By Andrew Housser
From e-mail scams to "phishing," money scams abound. In today's economy, it pays to be careful. Make sure you know and trust the source of any e-mail before responding, and don't be tempted to act on get-rich-quick schemes -- whether online or off. The reality is that they will likely only land you further in debt.
If you think you've been a victim of fraud, contact the Federal Trade Commission (
www.ftc.gov) or your state attorney general. Better yet, don't become a victim. Here are some of the most common scams for which to keep an eye out:
1) "Phishing"
These scams are simple, but dangerous. The scammer sends an e-mail that attempts to get the recipient to provide financial account numbers or to log into a site that looks legitimate, but is not. When the recipient clicks a link in the message and enters information, the scammer uses that data to steal money or identity.
How to stay safe: Do not respond to any e-mail that asks you to "click here to log in" to a Web site. If you believe an e-mail is legitimate, type in a known site address rather than clicking on e-mail links.
2) Cashier's check fraud
A scammer poses as a buyer of an item via a classified ad or online auction, and offers to pay with a cashier's check or wire transfer. These individuals generally respond to ads for items valued at $100 or more and ask you to ship the item to their location. They say they will send payment to you, but the funds they send are counterfeit or never arrive. Meanwhile, they have your item, which they resell.
How to stay safe: Deal in cash, use a third-party escrow service or transact on a reputable online auction site such as eBay. Operating within an auction's official infrastructure will give you some recourse if deals go wrong.
3) Debt elimination scams
Some businesses will claim that indebted individuals can pay an upfront fee -- usually in the range of $2,500 to $5,000 -- to get out of repaying debt. In return, the individual receives a "certificate" to take to the bank or other lender that supposedly releases him or her from liability for debts. However, banks are required by the government to confiscate these fraudulent certificates.
How to stay safe: Do your homework to find a reputable debt settlement firm if you are in serious debt hardship, and check with your lender or a lawyer to ask if a debt reduction program you may be considering is legitimate.
4) Mortgage rescue scams
Some so-called foreclosure assistance or foreclosure rescue companies prey on people facing the loss of their homes due to financial trouble. Some of these companies advertise, while others search public records and contact homeowners directly. Usually, the scammer offers, for a fee, to work with your mortgage lender to resolve problems. Sometimes, scammers tell homeowners that they can sell their home to the scammer, rent it back for a few years, then re-purchase it. In reality, they drain the equity from the home or even default on a new loan, meaning the original owner is evicted -- sometimes after losing hundreds of thousands of dollars.
How to stay safe: If you are having trouble repaying your mortgage, the first step is to contact your lender as soon as possible. The lender can explain your options, including the possibility of establishing a new, affordable repayment schedule. The federal government also offers some programs that may help; find more information at Making Home Affordable (
www.makinghomeaffordable.gov).
5) Work-at-home/home-based business scams
Ads claim you can earn thousands of dollars in your spare time. Unfortunately, few true work-at-home opportunities exist. Similarly, starting your own business is not as simple as paying someone $50 to $1,000 and receiving instructions by mail or e-mail. Many of these so-called "opportunities" turn their customers into spammers, wasting their money and possibly putting them afoul of the law. Systems that claim you can make money by sending information to others, where no actual product exists, are illegal pyramid schemes.
How to stay safe: Ask for references and research the company carefully to ensure it is genuine.
6) 419 scams, Nigerian scams, advance-fee fraud scams
E-mails arrive from desperate-sounding individuals outside the United States asking for help in transferring a large sum of money in exchange for part of the funds. Inevitably, "delays" arise, requiring money from you. The scam works by hooking people into envisioning the large sum of money promised, enticing them to agree to part with some of their money for the transaction.
How to stay safe: If you receive an e-mail solicitation along these lines, immediately delete it. If you have been victimized, contact the U.S. Secret Service Financial Crimes Division.
Money scams are fraudulent, and often prey on people who want to get something for nothing, or who are desperate. Heed the adage, "If it sounds too good to be true, it probably is." Face problems honestly, and be suspicious of offers of help that come out of nowhere.
Scammers often send e-mail that attempts to get the recipient to provide financial account numbers. (©iStockphoto.com/David Clark)
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC and its wholly owned subsidiary, Freedom Debt Relief, a national consumer debt resolution firm that has served more than 40,000 clients and manages more than $1 billion in consumer debt. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
