Personal Finances Scams lead ’09 Top Ten

A message from the Better Business Bureau

Chicago, IL – Scammers in 2009 followed the financial woes of individuals as they preyed on people’s difficult economic conditions and concerns about the general economy, according to the Better Business Bureau’s summary of dishonest business dealings for the past year.

 The list of the Top 10 most common scams in 2009 include:

 

 

 

“We’ve seen scammers follow the money trail and target the desperate emotions of people,” said Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois.  “This year the Top 3 scams were directly related to personal finances.  Almost two-thirds of all scams for 2009, in terms of the number of web searches and inquiries were: #1 Work-At-Home schemes, #2 Credit Repair scams, and #3 Grant Locating and Government Job-Finding offers.”

 

This listing is based on the number of times people requested information and inquiries through personal phone calls or the BBB website, as well as complaints.  These instances of service by the Better Business Bureau serving Chicago and Northern Illinois, including inquiries and complaints about specific businesses, totaled a record-setting 9 million.

 

“We believe the reason we hear more about these Top 3 scams is because people actually lose money on these and then complain, rather than being tempted by deals and checking them out before sending money,” explained Bernas.  “Typically these scams encourage people to send in money first before they receive any materials and information. This type of offer usually ends badly for people, who never get their money back.”

 

 

 

 

 

 

 

 

Explanations of these scams are:

 

1. Work-at-Home and Fraudulent Employment Opportunities – These scams promise high income for minimal work and minimal effort.  However, when an interested consumer “applies”, they almost always ask for money up-front to pay for materials, training kits, or investment money. After sending payment, most consumers either have their checks deposited and never hear anything again, or obtain something that is completely useless, essentially junk mail.

 

2. Credit Repair and Debt Negotiation/Settlement Services –Debt negotiation companies claim that they will negotiate with a consumer’s lenders to lower the total amount of debt owed for an upfront fee.  Unfortunately, some consumers who paid for debt negotiation services in advance found out that the company never contacted their lenders, but instead, took their money and ran. Everything a credit repair clinic can do, an individual can do personally at little or no cost. It is illegal to charge an advance fee for credit repair.

 

3. Grant & Government Job Finding Entities – Now more than ever consumers are looking for financial assistance to help them finance projects and debt, as well as paying for school. Entities claiming to assist in grant research, grant applications, or conducting grant or government-oriented seminars with the aim of helping consumers find applicable grants or government employment, should all be regarded with caution. The majority of these entities charge for services, applications, or information that can be easily obtained for free by doing online searches or visiting school financial aid offices.

 

4. Mortgage Foreclosure Rescue/Loan Modification Scams – Due to foreclosure information being publicly available, many scammers contact desperate home owners and promise to save their home. Loan modification companies promise to negotiate with the mortgage lender to decrease the amount owned on a loan. Victims of foreclosure rescue scams are asked to pay upfront funds or provide sensitive personal information.

 

5. Check Scams – Consumers receive a check in the mail, allegedly for winning a sweepstakes, lottery, or promotion. The consumer is urged to deposit the check, and then write another check from their own bank account to cover alleged taxes or fees.  The check that was deposited turns out to be worthless while the check sent by the consumer is good, and that money ends up being unrecoverable.

 

6. Advance Fee Lenders – These scam artists offer quick and immediate loans despite credit history and with little to no background check. The catch: the consumer is requested to pay advance fees before they receive the loan. After the victim wires the money, he never sees his loan funds or advance fee payment again. It is illegal to charge an advance fee for loans.

 

7. Mystery/Secret Shoppers -A website will often asks that you “register” and pay a fee in order to receive information about a certification program, a directory of mystery shopping companies, or baseless guarantees of obtaining mystery shopping positions. Most don’t exist, have already expired, or have nothing to do with legitimate secret shopping offers.

 

8. Phony Directories and Yellow Pages – Phony directories or yellow page scams usually target small to medium sized businesses. Solicitors call businesses to “renew” or “re-enroll” an existent yellow pages listing or advertisement. Many companies or their employees are misled into accepting the alleged “renewals.” The illegitimate directory provider immediately sends an invoice for this service, usually in the amount of hundreds of dollars, and threatens businesses with collections or credit report damage should they dispute the charges or decline to pay.

 

9. Not so “Free” Trials – Many websites offering a free trial for products do not disclose the billing terms and conditions or do not have such details prominently displayed on their website. Consumers think they are signing up for one time free trials, but often end up being repeatedly billed for products and services they didn’t want.

 

10. Phishing, Fake E-cards, and Smishing – Phishing is a crime and a high-tech scam that uses spam to deceive consumers into disclosing their personal information. Scammers create a legitimate-looking email from a bank or financial institution. The email asks for a confirmation of the consumer’s account and personal information. Recently scammers have tried to take advantage of the H1N1 scare as a new way to lure consumers into giving up personal information that would allow the scammers access to personal data.  Additionally, fake e-cards are another way scammers have tried to phish for personal information in 2009.  “Smishing” is the practice of sending a phishing message to steal credit card or identity information via cell phone text messaging.

 

 

 As a private, non-profit organization, the purpose of the Better Business Bureau is to promote an ethical marketplace. BBBs help resolve buyer/seller complaints by means of conciliation, mediation and arbitration. BBBs also review advertising claims, online business practices and charitable organizations. BBBs develop and issue reports on businesses and nonprofit organizations and encourage people to check out a company or charity before making a purchase or donation.

 

 

 

 

1. Work-At-Home schemes
2. Credit Repair scams
3. Grant Locating and Government Job-Finding offers
4. Mortgage Foreclosure Rescue deals
5. Check Collection scams
6. Advance-Fee Lending
7. Mystery Shopper offers
8. Phony Directory solicitations
9. “Free Trials” that are not free
10. Phishing, Smishing, Fake E-Cards and other ways to obtain ID information