They use any means to contact victims—telephone, snail mail, email, and the Internet. They gain your trust and when they have you hooked, they ask you for money; and then take it and run. The scenarios they use to lure you in change, constantly. But you can protect yourself and your friends and family by arming yourself with the knowledge of the most common types of fraud.
Advance Fee / Prepayment Scam
Posing as representatives from phony loan companies, scammers use authentic-looking documents and emails and sophisticated websites to appear legitimate and charge “fees” in advance of making loans. Consumers pay, but the loans never come through and the scammers are long gone, often changing the name of their “businesses” every few weeks to avoid law enforcement.
This is one variation of a scam called the “advance fee” or “prepayment” scam. Scammers can also lure victims in with investments or gifts. But it all comes down to the same theme: victims pay money to someone in anticipation of receiving something of greater value and then receive- little or nothing in return.
Mystery Shopping Scam
Mystery shopping scams are popular with criminals who target employment websites. Scammers send victims a check and instruct them to deposit the check and use the funds to send a money transfer using Western Union under the guise of “evaluating” the service. Victims transfer the funds only to find out weeks later that the checks bounce and they’re responsible for paying the bank back for any money withdrawn.
With the overpayment scam, scammers play the role of buyer and target consumers selling a service or product. The “buyer” sends the seller a legitimate-looking check, usually drawn on a well-known bank, for an amount higher than the agreed-upon price. They concoct an explanation for this overpayment and instruct the seller to deposit the check and wire back the excess funds. Weeks later, the victim learns the check is counterfeit but is still on the hook to pay the bank back for any money withdrawn.
Employment scams generally start with a too-good-to-be-true offer—work from home and earn thousands of dollars a month, no experience needed—and end with consumers out of a ‘job’ and out of money. They generally follow one of three patterns:
1. Scammers pose as a new ‘employer’ and send victims a check to cover up-front expenses, like supplies. Victims deposit the check, buy the necessary supplies and wire any remaining funds back to the scammer. Weeks later, they find out the checks are fake and they’re on the hook for the entire amount.
2. Scammers pose as ‘recruiters’ pitching offers of guaranteed employment or as ‘employers’ extending job offers on the condition that victims pay up-front for things like credit checks or application or recruitment fees. Victims pay, but job offers never materialize.
3. Scammers pose as ‘company’ representatives and seek sensitive personal and/or financial information from victims under the guise of doing credit or background checks. They target victims later on for identity theft.
Lottery / Prize Scam
Lottery or prize scams follow two similar patterns:
1. A victim gets an unsolicited phone call, email, letter or fax from someone claiming to work for a government agency or representing a well-known celebrity, notifying them that they’ve won a lot of money. The scammer gains their trust and explains that, in order to collect the winnings, they first have to send a small sum of money back to pay for processing fees or taxes. Following these instructions, victims immediately wire the money, but never hear again from the scammer who contacted them. Victims are out the money they paid for “fees and taxes.”
2. Victims get an unsolicited check or money order and directions to deposit the money and immediately wire a portion of it back to cover processing fees or taxes. Weeks later, victims learn the checks are counterfeit, but have already wired the money to cover the “taxes” and can’t get it back. And they’re on the hook to pay their banks back for any money they withdrew.
Rental Property Scam
Sophisticated scammers use the Internet, and particularly free classified websites, to prey on unsuspecting real estate victims. Rental property scams generally happen in one of two ways:
1. Consumers are looking for a house or apartment to rent and get scammed by an “owner.” Victims come across a place in a great area, at a great price. The advertisement looks legitimate so they start communicating with the “owner,” generally by email. The owner says the place is theirs if they wire money to cover an application fee, security deposit, etc. They wire the money, and then never hear from the “owner” again.
2. Consumers are renting out a house or apartment you own and get scammed by a “renter.” “Renters” contact victims, generally by email, and express interest in renting the house or apartment. Scammers send a check for the deposit but then cancel the deal. Victims wire the money back only to find out the check was a fake.
Emergency / Grandparent Scam
Emergency scams play off of peoples’ emotions and strong desire to help others in need. Scammers make up an urgent situation—I’ve been arrested, I’ve been mugged, I’m in the hospital—and target friends and family with urgent pleas for help, and money.
Emergency scams also come in all shapes and sizes. There’s the Grandparent Scam where con artists contact the elderly claiming to be their grandchild, frantically asking for money. And the Social Networking Scam where con artists hack into social networking accounts and then target friends with frantic requests for money, claiming injury, arrest, etc. They use the information and contacts on the social networking sites to supply enough personal detail to make their requests appear legitimate.
Internet Purchase Scam
In the internet purchase scam, criminals prey on victims who bid on items using an online auction website or service. It generally plays out in one of two ways:
Victims win the bid and are told the seller only accepts money transfer as the form of payment. The seller instructs the buyer to put the transaction in a fictitious name or the name of a loved one to “protect themselves” until the goods or services are received. The seller then creates a false ID in the fictitious name and retrieves the funds. The merchandise never arrives.
The other variation is when the original auction is legitimate but the victims don’t win the bid. They’re contacted later on by another party offering to sell them the same item under similar terms and instructed to wire the money as payment. The money is sent but the buyer never receives the goods.
The scam starts simply: a man and woman meet on the Internet. The “relationship” progresses: they e-mail, talk on the phone, and trade pictures. And, finally, they make plans to meet, and even get married. As the relationship gets stronger, the requests start to change. The man asks the woman to wire him money; he needs bus fare to visit a sick uncle. The first wire transfer is small but the requests keep coming and growing—his daughter needs emergency surgery, he needs airfare to come for a visit, etc. The payback promises are empty; the money’s gone, and so is he.
Fake Check Scam
Fake checks play a starring role in lots of different scams: advance fee or prepayment scams; mystery shopping scams; lottery prize scams, and more. Victims get an unsolicited check or money order and directions to deposit the money and immediately wire a portion of it back to cover various expenses, like processing fees or taxes. Weeks later, victims learn the checks are counterfeit, but they’ve already wired the money and can’t get it back. And they’re on the hook to pay their banks back for any money they withdrew.