Don’t Be Bamboozled

Recession-fueled scams are on the rise. Heres how to avoid financial fraud

Employment scams are also on the rise. With unemployment reaching nearly 10%, the highest since 1983,  enticing job offers and advertisements have become a way to cheat consumers out of their money. All federal positions are listed and available free to the public on www.usajobs.gov, but several recent scams offer “previously undisclosed” federal government jobs—for a fee. These promotions usually mention the federal stimulus plan in an effort to anchor the scam in something legitimate.

The housing foreclosure crisis is yet another high-profile news story that scammers use to prey on consumers, says Breyault. In some instances, con artists tell a homeowner they can prevent the home from going into foreclosure—for a fee; in others, scammers promise to pay the mortgage for homeowners who sign over their deeds and pay rent. In both instances, owners are advised not to contact their lenders because any interference could jeopardize the new mortgage terms.

“They claim they’ll negotiate on your behalf, but even if they do, it’s nothing you can’t do for yourself by dealing directly with your lender or mortgage servicer,” says Frank Dorman, a spokesman for the Federal Trade Commission. “People in financial trouble at all socioeconomic levels can be misled by the promise of high reward for low effort.” The outcome of most foreclosure scams? The homeowner loses the house and no longer owns the deed, yet remains responsible for the mortgage. Such victims take the credit hit while the scammer gets away with the fee and, in some cases, rent money.

Here’s how you can avoid the latest cons.

Avoid high-pressure sales pitches that require you to buy now or risk losing out on an opportunity. A request to wire money immediately is also a sign of fraud. Never provide a company with personal banking information before receiving the products or services you are contracted to receive. “Generally speaking, reputable companies don’t ask for payment in advance,” says Dorman.

Thoroughly research any financial investment on your own before you open your wallet. Don’t rely solely on referrals from friends or family, says Ken Fisher, author of How to Smell a Rat: The Five Signs of Financial Fraud (Wiley; $24.95). Instead, ask about credentials and licenses, and consult your local office of the Better Business Bureau. Any company should be able to explain to you in 30 seconds or less how they make their money, says Breyault. Don’t let anyone brush off your questions or tell you their business is too complicated to explain.

Talk to your lender or creditor first. It should be your first point of reference. Also, the U.S. Cooperative Extension System provides personal finance education through local workshops, seminars, and home study opportunities and online at www.extension.org/personal_finance. To find an Externsion office near you, go to www.csrees.usda.gov/Extension/index.html.

Be wary of all unsolicited offers of assistance with foreclosure rescue, credit repair, or job placement, Breyault advises, especially if they ask for bank account information or Social Security numbers. Remember, government agencies will never contact you by e-mail to offer assistance.

Place a fraud alert on your credit report if you believe your Social Security number has been compromised. Also file a complaint with the FTC.

Be discreet. Limit the information you reveal about yourself when making purchases. Consider removing your phone number and address from your personal checks, for example.

This article originally appeared in the November 2009 issue of Black Enterprise magazine.

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  • MARY ELLEN JOHNSON

    Hi Marcia,
    I’m so proud of you!
    I found your’Bamboozle’ article very informative. The information that really interested me was the government job site. No, not for me but for my relatives. I’m placing it on my family website.

  • http://www.prepaidlegal.com/hub/donaldknox Don Knox

    This is a great article. More people need to be informed about identity as well as financial frauds and crimes.

    Don Knox, CPP, CITRMS
    http://www.prepaidlegal.com/hub/donaldknox

  • http://www.polaroiddigitalphotoframe.com S. L. Pomeroy

    I resisted buying the Kindle 1 but I couldn’t resist any longer when the Kindle 2 came out. And I’m so glad I caved in. I love this device. I’m still discovering all the ins and outs of using it.

    Magazine and newspaper articles come to my Kindle every day or every week, depending. I bought over 100 books that were free or 99 cents, all the classics that I love, Jane Austen, the Brontes, Elizabeth Gaskell, Herman Melville, Charles Dickens, Shakespeare, and on and on. I also bought a few new books, and some favorite books like A Tree Grows in Brooklyn, or The Glass Castle.

    I read a lot and I will still use the library extensively as I can’t afford to buy all the books I want to read, but the Kindle is great for the books I do buy, and once I got it set up with lots of reading material, I might now buy 1 or 2 books a month, at $9.99, which is no hardship.

    I can surf the internet, though I haven’t quite figured that all out yet, and I can put my own files on Kindle. I’m a writer and working on a book. I can put that on Kindle just to see how it reads.

    I find the Kindle very comfortable in my hands, and easy to read. I sit in coffee shops reading it in the morning, and people sneak curious glances at it. I want to tell them, “It’s great, you should buy it.” I’ve had people come up and ask to see it. I’m glad to show it to them.

    The $30 case that goes along with it makes it feel like a book and gives that added protection. The only drawback is that it doesn’t stay closed, so I need to find a rubber band or piece of velcro to put around it, that is the only flaw I have found.

    The Kindle is really fun to use and I’m having a blast learning to navigate it and how to use all its features. I can bookmark pages (the corner of the page actually “folds down” to look like a real book), highlight and save passages or quotes, which I can then put on my computer and send to friends to share. I have no regrets, it’s everything I might have wished it would be.

    ETA: I think some people don’t understand that the Kindle doesn’t have a backlight ON PURPOSE and I hope the engineers never change that. The e-reader is supposed to replicate the experience of reading a book, not a computer. A book doesn’t have a backlight either. It’s easier on the eyes not to have that light. I bought a $13 light that clips on (it’s advertised with it) and that’s great for lying down in bed or in darker places. But most of the time I have no trouble seeing the text in any light. It’s also easy to make the font larger whenever necessary, like when my eyes are tired. And the lack of backlight saves on the battery. I can leave it on sleep for days and hardly ever need to recharge the battery. I can’t say enough that I am so not disappointed in this product.

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