Financial Fraud - Scams and Schemes

As hard as you work to make money and as difficult as it is to save it, the last thing you want to do is lose any of it through fraud. Financial fraud is now the number one consumer complaint, and billions of dollars are lost each year to unscrupulous operators, hackers, and gangsters.

Some frauds have been around for years, yet millions of people continue to fall victim to them. A healthy dose of skepticism and a bit of caution is sometimes all it takes to protect yourself from these low-tech schemes.

Newer fraud schemes, which often use the Internet or computer software, can be more difficult to combat, but being aware of methods to protect yourself can help keep you from joining the growing list of victims.

Identity Theft - Your Worst Nightmare

The most troublesome form of fraud is identity theft, where a criminal uses your name and Social Security number to assume your identity and incur debt. Although your liability may be limited to $50 per credit card and $500 per debit card, your life can become a nightmare as you spend the next several years clearing your name and your credit. If you think it can't or won't happen to you, consider that the rapidly growing problem of identity theft has affected millions of households and cost billions of dollars.

How do thieves steal your identity? All it takes is access to personal information from old bank statements, copies of bills, credit card statements, or credit applications, which they obtain through electronic means (email scams, etc), or by low-tech methods such as digging through your trash, stealing from your mailbox,or stealing your purse. With your information in hand, creating false identification is simple using today's sophisticated computers, software, and printers.

How to Protect Yourself From Identity Theft

To protect yourself from identity theft, take the following precautions:

• Shred or tear up pre-approved credit card offers, bills, cancelled checks, bank statements, and other documents that contain personal or financial information before putting them in the trash.
• When using an ATM, make sure nobody can see the numbers you punch in. If somebody is behind you, shield your hand when entering information.
• Don't carry your PIN numbers with you, and never give your PIN to another person.
• Never give out your credit card number to anyone who calls you unsolicited.
• Guard your Social Security number. Don't give it out to salesmen, vendors, or others who have no legal need for it.
• Don't carry your Social Security card with you.
• Don't use your mother's maiden name, your birthdate, or the last four digits of your Social Security number as a password on credit card or bank accounts. This information is too easy to obtain and can be used by thieves to access your accounts.
• Use a locked mailbox to prevent checks, credit card offers, and other financial information from being stolen.
• By law, you're entitled to a free copy of each of your three credit reports once a year. Request these free copies from Equifax (800-997-2493), Experian (888-397-3742) and Trans Union (800-888-4213) once a year and review for any credit transactions that don't look right.

Other Common Financial Scams

People are still falling for variations on these old scams. Don't be one of them:

• Free Prizes - You're promised a free prize in exchange for purchasing or testing a product.
• Business Opportunities - You're offered the chance to make lots of money working at home or buying a franchise.
• Investment Offers - You're offered an opportunity to invest at a discount or earn a very high rate of return.
• Charitable Contributions - You're asked to contribute to a charity that doesn't exist or most of the money goes to the fundraiser instead of to the charity.
• Credit Card Check - You receive a phone call from somebody pretending to be an employee of your bank or credit card company, saying there's been a mix-up with your credit card and asking for your credit card number or expiration date to straighten out the problem.

Credit Repair Scams

• Avoid dealing with companies that promise to clean up your credit for a fee. Hundreds or thousands of dollars later, your credit is no better than it was before.
• Mail Fraud - Avoid "too good to be true" offers. They may be for sweepstakes, or may require that you call an 800 or 900 number so you can be subjected to a high-pressure sales pitch.
• Telemarketing Schemes:Be wary of offers you receive over the telephone from companies trying to sell their goods or services, or offers urging you to call and make purchases in response to mailings or other forms of advertising.

For More Information

If you think you've been the victim of financial fraud, contact your State's consumer agency. For information on Internet fraud, visit Internet Scam Busters.

There's no end to the schemes and scams that unscrupulous people will come up with to part you from your money. Awareness, caution, good sense, and a little healthy paranoia will go a long way towards protecting you from fraud.