Phone Scams are Big Business for Criminals

The Ripoff Alert is an ongoing series alerting you to the latest scams and ripoffs. What to look out for and what you need to know to stay safe. This is #23 in the series. 

Smartphones are everywhere. I remember a year or two ago there were many people I knew who still had old style flip phones. I myself had one until last fall. Now just a few remain who haven’t jumped on the smartphone bandwagon.

We carry these things everywhere with us – to work, on road trips and to the grocery store. Now that so many of us own these mini computers, we have to take a minute to think about how we can protect the information stored on these devices.

Kiplinger has a list of things we need to be aware of concerning phone scams:

1. Your smart phone holds a mother lode of data

2. Think before you click

3. Scammers cast a wide net

4. That big bonus prize? It’s bogus

5. “Toll fraud” could be down the road

6. You can fight back

My thoughts are below.

1. They list some things we now do on our phones including banking, checking Facebook and calling your Mom. You have to start thinking of your phone as a computer. As such, it holds a lot of personal data that could be used against you in the wrong hands.

Lots of folks password protect their computers, and I recommend doing the same for your phone. That’s your first line of defense if your phone is lost or stolen.

2. They offer a common sense solution: “If it’s too good to be true or too enticing to be legitimate, ignore it.” That applies to texts, emails, banner ads, and anything else you may come across.

I recently wrote about scammers’ efforts to target their attacks against us, a crime known as spearphishing. Criminals have more information about us than you think, and are able to use it against us in new ways.

Just delete any emails or texts from senders you don’t recognize.

3. It seems that scammers are always a step ahead of us. They target a wide range of people knowing they only need a few victims to make it worth their while. The article mentions that because of QR codes and URL shorteners, it’s harder than ever to detect suspicious links or websites.

What exactly are the scammers after? Two things: Our money or our personal information (which they’ll then use to steal our money.)

4. I got a text the other day claiming I’d won a $1,000 gift card from Target. All I had to do was respond with some personal information and my “prize” would be on its way.

Now think for a second. Who wins gift cards out of the blue? The scammers know these are tough times and that we’re more vulnerable than usual.

5. One reason you have to be careful clicking unrecognized links is that they could contain malicious code. This code causes your phone to download ring tones or wallpaper without your knowledge or permission, which you’re then billed for by your phone company.

A related crime, carried out by your cell phone company itself, is known is cramming. In cahoots with third-party marketers, they “cram” unauthorized charges onto your bill, hoping you won’t notice. And guess what? Most people don’t. One obvious solution is to go through each page of your bill every month. If you see a strange charge, call your phone company and have it removed.

A more proactive solution is to have your phone company block all third-party charges. That prevents toll fraud or cramming from happening in the first place.

6. The article offer several good suggestions about how to fight back against phone scams. Among them: Complain to the FTC at http://www.ftccomplaintassistant.gov; forward spam texts to 7726 to alert the phone company; download and use an antivirus program such as Lookout; and ignore texts you don’t recognize.

It may seem that criminals are one step ahead, but you can level the playing field by anticipating their moves and protecting yourself from their attacks.

Beware of Fake Online Job Postings

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #22 in the series. 

The official unemployment rate in the United States has been right around 8% for all of 2012. But there’s a more meaningful measure, known as U6, that includes people who are underemployed or who have given up looking for work. By this measure, unemployment has been right around 15% all year. In a healthy economy it’s somewhere between 7-10%.

With 15% unemployment, there are lots of folks looking not only for a primary job but extra part time work as well. Anytime you have a lot of demand for something you’re also going to attract scamsters.

Scam artists know these are desperate times, so they’re seizing the opportunity to post fake job listings on Craigslist, Monster and other online job boards. As an example, the once-legit car wrapping industry has roared back to life as a scamster’s paradise. The idea is that you get paid to wrap your car in an advertisement for a local or national business. A decade ago this was a good way to earn extra money, but the companies in this industry have all gone out of business.

After agreeing to wrap your car, you receive a check in the mail. You’re told to deposit it, keep a few hundred dollars for your trouble and wire the rest to the company who will supposedly do the wrapping. So you follow through with your end of the deal, only to find out weeks later that the check was bogus and you’re out thousands of dollars.

Here are some tips to help you avoid these fake job postings:

  • If you receive a check and are told to wire a portion to somebody, just trash it. The check is bogus and they are just trying to rip you off.
  • Avoid handing out sensitive information like your Social Security number or date of birth until the end stages of the hiring process, after you’re sure the company is legit.
  • Be wary of anybody asking for any amount of money upfront.
  • If anyone claims to have access to secret government grants or hidden jobs they’re probably fibbing.

If you’re looking to earn some extra cash, check out my post about finding legitimate work-at-home opportunities. Keep in mind you’re not going to earn big bucks from any of these jobs. Think of them as a bit of extra income in your free time.

Retailers Require Extra Purchases – Or No Sale

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #21 in the series. 

Would you like a protection plan for your new laptop? Only $149!

Anyone who’s bought electronics from a retailer in the last decade knows the drill. Before you make your purchase and walk out the door, you have to withstand hard sells for extended warranties and protection plans. Upgrades and accessories. Even magazine subscriptions!

But a story I saw at Consumer Reports takes this idea to a new level. A few stores are engaging in a practice called “walking the customer”, where they refuse to sell you an item unless you also buy the extras. In this case the Consumer Reports shopper was trying to buy the new iPhone 5 at a Sprint store, but was required to buy accessories for a minimum of $84 as part of the deal.

In another example, several Staples customers have reported in recent years that to buy a laptop they had to purchase an extended warranty. If they refused, the sales associate would tell them the laptop wasn’t in stock! I’m not sure if Staples still has this program, but in the past they required sales associates to sell an average of $200 in extras for all computers they sold. The program was known as Market Basket, and if associates failed to meet the standard they received coaching and could even be fired. With requirements like this forced on the nation’s retail workers, it’s no wonder we as customers so often get the hard sell.

Retailers are getting desperate. Online sellers are eating into their margins. Instead of reinventing themselves by providing improved customer service or some other differentiating factor they’re turning to ripoff tactics like this.

If you’re ever told you must buy extra items to make a purchase, tell them to have a nice day. You vote with your dollars. Why reward a retailer that’s trying to stiff you?

Only Invest in What You Know

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #20 in the series. 

Investing is a topic that makes many of us squirm. It can be incredibly simple or mind-numbingly complex. What gets us in trouble so often is that we try to invest in something we don’t understand.

Warren Buffet, the billionaire investor, is famous for his practice of investing only within his “circle of competence”. To us common folk that means we should only invest in what we know.

During the big run up of tech stocks in the late ’90s, Buffet sat out of the game because technology wasn’t an area he was familiar with. Instead, he continued his tradition of buying undervalued stocks. As others were picking up the pieces after the bubble burst, Buffet maintained his strategy and limited his losses.

Think about the various types of investments available to us. Stock options, derivatives, commodities, exchange traded funds and so on. The reality is, these investments are very complex and aren’t suitable for most people.

Investment opportunities presented to us by friends, family, neighbors or people at church can likewise be difficult to understand. For every big Ponzi scheme reported in the news there are a hundred smaller ones that don’t make headlines. I’m not saying your pastor is going to approach you about earning 2% per day on your money, but the people who run these scams rely on trust and familiarity you may have with them. They know your guard is down.

Before doing any type of investing, understand how the company operates, how they earn money and who their main competitors are. Take a look at their financial statements. Is the business growing or is the customer base shrinking? What are the risks and opportunities in the industry? This knowledge helps you make an informed decision about whether you should invest.

Investment scams have been around since we started using money to pay for things. But never before have we seen the range and complexity of investment scams that exist today. The recession and the resulting loss of individual wealth have created a perfect opportunity for scam artists to craft false promises of oversized returns on your money. Because of their complexity, the new scams are more difficult to detect.

Remember Warren Buffet’s simple rule, and know that there are no shortcuts to building wealth. It comes little by little over many years and decades. The best way to avoid these scams is to do your research and stick with investments you understand.

Door-to-Door Sellers Not Always What They Seem

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #19 in the series. 

When was the last time you bought something from a door-to-door salesperson?

We’re all familiar with the Girl Scouts who scour their neighborhoods, delighting us with their thin mints and samoas. I myself went door to door selling community discount cards to raise money for my high school soccer team almost a decade ago. Chances are most of us have had similar experiences. But as a buyer, how can you tell the difference between “innocent” sellers and those trying to take your money?

The Better Business Bureau has received an increase in complaints from people who’ve been scammed at their front door. The top complaint continues to be magazine sellers. They get people to bite by making up a sob story about being single parents, unemployed and living on the streets. They try to lock you into a multi-year subscription to popular national magazines, sometimes costing over $100. The prices they charge are generally well above the going rate for each magazine. You’re then told to wait 90 to 120 days for your first issue. In most cases no magazines show up and your money is gone.

Along with magazine sales, other common scam areas are roof repair, driveway sealing and windshield repair.

I recently heard about a new version of this scam. Scamsters pull up to your house and present you with examples of quality meats you can have delivered at regular intervals. No room to store them? No problem, we’ll give you a freezer! After signing the contract the meat you end up with is nothing like what you’re shown; it’s essentially garbage.

Be careful when anyone comes to your door trying to sell you something. Follow these tips to protect yourself:

  • Be safe. Don’t just open your door to anyone.
  • Watch out for high-pressure tactics. These people are trained to be very convincing and will even claim to represent a charity if all else fails. And if you’re told now will be your only chance to take advantage of this great offer, run.
  • Get everything in writing. If you decide to do business with the salesperson, make sure all terms of the deal are in writing, including the cancellation procedure.
  • Finally, the Federal Trade Commission has a Cooling-Off Rule, where you have three days to cancel a deal of $25 or more if it was made outside the seller’s permanent place of business. The seller then has 10 days to give you a full refund.

Asked to Buy a MoneyPak? You’re About to be Ripped Off

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #18 in the series. 

In a new twist to an old scam, criminals are contacting you and claiming you’ve won a flat screen TV, a car or a lottery. They may have access to secret government grants. To claim your prize, you have to go out and buy a prepaid card called Green Dot MoneyPak and load $500 or $1,000 onto it. You buy these cards at Walmart, drug stores or 7-eleven convenience stores.

You’re then instructed to hand over the scratch-off information from the card. They supposedly need proof you’ll be able to pay the shipping costs and taxes on your “winnings”. The second they have your number, they have access to every last cent on your card and will drain it pronto.

In the past criminals could send out fake checks, asking you to deposit them and wire a portion back. But this method has been around so long most people are aware that if they receive a check for too much money they’re being scammed.

Know that anybody asking you to buy a MoneyPak card is trying to rip you off. This is just another case where they’re using a legitimate payment method for illegitimate purposes.

None of this is Green Dot’s fault. They post a warning on the front page of their website:

Use your MoneyPak number only with businesses on our approved list. If anyone else asks for your MoneyPak number or information from your receipt, it’s probably a scam. Don’t give your MoneyPak number to pay for something you buy through the classifieds or to collect a prize or sweepstakes. Do not give away your receipt information to another party either. If you give your MoneyPak number or information about the purchase transaction to a criminal, Green Dot is not responsible to pay you back. Your MoneyPak is not a bank account. The funds are not insured against loss.

I know times are tough. You might be desperate for cash. When someone comes along offering free money, you may think you’ve found your golden ticket. But don’t suspend your good judgement – they are taking advantage of your situation and just trying to rip you off.

Be cautious when anybody contacts you out of the blue claiming you’ve won something. Key rule: If you never entered a drawing you’re not going to win a prize. 

Beware of Investments Offering Oversized Returns

The Ripoff Alert is a new series appearing once each week on Fridays. It alerts you to the latest scams and ripoffs trying to get between you and your money, and gives you information you need to stay safe. This is #17 in the series. 

Trick question: What’s an easy way to guarantee a 10% return on your investments? Well, if I were a smooth criminal trying to make off with your money, I’d tell you I knew of a business that was about to make it to the big leagues. I’d convince you to “invest” your money before that happens. You’ll double or triple your money in just weeks! And with almost no risk!

Many of us are looking for that path to easy wealth. We badly want it to exist, and in some cases are willing to risk everything we’ve worked hard for to make a quick buck.

The truth about investing is that if you want a large return, you’re going to have to accept some level of risk. The larger the return you want, the larger the potential risk you have to take on. Anybody who tells you otherwise is trying to clean out your wallet.

The opposite is also true. If you’re unwilling to accept much risk, you have to settle with a lower return. Don’t be fooled into thinking you can have only upside with little or no potential downside.

“But I Need to Catch Up!”

Unless your time horizon is 10 years or longer, there’s no place you can put your money right now and have it grow more than about 1%. I know it’s pathetic. We all realize that won’t even beat inflation. But one nice side effect of these times we’re in is that if somebody comes along and tells you they can earn you 15% a year guaranteed, or 2% per day, or any other number that seems too good to be true, you know they’re lying. Such rates just don’t exist, today or ever.

I know it’s tempting to take the bait. You lost 30% of your nest egg in the recession and you need to get back on track. But the criminals will make off with your money, leaving you without the 15% return or your original investment.

Think about this: In an era where banks offer 1% per year on savings accounts, how can anybody legitimately offer 2% per day? Not gonna happen.

They’re Just So Sly

Fraudsters use online bulletin boards, newsletters and emails to alert you to these “can’t lose” deals. The internet allows them a curtain of anonymity that emboldens them to make audacious promises. But if this investment were such a great deal, why would they be telling us? Wouldn’t they just invest all of their own money if they truly believed it was a good deal?

You have to be careful with affinity fraud as well. This happens when someone you know and trust, such as a church leader or family member, tries to get money out of you for illegitimate purposes. It’s easy to let our guard down around those we trust. But when someone starts asking for your money you need to start asking questions.

So back to our trick question. The answer is there’s no way to guarantee a return of any percent on investments. By its very nature, investing is about taking on risk. It’s about taking chances. There are no guarantees with investing.