How to Protect Yourself From the Top 10 Frauds and Scams
Unscrupulous schemers and scammers have become trickier and harder to spot than ever, thanks to more sophisticated marketing and the availability of online information. But don't worry: Your pocket can't be picked without some participation by you. If you know what to watch out for and how to protect yourself, you can keep your hard-earned money safe. Here, the top ten financial fleecing tricks to watch out for.
1. "You've got mail": Internet identity phishing
How it works
You check your e-mail and see a notice from UPS, eBay, PayPal, the IRS, your bank, or any other official-sounding financial entity. It says your payment has been refunded, your account is due, your payment didn't go through, or -- most commonly -- your account information needs updating. What's going on? Sophisticated identity thieves send carefully disguised e-mail solicitations with hopes of peering into your computer to obtain personal information. What's really scary is that in some cases, you don't even have to click on the link provided; simply opening the email gives the scammers the window of opportunity they need.
How to protect yourself
Don't open any e-mail that references payments or other financial transactions.
First, look at the e-mail address it's coming from to make sure it's identical to the real thing. Take a close look at the subject line of the e-mail: the grammar, the font, the exact URL referenced. If it looks suspicious, delete it.
Look to see if the e-mail uses your real name. In most cases, the "phisherman" has your e-mail address but no other information, whereas if this were really from your bank or the IRS or whoever, they'd know your name, and possibly reference your account number or other identifying information. If not, delete it.
If you've already opened the e-mail before you realize it's suspicious, don't click on the link that it contains. Instead, check the link by opening a separate browser window on your desktop and going to the official website in question to see what the real URL is and whether the two match up. "Yes, it takes a while, but better than losing your life savings or having your credit ruined," says Alexis A. Moore, founder of Survivors in Action, a group that provides education about Internet and record-keeping security. If things look fishy, change the passwords on your online accounts, freeze any credit cards you're concerned about, and start watching your credit report to see if identity theft has occurred.
2. Pay-to-borrow loan scams
How it works
You're told you can borrow money (usually despite having a low credit rating or other impediment to a normal loan). But there are up-front fees involved, often running to hundreds or even thousands of dollars. The scam, says Reno, Nevada-based financial advisor Todd Tresidder: "The loan never comes through, and the fees you paid disappear along with the representative or company that offered the loan.
How to protect yourself
Remember that normal loans don't require fees to be paid at the beginning of the application process. In fact, it's against the law for a business to request up-front fees for loans, according to the Better Business Bureau.
Watch out for alternative terms. Smart scammers might use terms like insurance, taxes, or processing fees. No matter what term is used, an advance payment by any name is illegal.
Beware of false promises. No legitimate lender can guarantee you'll get a loan before you even apply. If someone promises you a loan before you've submitted an application, you can bet it's not on the level.
