The Most Popular Scams of 2008
The guy to the right has some greats deal for you. Take your pick:
What if you could erase all your debt overnight thanks to a secret loophole in the law? For a small fee of just a couple of thousands of dollars, there are companies that claim they can do just that! Sounds great? It does, but sadly it's a scam. The pitch goes something like this: lending money is illegal according to the Declaration of Independence, and so is the Federal Reserve. For a fee, you will be issued a "legal document" to send to your lenders, and then all your debts will – poof – go away.
It sounds silly when put this way, but debt-weary consumers can be really desperate for a relief, and scammers can be pretty slick and convincing – people fall for this scam every day. And it's a double-scam. Not only will you be relieved of the money you pay for the service fee, but the scammers will have all your personal information as well. Then they can open more accounts in your name, steal more money and add identity theft to your credit woes.
To avoid being ripped off, remember the old adage: if it's too good to be true it probably is. Plus, if there really was a quick, legal way for people to erase all their debts overnight, it would be all over the news already. But since it isn't, we can be pretty sure that such thing does not exist.
I find this scam particularly despicable because it’s designed to prey on the most vulnerable among us – those who depend on prescription drugs but find them difficult to afford. Offers for super-cheap drugs usually come through spam email and popup windows, but also come up in the top results when searching for a pharmacy on a search engine.
The scammers will offer the convenience of ordering from your home, incredibly low prices and no need for a prescription. “Only fill out a simple questionnaire; no examination, lab tests or doctor visits are required!”
First of all, it is illegal to dispense prescription drugs without a prescription. The companies that offer to do that are breaking the law, so this should immediately raise a red flag. Second, the quality of drugs offered incredibly low prices is always suspect. They are inexpensive because they are imported? Drugs from overseas are manufactured with no FDA oversight. Analyses have shown that many of these drugs are counterfeit and have varying degrees of effectiveness, with some having no effectiveness at all.
There are legitimate online pharmacies that truly offer convenience and value. They are usually run by companies you’ve already heard of, such as Walgreens or CVS. Experimenting with unknown foreign pharmacies is gambling with both your money and your health.
Phishing and Spoofing
Have you ever received an email supposedly from a bank asking you to update your contact information by clicking on a link? That's called phishing. If the email was from a "bank" that you don't do business with, then it's obvious that it is scam. But if crooks send you an email that looks like it from a financial institution that you do have an account with, then it could be easy to fall for this.
By clicking on the link provided you are taken to a “spoofed” web site – a site that’s a copy of the legitimate site, except that the data you enter goes to the scammers, not your financial institution. These sites can be very-well made so it can be hard to tell that they are fake. Lately, crooks have started sending email pretending to be from PayPal, eBay, Amazon and other online retailers, so it's no longer just the banks that they are pretending to be.
How can you protect yourself from this scam? First, if anything looks fishy about the email you receive, it’s probably a scam. Even though the crooks have become very sophisticated as far as technology goes, they still can’t seem to learn how to spell. Misspellings, grammar and punctuation errors are all red flags. If, however, you think the email might be legitimate, don’t click on any links in the email; instead open your web browser and type in the web address of your financial institution. That way you will go to the real site and bypass any potential traps.
Online “Friendship” With a Twist
The increased popularity of online dating services, social networking sites and chat rooms has attracted criminals too. While these sites can be a great way to meet new people, it's important to keep in mind that the new friends met online may not always be who they pretend to be.
One particular scam that has increased in popularity is the reshipping scam. It works something like this… You meet a new "friend" from overseas. After you exchange a number of emails supposedly getting to know each other, your "friend" lets you know that he wants to order certain items online from the U.S., but alas American companies won’t ship to his country. Would it be OK that he orders the stuff, have it shipped to your address, and then have you reship it to him to his country? You say yes, and soon packages start arriving to your door that you re-ship to your new friend as a favor.
Unfortunately, the items are bought with fraudulent payment, and soon the deceived merchants start calling you and the law enforcement starts knocking on your door. At best, you'll have an unpleasant few weeks explaining everything; at worst you will be considered an accessory to crime and may get entangled in a lengthy investigation.
As the technology advances, so do the crooks. These are just four of some of the most prevailing scams online. With the continued growth of the Internet we can be sure that we'll hear about more.
Personal Finance Blog
Starting in 2004, this blog series ran for 10 years. Click on the links below to read some of the posts.