I had a fascinating conversation with Mr. Herb Weisbaum, AKA the MSNBC.com ConsumerMan, about the scams we should all be aware of. It was an eye-opening conversation, one that I hope will save you a lot of pain and anguish.
Surprisingly, your credit card account is not on the scammers’ most-wanted list. “Con artists are trying not to use credit cards [in their scams] because the charges can be reversed,” Weisbaum said.
According to Weisman, the biggest and most egregious financial scam going on right now is the counterfeit check or fake check scam, which is being utilized all over the place.
“Mystery shopper, prize scams, renting apartments and giving first-month deposit rebates, auction scams… whatever the scenario, it all boils down to: I send you a bogus check, you deposit it, you wire me back some money, and then the bank comes after you for the amount you wired to me,” Weisbaum said.
This scam is “huge” in the contest area, Weisbaum told me. Here’s how it works: You receive a notice and a check in the mail. The check is for, say $15,000, and the notice reads, “Congratulations, you’ve won the Publishers Clearing House or Reader’s Digest sweepstakes! This check is a partial payment. Deposit this check, mail us $10,000 to pay for handling/shipping/administrative fees, and your check for the balance of the sweepstakes award will arrive.”
So, you do those things — deposit the $15,000 check into your bank account, then turn around and send a personal check for $10,000 to the “sweepstakes” company — but then, three days later, you get a call from your bank. The $15,000 check you deposited was fraudulent. The $15,000 has been removed from your account, PLUS, now you owe the bank $10,000, to cover the check you sent to the sweepstakes company.
“The banks sue people to put the money back into their accounts, to cover the big check they just bounced,” Weisbaum said. “So, people are being doubly victimized.”
How can you stay safe from counterfeit check scams?
“You never ever ever have to wire back money if you win a contest,” Weisbaum said. If you get a notice that says you have to send money to a contest organization, chuck it in the trash, or contact your state’s attorney general’s office.
Also, look at the top of the check. If the notice is from “Publisher’s Clearing House,” but the top of the check says “Joe’s Plumbing, Cleveland, Ohio,” then that should be a big red flag to you.
“Con artists steal the routing number and account information from a legitimate business, so that a company like Joe’s Plumbing is victimized too. Because the routing number is legit, you can put the check in your account,” Weisbaum said.
It’s not until a little later that the bank will catch up. Plus, the good people at Joe’s Plumbing will get a bank notice of their own, telling them that they’ve been bouncing $15,000 checks all over the country.
What a mess.
Weisbaum is also concerned about the methods being used to get your personal information. Technology has made it easier for criminals to get what they want.
“On the computer, that’s the phishing scams: your account has just been shut down. Now, they’re simple doing text messages for things you’ve never heard of, like ‘We’re updating our computer, please submit your info.’ People continue to fall for these things.”
“Some of the bogus emails you receive aren’t anything but attempts to load spyware into your computer. Technology has made it so easy, there are huge international gangs that make their fortunes by ripping you off,” said Weisbaum.
Technology may make it easier, but the tried-and-true phone methods continue to work in the criminals’ favor. “You get a call from someone who says they’re with the fraud division, we’ve got a problem here, we need your PIN so we can track it down.” Weisbaum recently got a fraud-alert call from his own account – he verified it by finding out that yes, they already knew his information, and then he hung up and called them back by dialing the customer-support number listed on his bank statement.
“People have to remember: Your bank or credit-card company is never going to legitimately ask for your PIN number. People on the phone are also playing IRS agents, police officers, etc.” Weisbaum said. Vigilance is key!
Are scams more proliferate during tough economic times? Weisbaum doesn’t think so.
“I think scams are 24/7, every day of the year. The pitch may change a little bit; con artists will use whatever is in the news. During the good time of the ‘70s, it was oil wells in Texas. During bad economic times, they’ll say they can settle your outstanding debts. If it’s for a charity, like Haiti earthquake relief, they’ll rip off your sense of generosity,” he said.
The thing that surprises Weisbaum most, though, is the eagerness with which people respond to con artists.
“What never ceases to amaze is that people who are down on their luck will still manage to find $500 for someone who claims to get them out of trouble, because some charlatan says he has all the answers, for a cost.”
Many debt-consolidation experts fall into this category. Be watchful, and caveat emptor!