charity scam warning – National Consumers League

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With heartbreaking images of the recent devastation in Japan—villages reduced to rubble and submerged under water, city streets leveled, and survivors searching for missing loved ones—many consumers around the world are reaching for their wallets to help. Advocates are warning that con artists have long exploited natural disasters, and the Sendai earthquake and tsunami will likely be no exception.Over the years, opportunistic con artists have exploited both natural disasters and terrorist attacks to bilk generous consumers attempting to make financial contributions to rescue efforts, warns the National Consumers League. The recent devastating earthquake and Tsunami in Japan will likely be no exception.

In the days following a natural disaster, NCL’s Fraud Center (www.fraud.org) often hears from consumers about crooks’ attempts to take advantage of tragic events for their personal gain. After the September 11th terrorist attacks, as well as after Hurricane Katrina and the 2010 earthquake in Haiti, NCL’s Fraud Center received reports of a variety of scams tailored by con artists to capitalize on the rescue efforts. Scams typically involve con artists sending out emails purporting to come from a known and respected charity such as the Red Cross or Oxfam International. Victims are then directed to a fake Web site made to look like a legitimate charity’s site, where they are asked to hand over personal information or to donate via wire transfer, PayPal, or a credit or bank account. The scammer then makes off with the donation, and no funds are sent to support actual disaster relief.

“The continued tragedy of fraud perpetrated in the wake of such disasters is that charity scams not only rob the donors,” said Sally Greenberg, NCL Executive Director. “They divert contributions from legitimate charities, who are in great need for money and goods to assist those who need it most.”

NCL warns consumers to be especially wary of emails from strangers. While many legitimate companies, organizations, and individuals are using the Internet to mobilize help for disaster victims and share information about the latest developments, crooks may use email or social networking sites such as Facebook or Twitter to reach a wide audience of potential victims.

Be cautious about any solicitation that mentions the disaster. Give only to charities you know and trust. If you want to support disaster relief efforts, you should contact respected charities directly to make a contribution – don’t respond to requests for aid.

What to watch for:

Be wary of clicking on links or on attached files labeled photos or video in emails from senders claiming to represent charities because they may contain viruses.

Consumers can confirm that charities are properly registered by contacting their state charities regulators, which are listed in the state government pages of their telephone books. Information about charities is also available from the Better Business Bureau Wise Giving Alliance, 703-276-0100, www.give.org.Consumers can also check out charities at GuideStar (https://www.guidestar.org/), and Charity Navigator (https://www.charitynavigator.org/), both of which contain links to legitimate charities working on the relief effort.

Consumers can report disaster-related telemarketing or Internet fraud to NCL’s Fraud Center via the online complaint form on www.fraud.org.

Avoid tax season pitfalls – National Consumers League

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April 15. The date fills many consumers with dread, since it marks the IRS tax filing deadline. For tax scammers, however, Tax Day equals (ill-gotten) profits. That’s why NCL is encouraging consumers to be extra-vigilant against predatory – or downright fraudulent – tax-related offers.Tax-related scams come in a variety of flavors. Here are a few of the more common variations:

Tax-related ID theft

Identity thieves have also increasingly sought to profit from their scams by filing fraudulent tax returns. According to the Federal Trade Commission Tax or wage-related fraud has also been the fastest-growing way that identity thieves misuse victims’ information since 2009. In 2011, the IRS’ Taxpayer Advocate Service received more than 34,000 tax identity theft cases, a 97 percent increase over 2010.

One of the more insidious dangers of this type of ID theft is that consumers may not become aware of it until they receive a note from their accountant or the IRS itself stating that their personal information has been misused (often to steal tax refunds or to apply for jobs).

While there is no fool-proof way to protect your identity, the IRS recommends several steps: 1) Don’t carry your Social Security card or other information with your Social Security number (SSN) with you; 2) Don’t give businesses your SSN just because they ask for it. Give it only when required; 3) Check your credit report every 12 months and challenge unusual activity; 4) Keep personal information in your home secure; 5) Protect your personal computer with firewalls, anti-virus software, security patches and change your passwords regularly; 6) Don’t give out personal information over the phone, mail or the Internet unless you know who you’re dealing with.

Tax relief scams

Around Tax Day, consumers would be wise to heed Benjamin Franklin’s old adage that “nothing can be said to be certain, except death and taxes.”

Consumers who owe back-taxes may be desperate to avoid the financial hit cutting a big check to the IRS may entail. Unfortunately, there are a multitude of fraudsters who claim that for an (often sizable) upfront fee, they can free taxpayers from having to pay the IRS. Others claim to be able to settle debts to the IRS for pennies on the dollar.

For example, in 2010, the FTC halted a scam run by a company called American Tax Relief (ATR) that had duped consumers out of more than $60 million. ATR claimed to be able to “free” consumers from tax liens, wage garnishments, levies and “unbearable monthly payments for up-front fees of $3,200 to $25,000. In fact, ATR provided little if any tax-relief for its clients

A complaint to NCL’s Fraud Center is illustrative of how these scams work. “Stephen” was worried about the money he owed the IRS. He contacted a company that assured him he would be work with tax attorneys who would settle his debt. Stephen sent them his personal information and tax returns from previous years. One week later, the company said they couldn’t help Stephen, but wished him “luck”. When Stephen asked for a refund for the $9,500 fee he paid via credit card, the company hung up on him.

Instead of paying big up-front fees to shady tax-relief firms, consumers who are having trouble paying taxes should contact the IRS or their state comptroller. The IRS’s Taxpayer Advocate Service is an independent office within the IRS that provides free help to consumers having trouble paying their federal taxes. Consumer experiencing difficulties paying state taxes should contact the National Association of State Auditors, Comptrollers and Treasurers (NASAA) to get guidance on how to get help from state tax authorities.

Tax preparer fraud

Millions of consumers turn to tax-preparation firms or personal accountants to help them file their taxes. While most of these companies provide a valuable and completely legitimate service, there are countless instances where fly-by-night tax-preparation outfits come in to town, hang out a shingle, and then disappear after charging outrageous fees for tax-preparation services.

According to the IRS, consumers should beware of tax preparation firms that claim they can obtain larger refunds than other preparers, who base their fee on a percentage of the amount of the refund, who ask consumers to sign a blank tax form, who refuse to provide a preparer tax identification number or provide copies of your tax returns.

Unfortunately, many tax-preparation scammers target certain neighborhoods, often with high concentrations of immigrants or low-income consumers.The 70 percent of consumers with adjusted gross incomes of $57,000 or less can take advantage of the IRS’s FreeFile service, which provides access to free tax preparation and filing services.

Other tax scams

The variety of tax scams is limited only by the imaginations of unscrupulous scam artists.

Misdirected refunds

“Pattie” reported to NCL that she responded to a tax refund company’s advertisement – receive a tax refund directly deposited into one’s bank account within 8-11 days for only $99! She provided her routing number when filling out the paperwork. The company told her that there was a delay but that her direct deposit was being processed. After following up with her bank, Pattie learned that the company had rerouted her deposit into their account – leaving her without a refund and helpless.

Phishing

Tax scams are often variations on phishing schemes: the victim receives a phone call from an “IRS employee” offering a tax refund – however, they need the taxpayer’s checking account number, he or she is told, in order to deposit the money. Alternately, the victim gets an email claiming to be from the IRS – often with a realistic-looking sender address – stating that the consumer is due a refund and needs to click on a link and enter their personal financial information in order to have it processed.

Fake stimulus money

Con artists contact their victims claiming to be government representatives calling to initiate payment transfer of impending government tax “rebates,” often related to the 2009 government stimulus bill. Victims are urged to provide bank or credit card account numbers to receive these rebates, sensitive information which is then misused to drain these accounts.

Consumers should remember: the IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call the IRS customer service toll-free number (1-800-829-1040) to confirm it.

Scammers prey on the elderly in 2010 – National Consumers League

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A phone ringing at 3AM usually means one thing: bad news. That’s certainly the case with a Grandparent Scam, in which fraudsters play on the fear that a friend or relative is in danger by calling an elderly victim and posing as a grandchild or acquaintance.The scammer then frantically tells a story of distress (they’ve been arrested, in an auto accident, are in need of lawyer, etc.) that requires money to be wired immediately. The “grandchild” begs the victim not to tell anybody about the call to avoid getting in trouble with their “parents.”

Scammers, always on the look-out for an easy mark, have been mercilessly targeting the elderly, according to the NCL’s Fraud Center and its recently released Top Ten Scams Report. The report, which is compiled annually from consumer complaints submitted to NCL’s Fraud Center, looks at trends in Internet and telemarketing fraud in the last year.

Consumers over the age of 55 make up nearly a third of all reports (32.8 percent), while baby boomers and older consumers total 54 percent of all complaints to the NCL’s Fraud Center in 2010.

“Fraudulent telemarketers and Web-based scammers aren’t just pushy salespeople trying to make a living – they are hardened criminals out to take their victims’ life savings,” said NCL Executive Director Sally Greenberg. “Con artists know that older consumers may be particularly vulnerable to falling for a bogus pitch, using scare tactics, posing as legitimate outfits, or making the offer sound so sweet that it’s difficult for consumers to resist.”

Top ten scams of 2010

  1. Fake Checks: 29.67%
  2. Internet: General Merchandise: 27.24%
  3. Prizes/Sweepstakes/Free Gifts: 20.49%
  4. Phishing/Spoofing: 8.90%
  5. Advance Fee Loans, Credit Arrangers: 2.44%
  6. Timeshare Resales: 1.56%
  7. Nigerian Money Offers: 1.28%
  8. Internet: Auctions: 1.14%
  9. Friendship & Sweetheart Swindles: 0.99%
  10. Scholarship/Grants: 0.65%

Fake check scams—in which fraudsters lure their victims with phony mystery shopper jobs or sweepstakes “winnings,” asking their victims to cash realistic-looking checks and wire a portion of the proceeds back to the scammer before the check bounces—continued to be the most frequently-reported scam to NCL’s Fraud Center, making up 29 percent of all complaints.

“There is no legitimate reason for someone to give you money and then ask you to wire money back,” said John Breyault, NCL Vice President of Public Policy. “If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.”

Fraudsters on the line

Despite our increasingly digital society and the growing prevalence of Web-ready devices such as smartphones and tablet computers, scammers have not abandoned the telephone as a method of contact. Nearly a quarter – 23.67 percent – of victims reported being defrauded over the phone, up 7.62 percent from last year.

In 2010, NCL’s Fraud Center saw a spike in telemarketers focusing on bogus prize and sweepstake scams. Among scams where the con artist contacted the victim by phone, these scams increased by 19 percent and are this year’s most frequently reported telemarketing scam.

Wire transfers: Con artists’ preferred method of payment

Wire transfers are great for scammers. Unlike reversing a credit card charge or canceling a check, consumers have virtually no way of getting their money once a transfer has been made. Because it’s such an unsafe way for consumers to pay for transactions, wire transfer remains the payment of choice for scammers, with more than 2 in 5 (41.5 percent) of consumers who reported losses sending money via wire transfer.

For more information on the top scams of 2010, read NCL’s report.

Government grant scams: promise free money but deliver debt – National Consumers League

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With high unemployment and a still sluggish economy, many Americans are on the lookout for new opportunities to get some cash—a fact that scammers are well aware of and eager to exploit. Government grant scams have been a frequently reported scam to NCL’s Fraud Center in recent months.NCL’s Fraud Center was recently contacted by a woman we’ll call “Maureen.” Maureen received a phone call from a woman who said she was a “customer service representative” from the United States government who was happy to inform Maureen that she was “eligible” to receive a government grant in the amount of $5,600. The friendly woman on the phone informed Maureen that, in order to receive her money, all she had to do was pay a onetime “processing fee” to the tune of $1,100. Maureen quickly wired the money to the address she was given, only to learn that she had to pay an additional $419 in order for her grant to be “released.” Maureen was now growing concerned and began to ask why she had to pay so many fees. The caller calmly explained that Maureen’s grant was “guaranteed” as soon as she made the final payment, which Maureen reluctantly made. Unfortunately for Maureen, the guarantee was bogus and the only thing she got was a $1,500 hole in her bank account.

With high unemployment and a still sluggish economy, many Americans are on the lookout for new opportunities to get some cash — a fact that scammers are well aware of and eager to exploit. Government grant scams have been a frequently reported scam at NCL’s Fraud Center in recent months. A typical scam can go one of two ways: the scammer requests a “processing fee” or “security deposit” (as in Maureen’s case), or the victim is instructed to provide personal information, such as bank account and Social Security numbers, under the guise that the caller will “deposit” the funds directly into the victim’s accounts. Once the caller has the victim’s banking information, the scammer drains the account.

The experts at NCL’s Fraud Center are tracking scams like Maureen’s and reminding consumers of the most obvious red flags for spotting fraudulent government grants, such as:

  • The government doesn’t telephone people or send unsolicited letters or emails to offer grants. If someone contacts you unexpectedly and offers you a grant, it’s a scam. Don’t provide your financial account numbers, Social Security numbers, or other personal information in response to such an offer. Crooks “phish” for that information to steal victims’ money and impersonate them for other illegal purposes.
  • Government grants never require fees of any kind. You might have to provide financial information to prove that you qualify for a government grant, but you won’t have to pay to get one.
  • Government grants require an application process. They aren’t simply given over the phone and are never guaranteed. Applications for government grants are reviewed to determine if they meet certain criteria and are generally awarded based on merit. If you didn’t apply for a government grant and someone says you’re receiving one, it’s a scam.
  • Government grants are made for specific purposes, not just because someone is a good taxpayer. Most government grants are awarded to states, cities, schools, and nonprofit organizations to help provide services or fund research projects. Grants to individuals are typically for things like college expenses or disaster relief.
  • Don’t be fooled by official or impressive-sounding names. Swindlers claiming to provide or help get government grants often invent impressive-sounding names and titles for themselves and the organizations they claim to represent. They operate under many different names and phone numbers, take your money, then often leave town to start all over again.

If you’ve been a victim of a government grant scam, know someone who has, or have been approached by a scam artist, contact your local law enforcement, your state attorney general and file a complaint with the National Consumers League’s Fraud Center at www.fraud.org.

‘Tis the season for charity scams – National Consumers League

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It’s that time of year, when many consumers are ready to open their hearts and wallets to many deserving charities. But con artists are well aware of this. How can you be sure you’re giving to a good cause — or a cause at all?If you’re thinking of giving to a charity this season, good for you! But be careful — some scammers out there may be looking to take advantage of your generosity. Complaints to the Federal Trade Commission about charity scams have become more frequent recently. The volume of complaints to the FTC’s Consumer Sentinel system increased by 8.6 percent from 1.23 million in 2008 to 1.33 million in 2009.  While the volume of complaints regarding bogus charitable solicitations remained a small fraction of overall complaints, they were reported much more frequently in 2009, increased by 82.1 percent over the same period (1,908 in 2008 versus 3,474 in 2009).

Avoid being a statistic this holiday season! If you decide to give, start by doing your homework.

Non-profit tracking Web sites like GuideStar.org and CharityNavigator.org have a free databases (registration may be required) with detailed information on many charities. Do your due diligence to make sure the charity is for real before donating.

Your local newspaper or television or radio station often compiles lists of reputable charities responding to emergencies. Consider consulting these sources for information on how to give.

Be proactive! Contact the charity of your choice directly on the phone or via the Internet to ensure that your donation is going directly to the charity of your choice.

Consider setting up a personal charity/giving budget and deciding ahead of time who you want to give to, rather that being pressured into giving on the spur of the moment by a phone or e-mail solicitation.

Don’t pay in cash, if possible. It is safer to pay by check or credit card. Be sure to get a receipt for any donation for tax purposes

If a charity contacts you, be cautious.

If you’re approached by an unfamiliar charity, check it out. Most states require charities to register with them and file annual reports showing how they use donations. Ask your state or local consumer protection agency how to get this information. The Better Business Bureau Wise (BBB) Giving Alliance also offers information about national charities. Call 703-276-0100 or go towww.give.org.

Ask for written information. Legitimate charities will be happy to provide details about what they do and will never insist that you act immediately.

Beware of sound-alikes. Some crooks try to fool people by using names that are very similar to those of legitimate, well-known charities

Ask about the caller’s relation to the charity. The caller may be a professional fundraiser, not an employee or a volunteer. Ask what percentage of donations goes to the charity and how much the fundraiser gets.

Be especially cautious after natural or other disasters. Fraudulent charities take advantage of those situations to trick people who want to aid the victims.  If you’re not sure whether a charity is legitimate, check it out with your state charities regulator and the BBB before you donate.

Be wary of requests to support police or firefighters. Some fraudulent fundraisers claim that donations will benefit police or firefighters, when in fact little or no money goes to them. Be wary of any claims that your donation will get you “special treatment” from these organizations. Contact your local police or fire department directly to verify fundraiser claims.