Protecting Yourself Against Financial Scams

Unfortunately, consumer fraud is nothing new. As you know, when times get tough, certain individuals look to intentionally deceive others.  For most of the last few decades, we’ve seen a surge in all types of fraud.  Some of the most popular scams are financial, dealing with mortgage modifications, credit cards, employment, and identity theft.  Anxieties about rising unemployment, trouble in the housing market, and high levels of personal debt have led many consumers to look for easy remedies, and scammers have seized on this opportunity to take advantage.

According to the Consumer Sentinel Network, a clearinghouse for complaints filed with various agencies, over the last 5 years more than 6.1 million complaints have been filed over fraudulent activity.  In 2010 alone, 1.3 million Americans indicated that they were the victims of fraud, with losses totaling well over $1.7 billion dollars.  What’s startling, aside from the gargantuan dollar amount, is that this is only a fraction of the fraud perpetrated in our country. Roughly 90% of defrauded consumers fail to lodge a complaint, meaning that closer to 10 million people fall victim to these crimes each year.

One of the more heartbreaking scams involves homeownership.  Since the housing market contracted, millions of homeowners have lost their home to foreclosure.  Although individuals can try to work things out directly with their lender, or use the services of a HUD-approved counseling agency to work as an intermediary, many opt to pay thousands of dollars to “save their home” by using a foreclosure scammer.  Obviously, people don’t know these foreclosure prevention schemes are fraudulent, but after getting the run-around from their mortgage servicers, many folks become desperate.   Frequently, the scammer takes the money, makes maybe one phone call to the loan servicer, and tells the homeowner they tried, but failed to arrange a modification.  Housing advocates from HUD-approved agencies are highly trained, dedicated individuals who provide these very services, for free.  More important, they work hard to come to the best possible solution for the homeowner.  A HUD-approved agency should be your first, last, and only call when facing foreclosure.

There are many more scams that you have to protect yourself against.  For instance, the number one con of 2011 has been the fake check scam, though there are many variations. It could start with someone offering to buy something you advertised on the internet, pay you to do work at home, advance supposed sweepstakes winnings, or pay an installment on money you’d receive for agreeing to have foreign funds transferred to your bank account.  Other popular scams include the purchase of goods that are never delivered; advance-fee loans, which are false promises of business or personal loans for an upfront fee; and friendship and sweetheart swindles, in which a con artist nurtures an online relationship, builds trust, and convinces you to send them cash or a check.

It seems like there’s no end to the depravity of some criminals, but the good news is that you can protect yourself.  First, let’s cover some basics.  Never share your Social Security number, bank account or credit card information with someone you don’t know.  Furthermore, no reputable business will ever ask you for this information via e-mail, so never send this information electronically, even if it appears to be from a business you know and trust.  Next, do some research.  Visit your Attorney General’s website and review their Consumer Protection pages for advice to help you identify whether the offer you’ve received is a scam.  Another good resource is the Better Business Bureau.  Most reputable companies are listed with the BBB and are graded on a scale of A+ to F, based on a variety of factors related to service.

Also, remember the most basic logic – if it sounds too good to be true, it probably is. When you hear a pitch that insists you act now, guarantees a big profit with little or no financial risk, or demands that you send cash immediately, stay away and contact the appropriate authorities.  You can direct your complaint to the Federal Trade Commission by visiting their website at  If a scam uses the mail or other interstate delivery services, you should also report them to the U.S. Postal Inspection Service. Until next time, I’m Thomas Fox for Cambridge Credit Counseling.


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