Top 10 scams to avoid

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It’s always a good idea to take a look back to help us on the road that lies ahead. The Better Business Bureau put together a list of the top 10 scams and ripoffs from 2010. Glance through them, so you know what to look for in 2011.

I’ve been doing this for a long time, and I can tell you some of the same scams that existed when I started in this business still exist today and still “get” consumers everyday.  Below you’ll find tips to protect yourself.

“With the economy still on the mend, scammers had a field day targeting struggling families who were looking for work and trying to make ends meet,” said Stephen A. Cox, President and CEO of the Council of Better Business Bureaus.

1. The economy has put many people out of work. It’s heartbreaking to hear the stories of people with 20 years work experience who can’t find a job. Scammers prey on that desperation, and job hunting scams are a big problem.

The Internet is essential to finding a job, but it’s also made it easy for scammers to thrive. Don’t give out your personal information to a company until you background them. Don’t be lured in by the promise of making big bucks. Instead, “Google” the company and make sure it’s legit. Or, check it out with the Better Business Bureau or Chamber of Commerce where it’s located. Make sure it actually exists and that it’s a company you’d want to work for before handing over your personal information.

I’ve also seen job applications that ask for social security numbers or require a credit check of some sort upfront. If it’s a legitimate company, you can get around this at the beginning. Just ask. Hold that information close to your chest and don’t reveal it right away.  If possible, wait for a face to face meeting or until you have verified it’s a legitimate company.

The Better Business Bureau says other companies ask you to pay a fee to be considered for the job. Reputable companies don’t charge you money for the possible opportunity to make money.

Consumers have also forwarded applications to me that ask for your bank account number so they can begin depositing money in your account for the job you’re pre-qualified for. Don’t fall for it. Companies are not going to give you seed money like this until they thoroughly background you. During that process, you should be doing the same with them.

Finally, try to do business with a U.S. based company. Don’t fall for a phony U.S. address. Verify who you are doing business with. Have I said that enough yet?  It’s because you’d be surprised how many people don’t follow that basic advice!

2. We all want to make a quick buck in this bad economy, but stuffing envelopes is not going to earn you much. I haven’t found a person yet that’s made money doing this work-at-home job. There are some legitimate work-at-home jobs, but  be leery.

Here’s some red flags: promises that seem to good to be true, a job that requires you to assemble products at home, or to hit the malls as a mystery shopper.

3.  Along those lines, be aware of those phony sweepstakes offers, lotteries, or checks that appear in the mail. You can’t win money if you don’t play the lottery or you didn’t enter a sweepstakes. The Better Business Bureau says the scammers even use legitimate companies like Reader’s Digest and Publisher’s Clearing House to get you to think they are legit money-making schemes.

4. Another component of this is when you post something for sale online, and the buyer sends you more money than the purchase price for the item. The BBB calls this the over-payment scam. You’re often told it was a mistake, and the extra money is to cover shipping fees, a middleman, etc. and you’re asking to wire the excess money. Then, the check you cashed bounces and you’re out the bank fees and the excess money you wired.

Don’t cash a check unless you know who it’s from. You are responsible, not the bank. That’s a hard lesson for consumers to learn. Verify the check is legitimate before you cash it if you are unsure. That’s as simple as calling the issuing bank.

5.The government has targeted debt relief services to try to put an end to debt relief and settlement schemes.  The Better Business Bureau says companies require upfront fees and may leave you in even bigger debt.  According to tentative year-end estimates by the BBB, complaints about this problem increased by 30% in 2010.

Click here to read all about these new debt relief rules

6. As the housing crisis continues, timeshare resellers are becoming a problem. People in many of the coastal cities have taken a huge hit on the market value of their property and they’re desperate to unload their timeshare or home. Don’t be too desperate.

The BBB estimates  timeshare reseller complaints increased by over 40% since 2010.  The BBB says owners are contacted by  a company who claims to have an eager buyer. The consumer has to pay several thousand dollars upfront to cover fees and then you never hear from the company again.

I’ve noticed a lot of these companies are start-ups so there may not be extensive information you can find about the company. Ask for references and call them. Make sure they are not the business owner’s neighbor or relative. Try to get the company to do something to earn your trust before you hand over fees.

7. Acai berry and other health cleansing companies were popular in 2009 and 2010, and they often were advertised as “free” to try to them out.  There are dozens of free trial offers that are not free.

Diet supplements are not the only category that’s targeted by these free trials. Penny auctions, money making schemes, and credit offers are also popular targets. Make sure you read the fine print to see how low-risk that offer really is.

Usually there is a promotional period, and I’ve seen some offers where you have to return the item before it ever arrives at your house. How is that possible? It’s not. That’s how these companies make money off their so-called “free offer.”  It’s often very difficult if not impossible to get a refund.

8. As spring arrives, be careful of door to door salesman and home repair contractors and roofers offering to work on your home.  The BBB says roofing complaints appear to have increased 40% according to early estimates of 2010 data.

This data is perhaps a little skewed, in my opinion, because of the problems with American Shingle. The BBB and consumer reporters across the company received many complaints about American Shingle. It went bankrupt and did not provide new roofs to customers.

Ask your insurance company for a good reference. Often if you go with a company they refer, the work is guaranteed.  Don’t hand over the entire insurance check before any work starts. If you’re a homeowner paying out of pocket, only pay a third upfront or better yet buy the supplies yourself. Finally, make sure you get a lien waiver before any work begins so if the contractor doesn’t pay a supplier or subcontractor you’re less likely to end up with a lien on your home.

9.  Identity theft is one of the fastest growing crimes, and tough to recover from if you’re a victim. The BBB says look out for low-tech theft, phishing emails, vishing phone calls, and smishing text messages.

Bottom line, shred your information and never give out your personal information to someone you don’t know, and shred your information for the best protection.

Here are some good ID theft tips: Google yourself
Identity theft resources
Monitor your personal information

10. The BBB rounds out its list of top ten scams with advance fee loan scams. That’s when you’re told you qualify for a large loan but you need to pay upfront fees. The BBB says they’re often over a thousand dollars. A legitimate company won’t ask you for upfront fees. They’ll ask for the fees for the service (loan origination usually) at the time of closing, when you get your money, or roll it into the loan. In advance fee loan scams, the victim wires the fee money but never gets the loan.

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