Avoiding Scams & Fraud

Avoiding Scams and Fraud

The FTC and Various Public Interest Groups Have Published the Following Scams and Fraudulent Transactions Summaries to Help Americans and to Keep Them From Becoming Victims of Scams.

Learn How to Avoid Scams and Fraud
One of the easiest ways to get information is to ask for it. Why get all messy digging around in trash cans if you can just call or email someone and have them hand over their credit card or social security number? It happens every day, even though you might think you're too smart to fall for it.

If you see any of these scams, learn how to report them.

"Your Account Needs to be Updated" Scam
Most major internet sites and financial institutions have been targeted including PayPal, eBay, Bank of America, Wells Fargo, the Internal Revenue Service (IRS), and America Online (AOL). These scams usually show up in your email inbox with a message from the "System Administrator" telling you to perform some urgent maintenance on your account. If you ever get message like this be very, very, careful.

We'll use PayPal as an example of how these scams work. Remember, these same techniques can be used for any scam.
A Fight Identity Theft visitor recently forwarded us a copy of a Pay Pal scam email. We were able to track down where the scam site was hosted and have it shut down within about 5 minutes. We also located where the stolen information was being sent from the web site and notified PayPal to make sure they shut down that site and contacted any affected customers.

This kind of scam has been around for a long time. The scammers send an email to you telling you there's a problem with your PayPal account and that you need to login to correct it. Here's what the email looks like.

Once you look it over, go on to see what the fake PayPal web site looks like:

Dear PayPal User

Today we had some trouble with one of our computer systems. While the trouble appears to be minor, we are not taking any chances. We decided to take the troubled system offline and replace it with a new system. Unfortunately this caused us to lose some member data. Please follow the link below and log into your account to make sure your information is not affected. Account balances have not been affected.

Because of the inconvenience this causes we are giving all users that repair their missing data their next two incoming transfers for free! You will pay no fees for your next two incoming transfers*.

Thank you for using PayPal!

* - If fees would normally apply, you will not pay anything for the next two incoming transfers you receive.

PayPal Security


NEVER give your password to anyone and ONLY log in at PayPal's website. If anyone asks for your password, please follow the Security Tips instructions on the PayPal website.

Nigerian Email Scam
This scam has been used for over ten years and is sent out to victims via letter, e-mail, and fax. It consists of a message stating the sender has a large sum of money, usually around 35 million, and needs help transferring it out of Nigeria, or some other place. As a reward for your help, the sender promises to pay you a few million dollars.

These emails are constantly being modified. A new one message supposedly comes from a rich Iraqi businessman trying to get 120 million dollars out of the country. Here's a sample:

"We are Christian and my father happens to be one of the few rich Christian in Iraq. One thing we ask from you, on behalf of my mother and sisters, is to please indicate your interest in helping us secure a safe place for the bulk of our fathers funds in the bank over here before the tyrant Iraqi government clamp on it.

Auction Fraud (eBay and Yahoo Auctions)
Auction fraud was the second most reported consumer fraud complaint to the FTC, totaling 51,000 auction complaints in 2002.

The fraud is simple - put up a fake ad on eBay, let someone "win" the bid and send in their money, but never send out the merchandise.

Phony Identity Theft Protection or Credit Repair Scams
The Federal Trade Commission has warned that some companies that claim to be identity theft prevention services are scam artists trying to get your drivers license number, mothers maiden name, Social Security number and credit and bank account numbers. Don't ever give out any personal information over the phone or online unless you are familiar with the business that is asking for it. If you are unsure about a firm, check it out with the Better Business Bureau.

Credit repair scams offer to erase accurate negative information from your credit file so you can qualify for a credit card, auto loan, home mortgage, or a job.

The scam: The scam artists who promote these services can't deliver. Only time, a deliberate effort, and a personal debt repayment plan will improve your credit. The companies that advertise credit repair services appeal to consumers with poor credit histories. Not only can't they provide you with a clean credit record, but they also may be encouraging you to violate federal law. If you follow their advice by lying on a loan or credit application, misrepresenting your Social Security number, or getting an Employer Identification Number from the Internal Revenue Service under false pretenses, you will be committing fraud.

"You've Won a Prize!" Scam
We all want to be winners, but if someone calls you on the telephone and offers you the chance to receive a "major" credit card, a prize, or other valuable item, but asks you for personal data - such as your Social Security number, credit card number or expiration date, or mother's maiden name -- ask them to send you a written application form.

If they won't do it, tell them you're not interested and hang up.

If they will, review the application carefully when you receive it and make sure it's going to a company or financial institution that's well-known and reputable. The Better Business Bureau can give you information about businesses that have been the subject of complaints.

"Make Millions Stuffing Envelopes!" Scam
These business opportunities make it sound easy to start a business that will bring lots of income without much work or cash outlay. The solicitations trumpet unbelievable earnings claims of $140 a day, $1,000 a day, or more, and claim that the business doesn't involve selling, meetings, or personal contact with others, or that someone else will do all the work. Many business opportunity solicitations claim to offer a way to make money in an Internet-related business. Short on details but long on promises, these messages usually offer a telephone number to call for more information. In many cases, you'll be told to leave your name and telephone number so that a salesperson can call you back with the sales pitch.

The scam: Many of these are illegal pyramid schemes masquerading as legitimate opportunities to earn money.

What Else Can You Do?
Adopt a "need to know" approach to your personal data. Your credit card company may need to know your mother's maiden name, so that it can verify your identity when you call to inquire about your account. A person who calls you and says he's from your bank, however, doesn't need to know that information if it's already on file with your bank; the only purpose of such a call is to acquire that information for that person's personal benefit. Also, the more information that you have printed on your personal bank checks -- such as your Social Security number or home telephone number -- the more personal data you are routinely handing out to people who may not need that information.

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