Classic Cons
And How To Counter Them
A Laundry List Of Dirty Tricks Used By Fraud Artists
- ATM Theft
- How it works: Automated teller machine (ATM) crimes can take several forms. Thugs may simply approach someone using an ATM and demand money. Or, more sophisticated thieves will watch the victim use the card (perhaps even with high-powered binoculars) and learn his or her card number and personal identification number (PIN). Later they'll steal the card or make their own and go back to ATMs for cash.
- Warning signs: One or more persons loitering around the ATM, often in a car, behind bushes or otherwise nearby. You spot unauthorized ATM withdrawals on your bank statement.
- Best defense: Use only ATMs in well-lit, busy areas where unusual activity would be noticed. For after hours or late night use, the best choice may be an ATM in a supermarket, convenience store, gas station or other protected area.
- Check Fraud
- How it works:Someone steals checks from your home, office or mailbox and forges your signature. Crooks don't need blank checks to pull off a check fraud. Many know how to easily remove the ink on checks, often by "washing" them with a cleaning solvent. They also will alter what's already been written.
- Warning signs:You notice that checks are missing from your checkbook or your reserve supply of checks. Mail containing checks or bank account information is "lost" or appears to have been tampered with. You spot unauthorized transactions on your bank statement.
- Best defense: Don't carry more checks that you need. Keep extra checks in a secure place. Write checks using a pen with thick, dark ink. Draw lines to fill in gaps in the spaces where you designate to whom a check is payable and the amount.
- Credit Card Fraud
- How it works:There are hundreds of ways. Here are just a few. A thief may steal your credit card. Someone may order a new credit card in your name by stealing a pre-approved application from your mail and having the card sent to a different address. An unscrupulous sales clerk can make a duplicate copy of your credit card receipt or use a special device to capture data from the magnetic stripe on your card.
- Warning signs:Unauthorized charges appear on your credit card statement or you get a statement for a credit card you didn't request. Your mail appears to have been tampered with. Mail containing a new credit card or a credit card statement doesn't arrive as expected.
- Best defense: Promptly report to the card issuer any unusual activity on your statement. If you receive a card you never asked for, or if you don't get a card you're expecting, promptly report that to the issuer. Protect your credit cards and card numbers, and don't keep PIN numbers near the cards.
- Fraudulent CDs
- How it works:You see a newspaper or Internet advertisement by an unknown bank, probably one far away, claiming to offer insured certificates of deposit (CDs) at unusually high interest rates. The ad also may say the funds will be held in accounts in "tax haven" countries where the interest will be free from U.S. taxes and protected from scrutiny by U.S. authorities. Chances are you won't see your money again.
- Warning signs:The most obvious sign is an extremely high interest rate compared to market rates for CDs advertised by reputable institutions. To fool unsuspecting investors, many successful scams also have involved so-called banks with names very similar to large, well-known U.S. banks.
- Best defense: As with any deposit or investment, check things out and know who you're dealing with before sending money. Crooks can counterfeit CDs as easily as checks, so if you want the security of a federally insured CD, only buy from a federally insured financial institution or a reputable broker.
- Internet Fraud
- How it works:Unusual or inexpensive goods and services are offered over the Internet. The consumer typically pays for something that doesn't arrive.
- Warning signs:Exaggerated claims often aren't easy to spot, but if something sounds too good to be true, it probably is a scam.
- Best defense: When banking or buying over the Internet, only give credit card or other personal information to companies you know and trust. If you don't know anything about the company, contact your local Better Business Bureau to find out if any complaints have been filed.
- Investment Fraud
- How it works:You get or see an offer of "guaranteed" big returns (up to 100 % or more) on investments, business opportunities and other "no-risk" deals. Many of these deals involve pyramid schemes where funds received from new investors are used to pay earlier investors, thus lending credibility to scam artists who may boast of returns paid to investors.
- Warning signs: Avoid investments that defy logic and offer unrealistic returns. Again, if it sounds too good to be true, it probably is a scam. Avoid high-pressure sales pitches. "If these supposedly high-return, no-risk investments were legitimate, nobody would have to contact you or pay to advertise them," says Gene Seitz, an FDIC fraud investigator based in Washington.
- Best defense: Deal only with reputable investment firms. Ask the SEC or your state securities regulator about the legitimacy of a broker or an investment opportunity.
- Nigerian Scam
- How it works:You receive an official-looking letter from someone claiming to be a Nigerian who, because of Nigerian government rules, needs help transferring money out of that country. Perhaps you're asked to deposit the funds into your bank account for a "reward" of 20 to 30% of the funds, which usually are in the millions of dollars. To do your part, you're simply asked to supply your bank account number and some money supposedly to cover "expenses."
- Warning signs:Nobody is going to give you a percentage of millions of dollars simply for the privilege of using your bank account or your name to transfer money to the U S.
- Best defense: If you receive a letter or fax containing promises of instant wealth, don't respond. Promptly take it to your nearest U.S. Postal Inspection Office.
- The Phony Investigator
- How it works:A consumer, often an elderly person, is approached by someone claiming to be a bank examiner, bank security officer, police officer, Internal Revenue Service (IRS) auditor or some other "agent" involved in an "official" review or investigation. For example, the consumer may be asked to withdraw cash from his or her bank account, or to let the investigator review personal account records, supposedly to aid in an investigation of a possible fraud at the bank. The successful con artist walks away with the cash or the confidential information that can be used to raid the consumer's bank account.
- Warning signs: Be wary of anyone who approaches you claiming to be a government employee investigating a bank, a bank employee, or otherwise asking for access to your cash or bank records. Government agencies do not turn to bank customers to withdraw personal funds or give account information as part of an investigation.
- Best defense: Decline any requests to give cash or confidential information to anyone who approaches you claiming to be a police officer or government investigator. Promptly report the matter to your bank's security officer and/or local law enforcement authorities.
- Telemarketing Fraud
- How it works:You get an unsolicited phone call or mailing with an offer of prizes, a vacation package, merchandise or other opportunities that are said to be "too good to miss" and "available only if you act now." You agree over the phone to give cash or bank account information up-front to take care of a supposedly minor fee or tax. Later you discover that the con artists have taken your money and you have little or nothing to show for it.
- Warning signs:High-pressure sales people offer prizes, goods or services that can only be delivered upon receipt of cash, a credit card number or checking account number. While prizes are usually subject to federal income taxes, this money is only payable to the IRS when you complete your income tax returns. Taxes never are collected up-front when legitimate prizes are awarded.
- Best defense: Buy only from a reputable telemarketing firm. Never pay a fee to receive something "free." If you have doubts about a particular firm, contact the Better Business Bureau and/or the Federal Trade Commission to see if complaints have been registered against the firm.
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