Whether it's fake checks, bogus products and services, or identity theft, it seems as if there's always someone out there trying to make suckers out of us. In the first six months of 2010, scams reported to the fraud center at the National Consumers League cost victims an average of $810.
It's not always easy to spot a scam, even for savvy consumers. That's why you should always be vigilant and take general precautions. Here are some common schemes.
Say you find a really great deal on a digital camera at an online retailer. But shortly after placing your order, you get a phone call from a company representative trying to sell you extra lenses, a fancy case, and other pricey add-ons. You refuse the high-pressure sales pitch, and later you're notified that the camera is no longer in stock. Or it never arrives.
Nonexistent or misrepresented merchandise on the Internet was the fraud center's top complaint in the first half of 2010, with an average loss of $931. That doesn't include fraud involving online auctions, which ranked eighth.
Check out sellers you're unfamiliar with before buying anything from them. To start, find out whether a company has a report and rating with the Better Business Bureau (www.bbb.org).
If you're victimized after paying with cash or by check, you could be out of luck. So use a credit card, especially when buying online or over the phone. If the order doesn't arrive, you can challenge the purchase under federal credit-card rules. Debit-card purchases offer less protection, although some banks voluntarily provide additional safeguards.
Incidentally, to reduce the risk of unauthorized charges, you might want to consider using a temporary "virtual" or "online" credit-card number, if your bank offers one, for purchases on the Web. In most cases you can request one on the issuer's website. Citibank offers virtual-card software you can install on your computer. You can limit the time the virtual number is active and the maximum amount that can be charged.
These schemes come under many guises. Bogus checks can be used to pay for something you're selling, such as a used car. Or someone might contact you about a "work at home" opportunity or sweepstakes that you supposedly won. He or she might use a fake check to pay you, with instructions to deposit it and then wire a portion of the proceeds to another party, perhaps to pay "required" fees or taxes. In many cases, these scams involve what appear to be certified or bank checks—but that's no guarantee that they're legitimate. If you deposit or cash a phony check at your bank, it will bounce and your bank will come after you to settle up.
Fake check fraud was the National Consumers League's top scam in 2009; it's now No. 2, representing one in four of the complaint reports that the group receives. The trick costs victims an average of $371.
Before depositing a check from an unfamiliar source, check with the institution whose name appears on it. And because the bank's contact information on the check could belong to the scammer, search for the institution's phone number and address separately.
Scammers use e-mail messages, phone calls, and other ways to trick people into revealing their passwords, credit-card and Social Security numbers, and other personal information they can use to steal identities, open credit lines, and the like.
Don't respond to e-mail messages or phone calls asking for your passwords or other personal information, no matter how urgent the appeal. Instead, contact your bank or other party to see if it made the request. Don't click on hyperlinks you receive in e-mail messages, and carefully type web addresses into your browser to avoid typos. Scammers sometimes set up bogus sites using common misspellings of legitimate web addresses, a practice known as "typosquatting."
Keep your computer's antivirus and antiphishing software up-to-date. And consider using a browser plug-in, such the free McAfee SiteAdvisor (www.siteadvisor.com), which warns about phishing websites and those that transmit viruses.
This one comes as a call from a family member, perhaps someone who identifies himself as your grandson, saying he needs help. The story might be that he was in an accident or arrested while traveling outside the country and needs you to wire emergency money, often to Canada. Such calls have cost victims thousands of dollars.
Don't give money to anyone without verifying his or her identity. If you get a call from a friend or relative asking for help, politely hang up and call the person's home or cell-phone number to find out if they made the call and the emergency is real. You can also call relatives to help determine that the call is legit.
These vacation offers can often be found at fairs and trade shows, or they might come in unsolicited phone calls, faxes, e-mail, or postcards. They're often used to entice you to attend sales promotions, say, for a vacation time-share. But some are simply stand-alone offers for trips. Despite the hype, the vacations are usually anything but free or even bargain-priced.
After attending the sales pitch, you might find that you're ineligible for the promised trip because you didn't comply with hidden or hard-to-understand terms and conditions. Available travel dates might be limited and accommodations awful unless you pay for upgrades.
Forget about this type of vacation. If a business has to offer free trips to generate interest, its products or services probably aren't worth considering.
After buying a product or service, you find that you're being charged for something you never meant to order. Maybe it's rustproofing for a new car at a dealership, or a club membership or subscription.
Details about extras might be buried in a contract or a website's fine print. Some companies pass credit-card information to third-parties who are ready to charge the minute customers click an "OK" button online or unknowingly give consent.
Read everything carefully before you sign or click. Question anything that's unclear, and don't proceed until you're satisfied with the answers.
It could come as e-mail or a phone call urging you to help some cause that might be in the news or tugs at your heartstrings. Some charities are outright frauds; others do little, if anything, to help a cause.
Don't respond immediately to a solicitation. Instead, check out the group with the major charity watchdogs: the American Institute of Philanthropy (www.charitywatch.org); the Better Business Bureau's Wise Giving Alliance (www.give.org); and the Charity Navigator (www.charitynavigator.org). And make sure you're dealing with the right group. Many con artists use names similar to legitimate charities. For local groups that don't appear on watchdog reports, ask the charity for further information, or donate through a local fundraising federation, such as the United Way, that screens groups.
If you want to help during an emergency, such as a flood or famine, stick with major established charities such as the Red Cross. Charity watchdogs often post names of legitimate groups that help victims.
Scammers are always ready to strike after reports of promising dietary supplements and other "medical breakthroughs" hit the news. Websites spring up overnight hawking products—acai berry supplements, for example—even though there's scant evidence of their benefits. The sites might feature celebrity "experts" or phony "reader" comments. Many offer free trials in order to get your credit- or debit-card number and then enroll you in ongoing fee-based programs.
Buy health products only from companies you know and trust. Double-check the terms and conditions if you're signing up for a free trial that requires you to give payment information.
Who doesn't want to win a big prize? But if you respond to mail declaring that you're a finalist, or even a winner, the only ones who'll be stuffing their pockets will be the scammers who sent it to you.
Many of these mailings or prize-related phone calls imply that buying something increases your chances of winning. In another variation, you might be told that you have to mail an advance payment to cover taxes, shipping and handling, or other incidental costs of processing or delivering your fabulous prize. Of course, you'll get nothing in return.
By law, buying services or merchandise can't increase your odds of winning a sweepstakes. Just saying no if you're asked to respond to a prize or sweepstakes promotion will increase your odds—of not getting ripped off.
This one involves companies promising to get you a loan or credit card even if you have bad credit. But after paying the required fee, you might not hear from the company again, or you might be offered a debit or stored-value card. Such offers appear in ads or on websites run by companies that engage in this type of "service." It's illegal for a company doing business by phone to promise a loan and require a fee before it's delivered.
Avoid companies that promise to get you a loan but don't seem interested in your credit history, the Federal Trade Commission warns. And never pay an advance fee for a loan, even if it's for "insurance," "processing," or "paperwork."
This article appeared in Consumer Reports Money Adviser.