Q. How has the recession impacted the prevalence of financial scams? Are there more schemes out there right now, trying to take advantage of people in precarious financial conditions?
A. The recession and overall current economic situation have created the conditions for fraud in a perfect storm. It is not that there are more schemes currently; there are more variations of the same scheme aimed at consumers who are struggling to make ends meet. The fraud schemes we are seeing have been around for years. Technology and the Internet have simply changed how they look and operate. Fraudsters tailor their scams for their target market such as people seeking jobs or homeowners in danger of defaulting on their mortgage.
Q. What is the newest scheme out there?
A. Mortgage loan modification fraud and mortgage rescue scams have been very much in the news of late. According to Connecticut Attorney General Richard Blumenthal, “Mortgage rescue schemes are becoming epidemic-preying on families facing foreclosure in exploding numbers.” Homeowners desperate to find ways to stave off foreclosure many times turn to companies making promises to clear up bad debt and remove bankruptcies, judgments, liens and bad loans from credit files. Consumers are paying up-front fees they cannot afford for services that are questionable at best and sometimes illegal. Consumers should obtain information about credit repair scams from the Federal Trade Commission at www.ftc.gov
- What are two other common financial scams that consumers are increasingly falling victim to?
- Two of the more popular schemes people are falling victim to involve variations of work-at-home frauds. Unsuspecting consumers are “hired” to be a mystery or secret shopper. Once hired they receive a letter containing instructions outlining their assigned tasks and a check usually in an amount ranging from just under $2,000 to nearly $5,000. The “shopper” is told to deposit the check and when the funds are made available, withdraw cash and go to a MoneyGram or Western Union outlet to wire funds to a purported relative out of the country. The shopper then completes an evaluation of the service. Typical “pay,” deducted from the check is between $250 and $400 for about two hours of work. In a second version, the consumer is hired to be an agent or payment processor for an overseas firm. Checks payable in the processor’s name purportedly representing payment for goods or services are received for deposit. As soon as funds are made available, they are to be wired out of the country via MoneyGram or Western Union minus a ten percent commission. In all cases, the checks are counterfeits and the consumer loses. Information about this and other check frauds is available a www.fakechecks.org
- What must bank and credit union customers do to protect themselves from these scammers?
- Bank and credit union customers must understand that whenever they receive a check in the mail and are instructed to wire funds by MoneyGram or Western Union in order to either sell an item, receive the proceeds of a lottery or process unusual payments, they are participating in an advanced fee fraud. Many banks and credit unions have posted fraud alerts to inform their customers and members of the scams. The public in general must become more aware and informed. Reports of these frauds frequently appear in news reports and special television programming. Anyone who receives an unsolicited check in the mail or is hired without ever having a personal interview and is entrusted with purported company funds represented in the form of checks payable in their name should immediately question the legitimacy of the check. The adage “If it looks too good to be true, it probably is” is still valid today. For more information about these frauds, consumers should visit www.lookstoogoodtobetrue.com
