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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

 
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:
 
    "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.

     
   
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:
     
    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.
     
   
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:
     
    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.
     
   
"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.)
     
    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.
     
   
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.
     
    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.
     
   
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.
     
    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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Treasurer cautions about refund anticipation loans
  "Oftentimes accompanied by significant interest rates and fees..."
State Treasurer Wheeler encourages Oregonians to 'Guard Your Money,' unveils new web site and tools
  "You need to know how to protect your wallet, your bank account, and your vital private information..."
> more
> all recent State Treasury news

 

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> Shady mortgage assistance or refinancing offers

> Tax refund anticipation loans

> "Free" trial offers that require you to give your credit card information

> "Work From Home Online" offers

> Bank account verification text messages, phone calls, or e-mails

> Drained gift cards

> more

 

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> Using Credit Cards wisely
> Understanding Mortgages
 

Presented in part by SIFMA Foundation for Education

 
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Office of State Treasurer Ted Wheeler

State Capitol Building, Salem OR 97301
(503) 378-4329 | oregon.treasurer@state.or.us

 

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