Scam

The Better Business Bureau of Chicago and Northern Illinois has released its top 10 scam list for 2007. Even though this is a regional list, it fits nicely with what we're seeing here at Fight Identity Theft:

1. Check Scams

Would-be victims receive a check in the mail, allegedly for winning a sweepstakes, lottery or promotion. The check supposedly covers taxes or other fees (see the text of the letter below). Here's how the scam works:

• You deposit the check in your bank.
• You then pay the fees described in the letter via a money transfer.
• Unfortunately there isn't any prize money and your bank eventually will tell you that the check you deposited is a forgery.
• You now owe the bank the money ($2,998.65 in the example below).
• You try to track down the money you sent out via money transfer, which is just about impossible.
• The scammers are now richer and you are poorer.

Here's a sample of a check one of our readers received in the mail. The scammers will often place a reputable company on the forged check:

2. Advance Fee Lenders

These frequently will contact people by phone after they've filled out an online loan application or have found an advertisement in a local newspaper.

This is a similar scam to the check scam described above.

3. Online Employment Offers

Offers that look for "shipping" or "billing managers," "payment processors" or anything with a financial sounding name very frequently turn out to be fraudulent listings that are, in actuality, looking for victims to commit money laundering.

Other bogus online employment offers request money for travel, work visas, etc. Some scammers don't ask for money, but instead ask for your personal info (name, DOB, SSN, address, mothers maiden name) in order to steal your identity or sell your info to someone that will.

Be extremely careful when dealing with online employment. Don't send money to anyone. Use a company's main number and then ask for your contact within the company vs. just dialing direct to the number you've been given in order to verify your contact really works at the company you're interested in.

4. Lottery/Sweepstakes Notification Letters

Epidemic in proportion, these are very much like the fake check scams.

5. Overpayment Scams

These usually are found in forms of online ads and typically in places such as Craigslist or other classified forums on the Internet.

Same kind of scam as #1 with a slight twist.

A check overpayment scam begins when a scam artist replies to the classified ad or auction posting and offers to purchase the item for sale with a check, then comes up with a reason for writing the check for more than the purchase price for the item. The scammer asks the consumer to wire back the difference after the check is deposited. Later, the scammer’s check bounces, leaving the consumer liable for the entire amount.

6. Mortgage foreclosure rescue scams

Scammers contact residents and offer them a desperate plan that is affordable and supposedly allows them to keep the home. Here's how it works:

The scammers will offer to lower your monthly mortgage payment while also promising that in a short time you can own your home free and clear of any debt. The con artist claims to offer or arrange for a new loan but instead tricks the homeowner into selling the home to the con artist or a third party and agreeing to either lease the home back or purchase it back on a land contract.  The con artist or third party will pay off the existing mortgage or take out a loan. If the scammed homeowner lived in the home for a number of years, he or she likely built up and is surrendering significant equity. Equity is the market value of the home minus the value of all mortgages and other liens on the home. The con artist now owns the home and has stripped or taken the equity out of the scammed consumer's home.

Consumerlaw.org has a great pdf which covers this fraud in detail - http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf

7. Marketing/Investment Scams

People are solicited by mail or e-mail and told they can make thousands of dollars working from home by buying a special kit, book or tape collection.

8. Inheritance Scam

An e-mail or letter is sent to the victim from someone claiming to be related to them, or from somebody that claims to know that the victim's distant relative is either very sick or has died and left inheritance money.

9. Phishing Scams

Generally, e-mails are sent from what looks like a legitimate bank or financial institution, asking for confirmation of account numbers and personal information.

- See some examples of a typical phishing email - Paypal phishing scam.

10. Nigerian Scam

E-mails or letters are sent from someone claiming to be an official or agent from a foreign country, informing the recipient he or she is seeking a foreign company or individual into whose account they can deposit funds left over from government funds, a business bank transaction or a confiscated family inheritance.

- See some examples of a typical Nigerian Email Scam.

Recently, a new phishing e-mail has been circulating. The e-mail is the IRS asking for donations to help the victims of the California wildfires. The e-mail is a scam. The IRS is not and never will ask for donations, let alone send out an e-mail asking for financial and personal information.

The e-mail seems real enough. It provides links to an IRS website. The website asks for personal and financial information in order to obtain the donation. It seems like a good thing to do. However, do not enter any personal or financial information, the website is not the real IRS website. The information that is asked for is what the scammers use to steal identities, open new lines of credit and ruin peoples’ credit and lives. If that weren't enough, the links and the e-mail are also thought to contain “malware and other malicious software.”

To protect yourself and help stop the phishing scam the IRS

“urged those who received the scam e-mail to help the IRS shut down the operation by forwarding it to phishing@irs.gov, using instructions found in "how to protect yourself from suspicious e-mails or phishing schemes" on the genuine IRS Web site, http://www.irs.gov.”

On a happier note, the IRS is doing their part to help the wildfire victims. They are extending payment and tax return filing deadlines for victims.

“As California taxpayers start the recovery process, the last thing they should worry about is meeting a tax deadline,” said IRS Acting Commissioner Linda Stiff. “The IRS offers many resources for disaster victims online at IRS.gov, over the phone and in person.”

If you would like to donate to the victims there are several ways in which you can. The LA Times wrote an article with several suggestions of how to help the wildfire victims.

Read the AP's article for all the details of the e-mail scam.

Have you seen ads like this on the internet and wondered if they're for real?

Well, they're for real, but I don't advise signing up for this kind of deal. Here's why...

When you see any "free" offer, you should be very careful. Very few things are really free. You should ask yourself these kinds of questions:

Question:

An ipod costs $69 to $399 dollars. How are they paying for it if they're giving it to me for free?

Answer: You have to give them something of value.

Question:

What do I have that's valuable to them?

Answer: A lot.

• Your personal information - you have to give them your name, email, home address, gender, date of birth, and phone number. They use this information to send offers to your email account, to your home via direct mail, and to your phone with telemarketers.
• Your credit card - you also are required to sign up for one of the offers they present to you. All of these offers will involve giving them your credit card number. The offers are things like a Blockbuster online rental membership, DVD and music clubs, credit card offers, ringtones & horoscopes. They are paid a bounty from these companies when you sign up. Companies will pay anywhere from $10 - $70 per sign up.
• Your friends and family - in order to qualify for the free item you have to get 5 friends or family members to sign up AND request one of their offers.

See how the money is now adding up? The company will receive possibly $40 per sign up which equals $240 (6 users x $40).

Were you worried they weren't going to make any money on this deal? Don't worry, they will still make more.

In fact, Eliot Spitzer, the fireball New York Attorney General has recently filed suit against Gratis Internet, the parent company of sites Freeipods.com, FreeCDs.com, FreeDVDs.com, and FreeVideoGames.com (just an aside - "gratis" means "free" in Spanish).

The suit alleges that Gratis:

"... sold personal information obtained from millions of consumers under a strict promise of confidentiality.

From 2000 through 2004 Gratis made numerous explicit promises to the users of its web sites about protecting personal information. Among the promises the company made were:

'We will never give out, sell or lend your name or information to anyone';

'We will never lend, sell or give out for any reason your email address or personal information';

'We at [Gratis web site] respect your privacy and do not sell, rent or loan any personally identifiable information regarding our customers to any third party'; and

'Please note that we do not provide your E-mail address to our business partners.'

Even on its sign-up pages, Gratis promised consumers that it 'does not . . . sell/rent emails.'

However, the Attorney General’s investigation confirmed that Gratis’s owners, Peter Martin and Robert Jewell, repeatedly violated these promises during 2004 and 2005 by selling access to lists of millions of Gratis’s customers to three independent email marketers. The marketers then sent hundreds of millions of email solicitations to those users, on behalf of their own customers. In each of these deals, Gratis wrongfully shared between one and seven million confidential user records.

This is believed to be the largest deliberate breach of a privacy policy ever discovered by U.S. law enforcement.

Need another reason to avoid offers like these?

Here's a good one - if you jump through all their hoops and qualify for your free ipod, you'll have to send them an IRS W-9 form, since the iPod's value will have to be counted as revenue.

What information is provided on a W9? Oh, only your name, address, and Social Security Number. Is that the kind of information you want in the hands of these people? I don't think so.
Save your pennies and buy your own stinking iPod. That's what I recommend.

It's our favorite time of year here in the U.S. - TAX TIME!

Along with tax season comes the predictable onslaught of IRS scam emails. No, these don't come from the IRS. They are from the same old bad guys trying to separate you from your money.

Here's an email that just arrived today:

They're only offering a refund of $63.80??? Those crooks!

I would have thought a higher amount, like $630.80 would better peak our interest in recovering the money. Oh well, I'm sure they do extensive testing to determine the cash amount that draws the most clicks...

Once you click the link you'll see a beautiful reproduction of the IRS site along with a form asking for your:

• SSN
• Credit card number
• Credit card expiration date
• Credit card CVV security code from the back of the card
• Credit card ATM PIN

This looks like a clear credit card fraud attempt. With this information they can purchase items over the internet or withdraw cash from your account.

What should you do if you receive an email like this?

The IRS, unfortunately, doesn't currently have an easy way to report these emails. The best you can do right now is call 800-366-4484 to report it, but the number was busy each time I tried to call. Not good.

The IRS has placed this kind of phishing scam in their "Dirty Dozen" tax scams for 2006. Here's what they had to say:

Phishing. Phishing is a technique used by identity thieves to acquire personal financial data in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards or apply for new loans in their names. These Internet-based criminals pose as representatives of a financial institution and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information.

Sometimes scammers pose as the IRS itself. In recent months, some taxpayers have received e-mails that appear to come from the IRS. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number.

In a variation of this scheme, criminals have used e-mail to announce to unsuspecting taxpayers they are “under audit” and could make things right by divulging selected private financial information. Taxpayers should take note:

The IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call 1-800-829-1040 to confirm it."

Since the IRS is so lame in trying to shut down sites, I thought I'd do something.

It appears the servers are based in Korea and I've emailed the ISPs that manage the IP involved, but I'm not holding my breath.

The last word... enjoy tax season, just don't try to claim an early refund from scammers.