Protect Yourself From Today's Most Destructive Scams
Sometimes it seems like life is one never-ending battle against scam artists trying to part you from your money. Stay diligent and avoid the three latest schemes devised to take advantage of you and your family.
Pie-in the-Sky CD Rates
As you're reading the newspaper, you see an advertisement for a financial group claiming they can find you a FDIC insured 3-month CD paying a 5% yield. You're thrilled -- you can't even find rates this great at Bankrate.com! You call the number, and the representative tells you how great the deal is, and to head over immediately with your checkbook. When you ask her what bank is offering rates so high, she tells you they can only reveal the bank's name while you're at the office because they change in a moment's notice.
Is It A Scam or a Great Deal? This one falls under the umbrella of "If it sounds too good to be true, it probably is." This exact situation came from a CNBC "Ask the Experts" column, about Sun Cities financial group. Their expert's response is the same as ours: Instantly writing a check to a bank they'll only reveal at their office? Give me a break!
And while there are many legitimate companies that place CD deposits at FDIC-insured banks on the consumer's behalf, you should always be cautious when giving a middle-man money, especially when they're promising out-of-this-world returns.
Web-Surfing Loan Sharks
You never meant to let the money get so tight this month, but when your car ended up in the shop, you searched the internet for answers, and wound up at the Web site of an online payday lender. You gave them your information and bank account number, and they made the deposit. When it comes time to pay back the loan, you notice that they’re making huge withdrawals from your account! You contact their office, and they tell you that, because they operate on Native American soil, they are "sovereign nations" and exempt from state usury laws, which cap interest rates.
Can They Really Get Away With That? Recently the Better Business Bureau has been flooded with complaints from consumers circling the drain after being wiped out from the interest on one short-term loan. Some of these online payday lenders are charging unreal interest rates -- up to 800%. One woman from Massachusetts paid $1,700 on a $225 loan she took out from Ace Cash Services. Similar complaints have been made against United Cash Loans; both agencies claim to be located at the same address on an Oklahoma reservation.
The bad news: These loan sharks aren't necessarily doing anything illegal -- yet. Although many online payday lenders are currently facing legal penalties, until anything is finalized, it's best just to avoid these con-artists. If you're short on cash, look into establishing an emergency savings fund, or setting up a home equity line of credit or other loan from your bank. If you absolutely must go to a payday lender, make sure you'll be able to pay them back as quickly as possible, and above all, do your research.
Nosy Census Workers
You're doing some chores around the house when you hear your doorbell ring. It's a well-dressed woman, and she says she works for the Census, and she has a few questions to ask you. She asks to come inside, and begins to collect your information, including your social security number, and credit card number.
Is That Information Really Necessary? Ask this woman to leave, because she is not working for the Census. Authentic Census workers will always carry official I.D. and will never ask about your personal financial information. Also, they will never ask or try to come inside your house.
Door-to-door Census collecting begins May 1st, so the Census is a great opportunity for identity thieves. Although Census officials widely publicize that they'll never ask for personal information, like your social security number, or your drivers license number, the Better Business Bureau has still received multiple reports of identity thieves posing as Census representatives.
If this situation has happened to you, there are steps you can take to fight back. The Federal Trade Commission recommends that in addition to filing a report with their offices, you should place a fraud alert on your credit reports, close any accounts you believe have been tampered with, and file a report with your local police. More information can be reached at the Federal Trade Commission's Web site.
In the end, avoiding scams is often as easy as just following a few common sense rules. If an offer sounds too good to be true, it probably is. Before you give out your personal or financial information, check with your bank, or your local Better Business Bureau office to make sure nothing smells funny. If something is actually the real deal, it will check out.