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WATCH FOR RED FLAGS! There are countless ways that
people may try to separate you from your hard-earned money or
property, and while many of those are illegal, some are indeed
legal. That means you need to be vigilant every time you open
your wallet – or even if somebody offers you something for free.
Remember, there’s no such thing as a free lunch, a free dinner
or even a free midnight snack. Somebody is going to pay for it …
and it’s probably you. |
Here are just a few of the many
themes you should be wary of. Not every situation is spelled out
here, but there are some red flags that you should approach cautiously:
Something that is "free," or that
requires your account info
Paying a bit now for vague
promises of riches later
Contests that you haven't
entered, or that require your account info
Any "emergency" financial
transaction requiring immediate action
An absolutely guaranteed return
Achieving tough goals with little
or no work
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Things are offered to you for
"Free"!
There aren't very many things you can actually get for free.
A free sample at the supermarket might only cost you your time
and attention... but some "free" offers can cost you money.
Be especially careful if someone makes you give our your credit
card number when getting something for "free." You may be
charged a subscription fee if you don't cancel service within a
certain time period.
Always read the fine print and watch out for the following
phrases: |
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"FREE HOME INSPECTION" - Be cautious if somebody calls or
knocks on your door and offers a free inspection to see if you
need house work -- such as gutters repaired, painting or a new
roof. Many times they will ask for a small down payment or a
credit card number and then disappear. And never let them
inside. “TRY
BEFORE YOU BUY” – Free trial offers are often known as
“Negative Option” purchases, in which you must cancel a product
before the end of a trial period. Sometimes, merchants make it
tough for consumers to take the necessary action, with the hope
of trapping you into expensive purchases.
FREE SEMINAR – Sometimes, legitimate businesses try to
attract new clients by offering a free seminar or a lunch, such
as at a church or at a hotel conference room. But be careful.
These kinds of free seminars also are used to attract
unsuspecting victims for scams. An Oregon cattle breeder that
sold phony tax shelters used free hotel seminars to attract
clients in the 1980s and 1990s, and many of those victims ended
up bankrupt.
FREE VACATION – Remember, it’s not really “free” if you
must agree to attend tours of real estate or other marketing
events. Also, many “free” vacations have a litany of fees
attached. Always read the fine print before you sign anything,
and be wary about giving out your credit card number.
Remember: if someone takes your credit card number, it's likely
that they intend to charge something to it.
ONLINE TRIAL OFFERS – Before you click a button that says
“I agree” to any online contract, make sure you know what you
are agreeing to. And look out for any pre-checked boxes that
trap you into terms that you don’t like, such as expensive
shipping for a supposedly free product.
REFUND ANTICIPATION
LOANS – Some tax preparation businesses say they can get you
your refunds faster. What they’re really offering you is speedy
delivery of your money, in the form of "refund anticipation
loans." But you might end up paying high interest rates
and fees just to get your money a few days sooner. |
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Promises of Riches after upfront
fee
Many scams -- both legal and illegal -- offer you plenty of
payoff after you put up an initial payment. There may even
be testimonials from "real people" who supposedly made good
money in such a fashion. Don't fall into the trap of
thinking that you're making a good investment without doing
research.
Phrases to watch out for: |
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WORK AT HOME – Who wouldn’t want to work at home in their
pajamas, part time, and make thousands of dollars? The trouble
is, many of the businesses that promise that easy path to riches
are based on people recruiting other people with that same
promise.
BUY A KIT NOW, MAKE BIG BUCKS LATER – It’s enticing to
hear testimonials from people who say they earned big salaries
after investing in a “startup package” that explains a business
model. What the testimonials don’t tell you is the real business
model: Hoping people are gullible enough to buy the kit.
UNCLAIMED PROPERTY “FINDERS” – The state of Oregon has
the unclaimed property of more than 1 million people, and you
can
search for free by visiting this link.
(Search
all states here!) Some businesses say they’ll
find property for you, for a price. But why buy it, when it’s
free?
NIGERIAN SCAMS – There are many versions of this scheme,
in which a person receives and unsolicited letter or email from
a "dignitary" or well-connected person overseas, who promises
big money if you provide your bank account number into which to
wire the money. What really happens is your bank account gets
emptied. Don’t ever do it. |
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Easy Winnings and Mysterious
Contests
Have you ever won a contest that you didn’t enter, with no
string attached? Sounds ridiculous, right? But these can be
ingenious, and people fall into traps involving “free winnings”
every year. In some cases, the supposed winners are asked to
supply a bank account number into which to transfer the money.
Those that give their account data end up losing… a lot.
Shenanigans to watch out for: |
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CONTESTS ATTACHED TO PRODUCTS - Contests are sometimes
used by legitimate businesses to attract customers, but
sometimes those businesses get in trouble. In 2001, twenty-six
states including Oregon reached a $34 million settlement with
Publishers Clearing House over allegations that the company used
deceptive mailing practices in its sweepstakes mailings.
FREE CONTESTS - When you enter a free drawing for goods
or services or even free online contests, you are giving your
personal information to somebody who could sell it or
potentially could steal your identity. At a minimum, you could
be signing up to receive lots of advertising that you don’t
want. Even if you're merely voting be text message for,
say, a singer on a popular TV show... your number might then be
sold to telemarketers!
MODELING OR ACTING JOBS - Some businesses advertise their
connections to the modeling industry or promise to help cast
clients in commercials or films, but unfortunately some of those
firms are most interested in getting people to hire them. |
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"Please Help!"
While there are plenty of honest, important
causes out there, scammers know that calling for help is a good
way to encourage people to make a quick, emotional decision
which may prevent them from doing their research before handing
credit cards numbers over. If you're suspicious of an
organization, you can always
check the Department of Justice's database
of charitable organizations. (If necessary, you
can always politely explain that you'll be making the same
donation to a more established organization.) |
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CHARITY FUNDRAISING CALLS – Did you know that charity
fundraisers only need to provide a fraction of the money they
collect to the actual charity they are soliciting for? You can
learn more about charitable giving from the Oregon Attorney
General
at this page. The office also
prepares a list of the “20 Worst charities” based on the
percentage of money raised that’s actually used for charitable
purposes.
FOREIGN REQUESTS – A type of Nigerian scam (see above)
more commonly known generally as "The
Spanish Prisoner" con. You are asked to forward
money to help a friend or powerful person out of a difficult
situation (in the 1800s, this was often a Spanish prison), and
are promised a large reward. In actuality, there is no
prisoner. Sometimes the scammers will convince you that
you have been engaging in illegal activity, in the hopes that
you will not go to the police afterwards.
FRIENDS OR FAMILY WHO HAVE REPORTEDLY BEEN ROBBED ON VACATION
– These scams can be garbled pleas for help over the phone, but
most often come via email so the recipient can’t tell that the
message is really coming from a potential thief. If you respond,
you’ll end up being the victim. |
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Guaranteed Returns
Although there are
some investments that function as "fixed income" (that is,
paying out at a particular rate), these investments -- such as
bonds or Certificates of Deposit -- generally pay a lower rate
that other investments. There is no such thing as an
investment that is guaranteed to pay big returns every
year. If somebody is marketing such a thing, it could be a
Ponzi scheme, which relies on
money from new entrants to pay for the fabulous returns.
But eventually, there are more participants in the scheme than
there is money. Oftentimes, the person running the scheme
gets fabulously rich in the process, like disgraced New York
investor Bernie Madoff, who was sentenced to 150 years in prison
in 2009 after stealing billions of dollars from clients. |
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SCHOLARSHIPS – College is expensive enough, so don’t fall
into traps in your search for scholarships. Some unscrupulous
businesses ask you to pay money up front to get connected with
"guaranteed" college scholarship money. Don’t learn the hard
way: Read the fine print.
GOLD! - Ever wonder how those gold resellers have enough
money to run so many commercials? Be careful to get many
independent estimates before selling any jewelry or gold, and
get appraisals in person. Investigations have found vast
disparities in the prices resellers will offer for the same
jewelry, and some unscrupulous businesses will pay you only a
small fraction of the actual value. By searching the
Better Business Bureau's review
of some of these companies, you can see that, mysteriously, many
consumers' packages never made it to the dealer. |
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Achieving Tough Goals With Little
or No Work
Goals like improving your credit score or
restructuring your mortgage take a lot of work to achieve.
To help you, there are some legitimate advisors out there... but
be wary of anyone who promises instant results with no work from
you. |
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ERASE DEBT/ IMPROVE CREDIT – Many firms that are offering
credit counseling to help you navigate a path out of debt may be
instead steering you toward bankruptcy. Bankruptcy is a legal
step that is available to people who can’t pay their bills, but
it has lasting repercussions that can impact your credit for
years.
"FREE" CREDIT REPORT – You’ve seen the commercials with
the guy and the guitar warbling about getting free credit
reports. The trouble is, he’s advertising a for-profit company
that makes millions from people who are enticed into signing up
for a monthly monitoring service. To get your actual free
credit reports, visit the official site at:
AnnualCreditReport.com.
FORECLOSURE RESCUE –
Some firms target homeowners in distress with enticements to
help stop foreclosure proceedings. Oftentimes, these firms
charge you high fees and some even end up taking the houses they
say they’ll protect from foreclosure. Sometimes they'll
promise to buy your home and then "rent the house back to
you"... only to sell it to another owner.
REVERSE MORTGAGES – Ads that offer you money by "tapping
the equity" in your home may be trying to sell you "reverse
mortgages." Those arrangements eventually transfer the ownership
of your home. These arrangements are legal, but read the fine
print to learn whether the fees and other terms are fair.
SUBPRIME LOANS – Unscrupulous mortgage brokers made a
bundle by steering low-income people into loans with unfavorable
terms for the borrowers, and that helped to trigger the national
housing crash. There is no fiduciary duty for a mortgage broker
to act in your best interest. New regulations have made subprime
loans less common, but the lesson remains: Always be sure to
read your mortgage paperwork carefully, and pay particular
attention to the "disclosure" page, where you can see if your
mortgage agent is getting a fee from a lender known as a "yield
spread premium" for putting you into a higher interest rate than
you would otherwise qualify for. |
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