Prevention Works

Beware of the Black Dollar

In recent months, new versions of the infamous Nigerian money and banking scams have come to the attention of the national news media. An unfortunate incident in a New York City condo last week provides an example of the latest variation: the Black Money Scam.

This is how the scam plays out.

First, a scammer will contact individuals via email with their story of their plight—which is always dire—in their country and ask them to provide an advance for fees and taxes to import a case of money into the United States in exchange for a large percentage of the money. They tell the intended victims that the money has been dyed black so that it can be imported and that they can purchase a cleaning solution for the money once the money is in the country. Many targets are quite naturally suspicious of this story, but some are curious enough to pay the advance and ask to see the money. The scammer then shows the target the case full of currency-sized paper (which, in reality, is usually black construction paper) and will use sleight of hand with a “cleaning solution” to produce a clean bill.

However, the scammer doesn’t bring enough solution to clean more than one bill and counts on victims to be gullible enough—and some are—to assume that the rest of the case is full of cash that has been dyed black. The scammer tells his target that he cannot pay the target his share of the money because taxes have not been paid, but once the black money is washed it will be used to pay the taxes. Next the scammer will inform the target that he needs more money to pay for the cleaning solution. In some cases the scammer will even set up a website for victims to purchase the cleaning solution, providing yet another opportunity to take advantage of victims who believe that the existence of a website adds credibility to the scammer’s story. The scammer will continue to give the victim the runaround, asking for more money for fees, taxes, and other charges. This will continue until the victim realizes that he or she is being scammed or refuses to give any more money.

These crimes often go unreported to law enforcement or are reported too late for anything to be done about them. By the time the authorities find out, the scammer is long gone with the victim’s money. If you receive an email from someone offering a percentage of money if you help them export it, it’s likely to be a scam. Don’t respond and report the email address to your Internet Service Provider and law enforcement. If the email address is caught early, it’s possible that action can be taken. Be aware of these scams and don’t fall victim to these heartless people. And remember: If it sounds too good to be true, it probably is.

FBI Agent Infiltrates Cybercriminals’ Hidden World

Infoworld has posted a fascinating account of FBI Agent Keith Mularski's successful infiltration of the professional identity theft and fraud scene. Over the three-plus years he spent posing as a scammer on the international fraud website DarkMarket, Mularski slowly built trust with other members and rose through the ranks of the criminals running the site. He steadily gained access to more information about the site's users and was eventually made an administrator of the site itself. Even after rumors began to spread that Mularski was actually a law enforcement agent, many of the cybercriminals still trusted him because of their long history dealing with him. After all, every other site administrator had previously been accused of being a law enforcement agent as well.

Though Mularski never sent spam or committed any acts of fraud while maintaining his dual identity, he was familiar with many of the techniques used by cybercriminals from his work on an antispam operation. He also spent long hours day and night maintaining the site and chatting with other members. It took a toll on his personal life, but gave him credibility he needed to gain the trust of other DarkMarket members.

Once he was given administrative rights on DarkMarket, Mularski could track scammers accessing the site and even read what they were saying to each other. Due to information provided by Mularski, the other administrators of DarkMarket were arrested in their home countries until he was the sole remaining administrator of the site. Then, working with other law enforcement agencies in Europe, he led an investigation that netted 59 arrests and prevented $70 million in bank fraud.

While this story highlights the great work of Agent Mularski and the Cyber Initiative and Resource Fusion Unit, run out of the National Cyber-Forensics & Training Alliance it also reveals the sophistication of many online scammers, and the wealth of resources available to them online. Law enforcement would be wise to follow this example in rooting out forums where potential criminals learn how to break the law and cooperate with each other. Doing so will prevent many people from ever starting down the path of crime. NCPC provides information that helps protect people from becoming victims of fraud and identity theft. What else can law enforcement agencies and crime prevention organizations do to prevent people from becoming victims of cybercriminals?

Don’t listen to them; your account is not being cancelled

Crooks never take a break, especially not over the holidays when their victims are most vulnerable to their tricks and scams. The holidays can be a stressful time with shopping, family and work gatherings, and other holiday events, especially for people already leading stressful lives. It's only made worse when they become an unsuspecting victim of a new phishing scam when they pick up the phone and are greeted by a recording or person claiming to be from their bank. This recording says that their account information has been compromised and asks them to punch in their account and PIN numbers. Unfortunately, many people, accustomed to providing their information by keypad, enter all their personal information without a thought, assuming that it is truly their bank calling. Unfortunately, those people who have done that over the last two months have just been victimized by an identity thief or phone scammer.

If you receive a call from a local bank that begins with a recording or a person saying that they are calling from your bank and need your account or PIN number or your account will be cancelled, immediately hang up the phone! Then, if you noted it, write down the number that called you and contact your local police non-emergency number to report it. Also, if you have received one of these calls, you need to contact your local bank to find out whether there is a problem with your account. Banks such as the Mid Penn Bank in Pennsylvania have even sent letters to their customers reminding them that a bank will never ask for their account or PIN numbers by phone. Most banks ask for your address, last four digits of your Social Security number, or a prearranged question to confirm that the person they are speaking with is legitimately the owner of the account. These scams have also recently been attached to unsolicited emails, so just as you would with a phone call, don't respond or call the numbers listed. Instead, contact your bank directly.

Millersburg, PA, Police Officer Jeremy Ulsh said that this scam "appears to be a random phishing expedition with the intent of gaining confidential customer information." Vice President Jay Miller of the Jim Thorpe National Bank in the Allentown, PA, area said, "Don't ever, no matter what they say . . . give out account information over the phone."

Beware of Housing Predators

A recent article in the New York Times reveals that many predatory housing lenders have run out of potential victims and have re-organized themselves as "loan rescue" firms. They try to insert themselves into the relationship between a borrower and his bank. With unemployment on the rise and home prices still declining in many areas, the predators have found a new market for scams.

Non-profit and government resources for troubled homeowners are being drowned out by the aggressive sales tactics of predatory firms, who relentlessly stalk those listed in the public record as being close to foreclosure. In some cases, the loan rescue firms offer the same services a government or non-profit agency might provide but at a much higher price. In other cases they might simply take the money and run.

In one common scam, predatory firms offer rescue loans to struggling borrowers "but homebuyers are neither rescued nor do they actually receive loans," according to Dr. Mark Dotzour, Chief Economist for the Real Estate Center at Texas A&M University. Instead, "the predatory lender offers a 'loan to get caught up' on the delinquent mortgage payments. In exchange for the rescue, the homeowner signs over the title to the predator, who promises that the homebuyer may remain in the home while paying rent. The predator then sells the house to someone else, and the original homeowner gets an eviction notice."

If you know someone who may need help with their mortgage, tell them to contact a counselor approved by the U.S. Department of Housing and Urban Development.

Want to Save a Buck? Look Out for Travel Scams, Part 2

Last week, I blogged about three things I do to protect myself from travel-related scams. Mark Kahler at About.com has put together an excellent list of the Top 10 Signs of a Possible Travel Scam. They follow.

1. When advance payment is required without a written contract. Get the offer in writing and read it over carefully before you hand over any money.
2. When transactions are required via courier service. Why can't they use U.S. Mail? Are they trying to get around mail fraud statutes?
3. When transactions can only be carried out by telephone. Though many reputable businesses don't have brick-and-mortar storefronts anymore, find out why they will only book by phone and not electronically or in person. Then get a written contract before paying.
4. When the offer is for a "limited time only" and must be booked immediately. Sure, some offers expire by a certain date. But when my departure date is more than 60 days in the future—the time limit for credit card disputes at many banks—and I need to book "NOW!" to get a big price cut, I'm suspicious.
5. When the travel provider and the vendor have different names. Why wouldn't they be from the same company? One could be working for the other just to make the sale.
6. When the names of such vendors as hotels and airlines are not disclosed in writing. If I'm not booking through a reputable online auction house like Priceline, I want to know whom I'm dealing with!
7. When the price offered is far below the market value. There are deals out there, but I would proceed with caution.
8. When you receive offers to certify you as a "travel agent" to take advantage of free trips and other perks. These perks are so rare and hard to come by for established travel agents, how could I just buy my way in for a small fee? Total scam!
9. When you suspect there might be "split pricing." Make sure the rate isn't for one-way travel or based on double occupancy. Look out for hidden add-ons!
10. When the ad uses words like "free" and "complimentary" far too often. If it really was such a great deal, would they have to hit you over the head with it?

And most importantly, I trust my instinct. Whether it's a deal that looks too good to be true or a hotel representative who seems a little shifty, I'll walk away without worrying about seeming rude or culturally insensitive. I worked hard for my vacation money and I'd rather walk away from a deal that doesn't seem right than ruin my holiday!

Want to Save a Buck? Look Out for Travel Scams, Part 1

When the economy is in trouble, scams increase. And these days, with gas prices so high and the cost of plane tickets skyrocketing, most people are looking for the best possible bargains when they travel for work or play.

According to the National Fraud Information Center, the average loss to fraud in 2004 was $803 per incident, and travel fraud was second in frequency of complaints. So what three things do I do to keep my money safe and avoid ruining my vacation?

I read the fine print. This advice works for everything, from "funky" airfare pricing (it looks like a really great deal until you realize it's the price for one-way travel) to misleading offers to check out a timeshare. MSNBC.com reported on one individual who fell for such a trick during a vacation in Mexico. He thought he was extending his stay by agreeing to try out a timeshare. But when he returned, he found that he actually bought that timeshare—his credit card had been charged $37,000! I also won't sign any contract or form unless it is in a language I read fluently.

I do my research. Is the business a member of a professional group such as the American Society of Travel Agents, the Association of Retail Travel Agents, or the Cruise Lines International Association? Does it belong to its local Chamber of Commerce? These memberships usually indicate that a company is serious about doing business with you. I also find out how long the company has been around and if complaints have been lodged against it with the Better Business Bureau.

I'm skeptical of deals that are "too good to be true." Sure, every once in a blue moon you'll find a legitimate price that is far below the market value. But those are rare. More often than not that low, low price has hidden add-ons.

Tomorrow, I'll blog about ten red flags that warn me when a "deal" is more likely to be a "scam."

Hurricane Relief Scams That Could Leave You Devastated

It's hurricane season and it seems that every year a scourge of relief scams ride in with the storm surge. Hurricanes Katrina, Rita, and Ivan, and even the tsunamis of Asia in 2005 proved that there will always be some criminals who seek to profit from disaster by scamming both those hit by the hurricane and the kind-hearted donors who want to help.

The Federal Bureau of Investigation reported seeing an increase in websites soliciting for charitable donations to aid hurricane survivors. According to Computerworld, nearly 100 domain names related to Hurricane Gustav were registered well before the hurricane hit our shores. Some of those domains were probably intended for use as bogus charity and relief scams.

Many, if not all, of the unsolicited emails in your inbox asking for donations are scams. Some of them look pretty authentic or can move you to tears, but you can protect yourself from all of them by following these simple tips.

• Don't respond to spam emails or click on any links or pictures in spam emails.
• Be skeptical of individuals soliciting donations via email, no matter how official the email might seem.
• Don't provide your personal information to someone soliciting contributions.
• Make donations directly to recognized organizations, not through a third party. Type in the site yourself—rather than using a link in an email—and make sure you're using a secure connection (look for "https" in the address bar).

Con artists don't only target donors though. Some will stoop so low as to scam people who have been affected by the disaster, too. Scammers have claimed to represent government agencies, banks, and credit card companies. Some scammers pose as contractors offering to do immediate repair work to damaged homes—and then never show up to do the work. Even some legitimate contractors engage in price gouging, since there is so much repair work to be done and so few contractors available. Other con artists will email disaster victims promising them big winnings in a sweepstakes or lotteries if they send in payments for taxes or other fees or their bank account number. The worst con? Fee-based spam messages that offer to locate loved ones who are lost in the wake of a hurricane or other disaster. Disaster victims need to be vigilant in a time that can stressful and difficult.

If you receive a scam email, file a complaint with the Internet Crime Complaint Center. Scambusters.org has put together a list of some of the most common hurricane scams. Have you come across any others?

Mortgage Scams: How To Avoid Losing the House From Under Your Feet, Part II

Mortgage scams are on the rise and in my last blog I listed some of the more common ones. How can you protect yourself and your home from shady mortgage brokers, sellers, and realtors? I put together a list of tips from Bankrate.com, FBI.gov, and the advice of a few altruistic banking friends who wished to remain anonymous for contractual reasons.

• If it sounds too good to be true, it probably is. Many ads that promised "Credit No Problem" or "No Down Payment," turned out to be scams.
• Get referrals for real estate, mortgage lenders, and brokers before buying or selling your home, and check licenses with state boards. Avoid financing with a home seller unless you absolutely have to.
• Do your own research on what other homes in the neighborhood have sold for, and look into recent tax assessments of neighborhood homes.
• Don’t let anyone—realtor, mortgage broker, lender—talk you into making a false statement on your loan application.
• Be sure you read your contracts thoroughly and understand what you are signing before you do so. If possible, consider hiring a closing attorney to review your loan before signing. Ask the lender questions.
  1. Bring the original Truth in Lending statement you were sent by the lender at the beginning of your application process to the closing and compare that with the actual settlement statement. If there are material differences, question them.
  2. What is my interest rate? Is it fixed for the life of my loan? If not, when does it change? How much can it the rate increase when it does change and what will that do to my payment? How often does it adjust?
  3. What is the amortization on my loan?
• Never sign a blank document or a document that contains blank lines.
• Know your rights and responsibilities and the rights and responsibilities of your lender. There are laws in place to protect people, like the Right of Rescission, which gives you three days after signing a contract to retract some types of home loans without losing any money.
• Ask to review your documentation ahead of time. Don’t be afraid to seek expert advice and ask questions.
• U.S. Department of Housing and Urban Development provides counseling for low-income homeowners.

If you’re already a homeowner and you’re having trouble making mortgage payments, contact your lender before the situation gets too dire. There are plenty of scams out there that claim to eliminate mortgage debt or help you out if you’re facing foreclosure—don’t fall for them! The lenders don’t want your house, so most will work with you to help you keep it.

Mortgage Scams: How To Avoid Losing the House From Under Your Feet, Part I

My friends and I were discussing the rise in mortgage scams and frauds across the country. Is the poor economy creating opportunities for more con artists or are people just more desperate for a deal? Whatever the cause, there are certainly more cases of mortgage fraud on the books this year than there have been in the past.

The Federal Bureau of Investigation reports that 462 cases of mortgage fraud were opened in FY2007, compared with 295 in FY2003. The states with significant mortgage fraud problems in 2008 are Florida, Nevada, Michigan, California, Utah, Georgia, Virginia, Illinois, New York, and Minnesota, according to the Mortgage Asset Research Institute. And in many cases, homeowners will end up on the street.

In New Jersey, unscrupulous brokers and lenders provided misleading and inflated appraisals of homes to buyers. In Detroit, MI, a loan originator was indicted in a scheme to defraud mortgage companies, recruiting buyers to purchase a house at an inflated rate and submitting false loan applications.

A former loan broker from Mississippi was indicted in connection with a mortgage loan fraud scheme for preparing false and fictitious documents to ensure lenders would make mortgage loans to prospective borrowers, garnering him a fee. He is alleged to have attained fraudulent mortgage loans of more than $1 million.

According to Bankrate.com, first mortgages have the greatest risk of scams. Some scams rely on “flipping.” A seller buys a low-value property, does a few cosmetic repairs, and then tries to convince a buyer to pay much more than its actual worth.

Other schemes involve sellers who try to trick buyers into deals like “lease with an option to buy” and “contract for a deed” plans. At one time these were predominately legal deals to help people afford to buy a home, but today most of them are scams. In the lease-to-buy scam, the buyer makes a small down payment with the agreement that every month’s “lease” payment will go toward the required upfront charge. The agreement says that the seller only has to give the buyer an option to purchase at the end of the first year, and then if the buyer can’t come up with the entire amount the seller keeps the down payment as well.

So what can you do to protect yourself and your home from con artists? I’ve put together a list of tips in my next blog that will help you do just that.

Digital TV Scams: Coming to a Home Near You

On February 17, 2009, all major television stations are required by federal mandate to drop any remaining analog programming and completely switch over to digital broadcasting. Consumers must use a digital television, cable or satellite provider, or a digital to analog converter box in order to view digital broadcasts. This switchover will leave those who use ‘rabbit ears’ or rooftop antennas with blank screens. Fortunately, the federal government is distributing up to two free coupons, valued at $40 each, to every household that applies via the Internet, fax, mail, or phone (while supplies last). In this technology and entertainment-obsessed country, most people who rely solely on over-the-air analog television broadcasts are those who cannot afford or may not understand newer electronics. This leaves already vulnerable groups, low-income residents, and some senior citizens even more vulnerable. Seniors and low-income people are the least likely to have access to the Internet, and therefore have limited or no access to the essential information on the government’s website, www.dtv2009.gov. Without sufficient resources for accurate information on the digital switchover, many seniors and low-income individuals are highly susceptible to digital TV (DTV) scams.

Although applying online for government coupons may be easy for those who use the Internet every day, it can be a daunting task for those who are unfamiliar with computers. The government website, www.dtv2009.gov or its variation, www.dtv.gov, might seem like obvious places to look for information. But what about www.dtv.com or www.dtv.org? These websites seem as if they would lead you to useful information, but they actually host advertisements for satellite and digital service providers. Consumers should be guided to .gov websites instead.

Fearful of Internet scams, many individuals are attracted to alternative options. In recent weeks, the Better Business Bureau (BBB) has received complaints about Universal TechTronics, a company that has been running newspaper ads across the country featuring “free” digital to analog converter boxes without government coupons. However, with shipping and handling and a hidden $59 warranty fee, TechTronic converter boxes cost the consumer nearly five times as much as those acquired from approved retailers with the government coupon. According to the BBB, these advertisements “prey on consumers’ lack of knowledge” about the digital transition.

Rather than deal with the hassle of acquiring a converter box, many consumers are upgrading to new digital televisions. However, purchasing a new TV can also be dangerous. In recent weeks, the Metropolitan Police Department of Washington, DC, has heard several complaints involving television-related scams. Typically, someone will offer the victim a new digital television at a low price. Soon after, the scammer delivers a box weighted with something that resembles a television, collects a cash payment, and quickly leaves before the victim can discover the truth—there is no working TV in the box.

Although you may not be personally affected by the DTV transition, be on the lookout for friends, neighbors, or relatives who could be susceptible to DTV scams.