Classic Warning Signs of Scams

The Consumer Financial Protection Bureau published this article to assist with spotting fraud. Read more here...

IRS Warns Taxpayers of New Scam Mailing:

The IRS is alerting taxpayers of a new scam involving a mailing directing the individual to send various pieces of sensitive information in order to collect unclaimed tax refund money.  

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Pre-Paid Card Fraud:

We have seen an increasing trend of consumers being targeted for scams involving pre-paid gift cards.  Scammers will use a variety of tactics when contacting their victims including online romances, past-due bills, warrants for your arrest or various business opportunities.  They will then encourage the victims to pay them using pre-paid cards available at most grocery and discount stores.  Once purchased, the scammer requests the card information from the victim and the money becomes virtually untraceable.  Whatever promises were made as part of the scam will be unfulfilled and the victim will be out the cost of the cards.  If you truly owe a debt or its a legitimate business opportunity, they will not ask you to use pre-paid cards, this is a scam!  Read more about red flags to watch for here.

Government “imposter” frauds:

These schemes often start with a phone call, a letter, an email, a text message or a fax supposedly from a government agency, requiring an upfront payment or personal financial information, such as Social Security or bank account numbers.

“They might tell you that you owe taxes or fines or that you have an unpaid debt. They might even threaten you with a lawsuit or arrest if you don’t pay,” said Michael Benardo, manager of the FDIC’s Cyber Fraud and Financial Crimes Section. “Remember that if you provide personal information it can be used to commit fraud or be sold to identity thieves. Also, federal government agencies won’t ask you to send money for prizes or unpaid loans, and they won’t ask you to wire money to pay for anything.”

Debt collection scams:

Be on the lookout for fraudsters posing as debt collectors or law enforcement officials attempting to collect a debt that you don’t really owe. Red flags include a caller who won’t provide written proof of the debt you supposedly owe or who threatens you with arrest or violence for not paying.

Fraudulent job offers:

Criminals pose online or in classified advertisements as employers or recruiters offering enticing opportunities, such as working from home.  If you’re required to pay money in advance to “help secure the job” or you must provide a great deal of personal financial information for a “background check,” those are red flags of a potential fraud.

Another variation on this scam involves fake offers of part-time jobs as “mystery shoppers,” who are people paid to visit retail locations and then submit confidential reports about the experience. In an example of the fraudulent version, your job might be to receive a $500 check, go “undercover” to your bank, deposit the check into your account there, and then report back about the service provided. But you also would be instructed to immediately wire your new “employer” $500 out of your bank account to cover the check you just deposited. Days later, the bank will inform you that the check you deposited is counterfeit and you just lost $500 to thieves. One warning sign of this type of scam is that the potential employer requires you to have a bank account.

“Phishing” emails:

Scam artists send emails pretending to be from banks, popular merchants or other known entities, and they ask for personal information such as bank account numbers, Social Security numbers, dates of birth and other valuable details. The emails usually look legitimate because they include graphics copied from authentic websites and messages that appear valid.

“We have also seen emails with links to fake websites that are exact copies of real websites for FDIC-insured banks, except the web addresses are slightly different than the real ones,” said Doreen Eberley, director of the FDIC’s Division of Risk Management Supervision, which is in charge of the agency’s policies and programs related to financial crimes. “These sites are used to trick people into giving up valuable personal information that can be used to commit identity theft.”

Mortgage foreclosure rescue scams:

Today, many homeowners who are struggling financially and risk losing their homes may be vulnerable to false promises to refinance a mortgage under better terms or rates. But borrowers should always be on the lookout for scammers who falsely claim to be lenders, loan servicers, financial counselors, mortgage consultants, loan brokers or representatives of government agencies who can help avoid a mortgage foreclosure and offer a great deal at the same time. These criminals will present homeowners with what sounds like the life-saving offer they need. Instead, the homeowner is required to pay significant upfront fees or, even worse, tricked into signing documents that, in the fine print, transfer the ownership of the property to the criminal involved. Common warning signs of fraudulent mortgage assistance offers include a “guarantee” that foreclosure will be avoided and pressure to act fast.