Protect your identity – National Consumers League

How would you feel if you were stopped for a traffic violation and suddenly found yourself being handcuffed and taken to jail for a crime you never committed? Or if you got a nasty call from a collection agency for a car loan you never had? Or if your application for a home mortgage was turned down because of information in your credit report about overdue bills on accounts you never opened?These are situations you could face as a victim of identity theft. While ID theft can take many complex forms, the essence of this crime is simple—someone steals personal information about you to use for fraudulent purposes.

ID theft can happen to anyone. By guarding your personal information carefully, you can reduce the likelihood of becoming a victim. But you may not be able to avoid ID theft entirely; it can happen in ways beyond your control. Businesses, government agencies, and organizations that obtain personal information also have a responsibility to handle it carefully and keep it secure.

If you do become a victim of ID theft, there is help available to guide you step-by-step through the procedures that you will need to take to resolve the problem.

Avoid falling victim to identity theft by following this routine:

  • Check credit reports annually and before major purchases.
  • Check bank and credit card statements regularly and report unauthorized transactions immediately.
  • Carry only the credit cards, checks and identification you need.
  • Safeguard your Social Security Number.
  • Don’t give out personal information unless you know the recipient.
  • Pick up receipts from ATMs, restaurants, and stores.
  • Protect your Personal Identification Numbers and never carry them with you.
  • Use strong passwords to protect sensitive information. Don’t use information like birthdays or pets’ names.
  • Shred important documents before discarding them.
  • Destroy expired or unneeded cards.
  • Keep firewall, anti-virus, anti-spam and anti-spyware software current on your computer. Don’t respond to requests for personal information from unsolicited email or pop-ups.

Tread carefully with money transfer services – National Consumers League

Money transfer services make it easy to wire cash quickly and conveniently to friends and relatives — but crooks may take advantage of these services to get money from their victims!

  • Scammers may ask for payment through money transfer services because it’s fast. Unlike checks and credit card payments, the money is often available within minutes. That means that a fraud victim may not be able to stop the payment before it’s received. Because the money is usually picked up in cash and in person, it can be difficult to recover.
  • Common scams to watch for are bogus sweepstakes and lotteries, false promises of credit cards and loans, fraudulent online auction sales, work-at-home and other money-making schemes, and offers to transfer foreigners’ “fortunes” to victims’ bank accounts.
  • Crooks also befriend people on dating service sites and in online chat rooms. They ask to “borrow” money for medical problems or other emergencies, or to come to the U.S. from another country. Once they get it, the “friendship” ends. People who lost a pet or other valuable item are sometimes contacted by criminals who, posing as good Samaritans, ask for money to ship it back.
  • One of the fastest growing frauds is the fake check scam. If you receive payment and are asked to send part of it to someone through a money transfer service, don’t do it.
  • New frauds emerge every day, but no matter what the pitch is, if someone you don’t know asks for payment through a money transfer service, don’t do it.

Pyramid schemes posing as business opportunities – National Consumers League

The pitch is that you’ll make money by joining the program and recruiting others. The reality is that in pyramid schemes, you and your friends will lose money, not make it.

Here’s how to protect yourself

Take your time — don’t let anyone rush you into a decision. Legitimate opportunities will not disappear overnight.

  • Review the compensation plan and be sure you will be paid based primarily on the sale of products by you or members of your network.
  • Minimize your risk. Most legitimate multilevel companies require little, if any, up-front payment, and offer to repurchase your inventory for at least 90 percent of what you paid if you decide to leave the business.
  • Ask questions, verify all information, get written copies of all company literature, and consult with others who have experience with the company.
  • Pyramid schemes promise easy mney. You pay to join, convince others to do so, and you’ll get a cut of the payment from each new member. The truth is, all such schemes are losers and collapse when members realize they’re not making the money they were promised.
  • Sometimes pyramid schemes claim to be multilevel marketing plans (MLMs), which use networks of independent distributors to sell their products. The key difference is legitimate MLMs sell goods or services to consumers and compensation comes primarily from those sales, not from membership fees or the recruitment of new participants.
  • Pyramid schemes are illegal. People who participate in them are subject to fine and/or imprisonment in all 50 states and under federal law.

Download NCL’s brochure, Pyramid Schemes: Don’t let one collapse on you.

No free lunches: Avoid investment seminar scams – National Consumers League

Free seminars are a popular way to promote investment and insurance products. After the meal, the so-called “experts” urge folks to trade in their current investments for the product being pitched. Testimonials are glowing; the charts and handouts are impressive. But don’t fall for the pitch!Don’t believe claims that there is no risk. There is always risk in investments, and no one but a con artist will tell you otherwise. Know the risk before you invest.

Beware of promises that you’ll make big profits fast. No one can accurately predict how an investment will do. Often the investments that promise the most pay-off are also the most risky.

Get the details in writing. Legitimate companies will be happy to give you all the information you need.

Don’t agree to anything on the spot. Pressure to act immediately is a danger sign of fraud.

Understand your investments. Do you know the difference between stocks and bonds, margin accounts and cash accounts, options and futures, mutual funds and certificates of deposit? If not, do your homework before you invest.

Don’t act on testimonials from strangers. Someone who appears to want to share a friendly tip about a great investment opportunity may actually be a con artist trying to lure you into an investment scam.

Be especially wary of investments in commodities. Crooks often promise that the value of investments in coins, precious metals, artwork, oil leases, gemstones, and other commodities will rise. The truth is that the value of these types of investments can go up or down significantly.

Steer clear of “offshore investments.” These are often promoted as a way to avoid taxes. Actually, you are still liable for taxes, and the investments themselves are usually very risky.

Be cautious about emails for investments. Many unsolicited emails are fraudulent.

Take the time to check out investment offers. A good place to start is with your state securities regulator. Other resources for information to help you make wise investment decisions include: the federal Securities and Exchange Commission, 800- 732-0330, www.sec.gov; the North American Securities Administrators Association, 202-737-0900, www.nasaa.org; and the National Futures Association (for investments in commodities), 800-621-3570 (in Illinois, call 312-781-1467), www.nfa.futures.org.

Be on the lookout for phone fraud – National Consumers League

From slamming to cramming and everything in between, con artists and companies have tapped into telephone bills as a place to bilk consumers out of money they shouldn’t owe. Learn to spot the most common phone frauds.

Slamming

  • You’ve been “slammed” when your phone service has been changed without your consent. It can happen with long distance service and, as competition increases for local and local toll, for those services as well.
  • Sometimes slamming results from company error; for example, the wrong number being typed into the system. But in many cases it’s a deliberate attempt by one company to “steal” the customer from another.
  • The slammer falsely claims that you have agreed to change your service provider and asks your local phone company, which performs the actual switch, to make the change.
  • If your telephone company is switched to another company without your consent (this could be your long distance company, local toll, or even local service if there is competition in your area), you have the right to be switched back without being charged any switching fees. Changing your service without your permission is called “slamming,” and it’s against the law.
  • If you were slammed on or after November 28, 2000, new rules from the Federal Communications Commission apply. To make the most of your rights, read your phone bill carefully as soon as you get it and act quickly if you discover you’ve been slammed.  You’re in the best position if you haven’t yet paid the slammer.
  • Call the company that “slammed” you and say you are disputing the switch.  Its number should appear on the same page as the charges on your bill.  If you haven’t paid the bill, demand that the charges be removed for up to the first 30 days of service.
  • Call the company you were switched from to arrange to switch back with no switching fee and re-enroll in any special program or calling plan you had.  If you haven’t paid the bill and received service from the slammer for more than 30 days, arrange to be rebilled by your original company for any calls from day 31 on.  If you have paid the bill, ask your original company to try to recover the refund to which you are entitled.
  • Call your local phone company if it provided the billing for the slammer to notify it about the problem and that you are disputing the charges.
  • Notify the appropriate agency. If you have resolved your slamming complaint, be sure to mention that when you report the problem to the agency. Your information is still useful for tracking patterns of slamming abuses. If you haven’t been able to resolve the complaint, the agency will try to help you.
  • Include your name and address, telephone number, email address, the name of the company that slammed you, the name of the company you were slammed from, a complete explanation of what happened and when, how much you have paid the slammer, if anything, and the solution you want if the problem hasn’t been resolved.  If you are mailing your complaint, enclose copies, not originals, of any bills you are disputing.
  • You should report slamming promptly, even if the slammer or your original company assures you that everything has been resolved.
  • You can report slamming to your state utility department.

Cramming

  • You’ve been “crammed” when charges for miscellaneous services that you never agreed to buy have been added to your phone bill. Some examples are phone-related services such as voice mail, paging, or personal 800 numbers. But you might also find charges for other types of services on your bill, such as Internet access, club memberships, and even dating services!
  • The crammer arranges to bill you, usually through your local phone company, by falsely claiming that you authorized the new services.
  • These charges might appear on your bill just once, or they might recur on every bill – a good reason to look closely at each bill before you pay it.

Pay-per-call abuses

  • Information and entertainment provided by pay-per-call services are accessed through 900 numbers, some 800 numbers, and even some international phone numbers. They can be recorded weather reports, stock quotes, group chat lines, psychic services, reports about a company’s complaint record from a Better Business Bureau – just about anything.
  • When you call 900 numbers or 800 numbers that provide pay-per-call services, you pay a charge that is set by the service provider, not your phone company. Services provided through international phone numbers result in charges at whatever the rate would normally be for calling that country from your phone.
  • Dishonest pay-per-call service providers don’t disclose, or misrepresent, the cost of their services. They may also misrepresent the services that they offer. You may be tricked into dialing pay-per-call services by following instructions to punch in a “personal activation code” that actually connects you to a pay-per-call line, or you may be switched to a pay-per-call line without knowing it. Some consumers report being charged for pay-per-call services even when their phones were never used to dial them.

Collect call scams

  • Some fraudulent companies attempt to charge consumers for pay-per-call services by masquerading as collect calls. They use common names such as “Jennifer,” hoping that the person who answers will accept the call. Once the call is accepted the person typically hears a recorded message offering some type of service or soliciting for a so-called charity.
  • If you accept the call you will be billed for it even if you are not interested in the service or in making a donation.
  • Some consumers report that they have been billed for these types of collect calls even though they refused to accept them.
  • Consumers also complain about being charged excessive rates for making collect calls from some pay phones.

Calling card fraud

  • When you use a calling card in a public place – an airport, a train station, a pay-phone on the street – someone may be looking over your shoulder to see the account number and PIN number that you dial. They might even be far away, using binoculars or the telephoto lens of a camera to watch you.
  • Once they have your numbers, people can use them to make calls on your account or sell them to others for that purpose. It isn’t necessary for them to actually have your card.

How to avoid falling for phone fraud

  • To avoid slamming or cramming, look closely at contest entry forms or other forms you fill out. They may include an agreement to change service providers or add new services to your bill.
  • If you get a telemarketing call concerning phone service, don’t agree to anything on the spot. Ask the company to send you written information. This way you can evaluate the offer without pressure and to confirm the identity of any caller who claims to represent your regular local or long-distance company.
  • Use an answering machine, voice mail, and/or caller ID to screen calls so that you decide which callers that you want to talk to.
  • Don’t accept collect calls from people you don’t know.
  • Your local phone company can provide a free 900 number block to prevent anyone from dialing a 900 number from your phone. This can help you avoid some pay-per-call abuses.
  • Don’t make or return calls to numbers you don’t recognize. Some international numbers look just like domestic US numbers, but international calls can cost much more. If you are not sure whether a number is in the US or another country, dial 00 and ask the long-distance operator where you would be calling.
  • Consider getting a “PIC freeze” on your local toll and long distance service. This free service from your local phone company prevents any switching of your long distance or local toll company unless you tell your local phone company directly that it’s OK to make the change.
  • Be aware that the PIC freeze is not absolutely foolproof. Most major phone companies sell service at wholesale rates to other companies who resell it to consumers under their own brand names. If you are illegally switched to a company that is a “reseller” of service from your original company, the system may not recognize that there has been a switch. The telephone companies are trying to solve this technical problem.
  • Ask your local phone company about any blocking that may be available to prevent miscellaneous services from other companies from being crammed onto your phone bill without your consent.
  • Prevent calling card fraud by using your body to block the key pad when you are using your calling card at a public phone. If you are giving your account number and PIN to an operator, speak softly so no one around you will hear.

Think twice about credit repair offers – National Consumers League

Good credit is important; a bad credit history can impact your ability to get loans, housing, or even a job. But while promises to “fix” bad credit may be tempting, they’re not true – and they may leave you in worse financial shape than when you started.

  • No one can erase negative information if it’s accurate. Only incorrect information can be removed. Accurate information stays on your record for 7 years from the time it’s reported (10 years for bankruptcy). Even information about bills you fell behind on but now are paid will remain on your report for these time periods.
  • Credit repair services can’t ask for payment until they’ve kept their promises. Federal law also requires credit repair services to give you a explanation of your legal rights, a detailed written contract, and three days to cancel (this applies to for-profit services, not to nonprofit organizations, banks and credit unions, or the creditors themselves).
  • You can correct mistakes on your credit report yourself. If you were recently denied credit because of information in your credit report, you have the right to request a free copy. Otherwise there is a small fee, unless your state law provides for one free report a year. It doesn’t cost anything to question or dispute items in your report. Follow the instructions provided by the credit bureau. The major credit bureaus are: Equifax, 800- 685-1111,www.equifax.com; Experian, 800-682-7654, www.experian.com; and TransUnion, 800-916-8800, www.transunion.com. Contact all three, as the information each has may vary.
  • You can add an explanation to your report. If there is a good reason why you weren’t able to pay bills on time (job loss, sudden illness, etc.) or you refused to pay for something because of a legitimate dispute, give the credit bureau a short statement to include in your file.
  • Know that you can’t create a second credit file. Fraudulent companies sometimes offer to provide consumers with different tax identification or social security numbers in order to create a new credit file. This practice, called “file segregation,” is illegal, and it doesn’t work.
  • If you have credit problems, get counseling. Your local Consumer Credit Counseling Service (CCCS) can provide advice about how to build a good credit record. The CCCS may also be able to make payment plans with your creditors if you’ve fallen behind. These services are offered for free or at a very low cost. To find the nearest CCCS office, call toll-free, 800-388-2227, or go to www.nfcc.org.

Groups unite to issue call for action against phishing scams – National Consumers League

Consumer confidence in conducting business and protecting personal data online is threatened every day by phishing scams. In an initiative led by NCL, law enforcement, financial services, and technical industries have joined forces to combat this threat. The group have issued a “call to action” with the release of a paper outlining key recommendations that form a comprehensive plan for combating phishing more effectively.Phishing is a large and growing problem, in which identity thieves pose as legitimate companies, government agencies, or other trusted entities in order to trick consumers into providing their bank account numbers, Social Security numbers, and other personal information. In 2005, phishing scams ranked 6th in Internet complaints to NCL’s Internet Fraud Watch program and the scams continue to dupe consumers. A May 2005 consumer survey by First Data found that 43 percent of respondents had received a phishing contact, and of those, 5 percent (approximately 4.5 million people) provided the requested personal information. Nearly half of the phishing victims, 45 percent, reported that their information was used to make an unauthorized transaction, open an account, or commit another type of identity theft.

NCL’s new report, the result of a comprehensive three-day brainstorming retreat organized by the Washington-based consumer advocacy organization last September, makes multiple recommendations on how to combat it.

“There is no silver bullet to solve the phishing problem, but there are known responses that need more support and promising new approaches that could help deter it,” said Susan Grant, director of NCL’s National Fraud Information Center. The key recommendations in the report are:

  • Create systems that are “secure by design” to make consumers safer online without having to be computer experts;
  • Implement better ways to authenticate email users and Web sites to make it easier to tell the difference between legitimate individuals and organizations and phishers posing as them;
  • Provide better tools for investigation and enforcement to prevent phishers from taking advantage of technology, physical location, and information-sharing barriers to avoid detection and prosecution;
  • Learn from the “lifecycle of the phisher” and use that knowledge about how these criminals operate to exploit points of vulnerability and stop them;
  • Explore the use of “white lists” to identify Web sites that are spoofing legitimate organizations and use “black lists” to create a phishing recall system that would prevent phishing messages from reaching consumers;
  • Provide greater support for consumer education, using clear, consistent messages and innovative methods to convey them.

Sponsorship for the initiative was provided by the American Express Company, First Data Corporation, and Microsoft Corporation. The recommendations were developed by retreat participants representing financial services firms, Internet service providers, online retailers, computer security firms, software companies, consumer protection agencies, law enforcement agencies, consumer and ID theft victims organizations, academia, and coalitions such as the Anti-Phishing Working Group and the National Cyber Security Alliance. Peter Swire, C. William O’Neill Professor of Law at the Moritz College of Law of the Ohio State University, wrote the report for NCL.

In the next phase of this project, NCL is forming working groups and inviting organizations and experts who are concerned about phishing to examine how the anti-phishing strategies in the report can be adopted on a widespread basis. “We all need to work together in a systematic approach if we want to have a significant impact on the tidal wave of phishing that is hitting consumers and hurting legitimate organizations,” said Grant.

Online auctions: An in-depth look – National Consumers League

Online auctions are wildly popular; nearly one third of adults in the United States who go online have participated in them—an estimated 35.6 million people. Most auction-goers are happy with their experiences and confident that they won’t run into trouble. However, at NCL’s Fraud Center, online auctions have consistently ranked as the top complaint since that category was added to the database in 1997.The average loss per victim in 2000 was $326. Auction victims often say that they never thought about the risks or how to protect themselves—until it was too late. As part of an effort to educate auction-goers about how to take advantage of this exciting new marketplace and reduce the potential for problems, NCL commissioned this Harris Interactive survey with support from Tradenable, a major provider of escrow services. The survey was designed to find out how and why people participate in online auctions, how confident they are as buyers and sellers, how they usually conduct the auction transactions, what problems they encounter, and how they deal with those problems.

Why online auctions are so popular

The Internet opens a global marketplace to consumers, one in which they can find anything they’re looking for and compare prices easily, no matter where they live. For sellers, it provides access to a greatly expanded pool of potential customers, and the low cost of access makes it easy for individuals as well as businesses to offer goods and services.

Most of the survey respondents who participated in online auctions did so only as bidders. A smaller group has participated only as sellers. Though most of the people who participate in online auctions have done so between one and ten times (65 percent), 22 percent said they had participated more than 26 times.

Online auctions appeal to bidders mainly because they’re looking for bargains (43 percent), hard to find items (23 percent), or things they collect (21 percent). When survey respondents who don’t participate in online auctions were asked why, most said they simply weren’t interested (52 percent) or didn’t see anything they wanted (12 percent); few expressed concern that they would not get what they paid for as buyers (six percent) or thought that it would be too much of a hassle as sellers (three percent).

Online auction buyers’ experiences

Of those who have participated as bidders in online auctions, 83 percent have actually bought something. The average value of most purchases was $100 or less (75 percent), but 21 percent of buyers said the average value of their auction purchases was between $101 and $500.

The vast majority of those who participate in online auctions are very or somewhat confident that if they are the winning bidder they will get what they pay for from the seller (94 percent). People who are mostly sellers but have also bought on auctions are also confident they’ll get what they pay for (99 percent).

Feedback about sellers’ previous transactions is obviously valuable information for potential purchasers. But only half of those who mainly bid on auctions say that if feedback information is provided on the auction site, they always check it before bidding; 37 percent usually check. Those who mainly sell on online auctions are also cautious when they’re bidders; 68 percent say theyalways check the information about the seller’s track record before bidding; 20 percent usuallycheck.

They are also reluctant to bid on items if there is no information available on the auction site about a seller’s track record. More than three-quarters (77 percent) of those who mostly sell on online auctions say they won’t bid on items in that case. Fifty-three percent of those who are mostly bidders are also reluctant to bid in these cases. People who are mostly bidders are willing to look for information from other sources like government agencies, consumers groups, or the Better Business Bureau before deciding whether to make a bid (17 percent). Overall, 29 percent of auction participants would bid on items even if there were no information on the auction site about the seller.

The most common way that people who buy items in online auctions pay is by sending a check, cashier’s check, or money order directly to the seller (69 percent). Unfortunately, by the time the buyer discovers that there is a problem with the transaction, the check or money order has usually already been cashed. And if the seller encounters a problem with the buyer’s payment, such as a check bouncing, the merchandise may have already been shipped.

Credit cards offer more protection because buyers have the right under federal law to dispute the charges if the goods were misrepresented or never delivered. Payment by credit card can also be safer for the seller than accepting personal checks. However, the frequency with which the auction buyers paid by giving their credit card numbers directly to the sellers is relatively low, only 17 percent. Services offered by or through some auction sites that facilitate payment by credit card are clearly helpful. Nearly half of all those who bought items have made payments through those services (44 percent).

Escrow services are another way that auction buyers and sellers can protect themselves. For a small fee, an escrow service holds the buyer’s payment and forwards it to the seller upon the buyer’s receipt and approval of the item within an agreed upon inspection period. But overall, only six percent of those who have bought items have paid through an online escrow service—the same percentage as a much more dangerous method of payment: sending the seller cash. Use of escrow services among those who are mostly sellers when they buy items is 15 percent.

Despite the high confidence rate that people generally have in online auctions, four in ten (41 percent) buyers have had problems, including: receiving items much later than expected (20 percent), receiving items that were different than promised (11 percent), receiving damaged items (ten percent), and never receiving the items (ten percent).

Most people who experienced problems were able to resolve these problems with the sellers by themselves (62 percent). Other actions buyers took included: complaining to the auction site (29 percent), disputing the credit card charges (eight percent successfully, two percent unsuccessfully), making an insurance claim (four percent successfully, one percent unsuccessfully), using an online mediation service (one percent successfully, two percent unsuccessfully), and complaining to a government agency, consumer group, or the Better Business Bureau (two percent). Many said they never took any action to solve their problems (21 percent).

Online auction sellers’ experiences

Nearly a third (32 percent) of those who offered items for sale on online auctions have sold 11 or more items. Smaller numbers have sold fewer items (24 percent sold 1-2 items, 19 percent sold 3-5, 9 percent sold 6-10). Most offered items for sale valued at $100 or less on average (69 percent), but 20 percent of sellers said they offered items with average values of $101-$500.

More than half of the sellers (52 percent) said they had experienced problems with buyers, including: late payments (34 percent), never receiving payments (27 percent), buyers changing their minds (20 percent), checks bouncing (five percent), and buyers using stolen credit cards (one percent).

The majority of sellers who experienced problems resolved their problems with buyers themselves (66 percent). Other actions that sellers took included: complaining about the buyer to the auction site (49 percent), participating in private online mediation (seven percent), contacting the escrow service they used to accept payment (five percent), and using a collection agency (two percent). Only seven percent said they took no action.

Familiarity with escrow services

Unfortunately, 42 percent of the survey respondents who don’t typically use an escrow service aren’t familiar with the services. Another 30 percent don’t think it’s necessary to use them, and 19 percent don’t want to pay the fee. Online escrow services are convenient for both auction buyers and sellers. The fee, usually a small percentage of the final purchase price, can be paid by either party as they mutually agree. For sellers, escrow may be a less expensive option than participating in the credit card payment system, especially if the buyer pays the fee. For buyers, it can help ensure that they will get what they pay for—or they won’t have to pay.

Conclusion: what does this mean for online auction participants?

Online auctions can offer great benefits to both buyers and sellers. But as the survey shows, when a consumer pays before receiving the merchandise, or a seller ships the goods before the buyer’s payment clears, there is some risk involved. Even though most people have good intentions, things occasionally go wrong. And some people are irresponsible, or even downright dishonest, in their dealings with others.

Auction participants need to be aware of the risks and know how to protect themselves. While there aren’t any guarantees in life, it is possible to reduce the potential for trouble in online auction transactions by following some basic safety tips, including

  • Understand how the auction works;
  • Check out the seller before you bid;
  • Get the contact information of the person or company you’re dealing with;
  • Look for information about insurance for buyers;
  • Payment by credit card can protect both buyer and seller;
  • Consider using an escrow service.

It’s easy to get carried away in the excitement of online auctions. Common sense and caution are the keys to happy auction experiences.

Survey methodology

This Harris Interactive QuickQuerySM survey was conducted via the Harris Poll Online, within the United States, from December 19-21, 2000. The poll was conducted among 2,196 respondents, 18+ years of age. Figures for age within gender, race, education, region, employment, and income were weighted where necessary to bring them in line with their actual proportions in the online population. QuickQuery is an omnibus service that provides approximately 2,000 respondents in two days.

In theory, with a sample of this size and after weighting the data, one can say with 95 percent certainty that the results have a statistical precision of plus or minus 3 percentage points of what they would be if the entire adult population of the United States had been polled with complete accuracy. There are several other possible sources of error in all polls or surveys that are probably more serious than theoretical calculations of sampling error. They include question wording and question order, non-response, and screening. It is difficult or impossible to quantify the errors that may result from these factors.