Related topics: debt reduction, debt, Liz Weston, bills, foreclosure
There's an art to conning people. That's why they're called scam "artists."
The successful ones skate right up to the edge of the truth, capitalizing on people's awareness of certain programs, trends or developments -- and people's limited understanding when it comes to the details.
Toss in a recession that changed many of the rules and made more people financially desperate, and scam artists are having a field day.
Here's one example: Most people know President Barack Obama pushed an economic-stimulus package worth hundreds of billions through Congress last year. So the con artists will tell you some of it could be yours, if you just pay an upfront fee to them to process your "application" for a "stimulus grant."
In normal times, you might be suspicious of the idea that the government would just hand you cash. But didn't you get a rebate check from the Internal Revenue Service a couple of years ago? And didn't Wall Street get a huge bailout? Maybe there's something to this . . .
There's not, of course. But by the time you realize it, the $250 you've paid to get your "grant" will be money down a black hole.
Liz Weston
Confusion about the stimulus isn't the only factor helping the bad guys. People's debt problems create other opportunities for the recession vultures to prey on the vulnerable.
Two months ago, in "The 'Obama debt relief' scam," I wrote about debt settlement companies pretending a new law had been passed to help people get rid of credit card bills.
And Gena Orme of San Jose, Calif., got a call from someone trying to sell her a service to reduce the interest rates on her credit cards, "and they insisted I had to enroll today."
The cost? $1,200, charged to one of her cards, but the salesperson told her "I wouldn't really be paying anything because I would save over $2,000 in interest."
More likely, Orme just would have been out $1,200. Credit card companies are much more willing to work with struggling borrowers than in the past, and they do have hardship programs to temporarily reduce interest rates to help you pay off your debt, and you don't have to pay an upfront fee to qualify. If your issuer won't offer you a workout program directly, you typically can go through a legitimate credit counselor's debt management plan -- but again, there wouldn't be any big upfront or continuing fees.
The big tip-off to a scam is the urgency to "act now!" If the deal is legitimate, you should be given time to research it. Plus any outfit that "guarantees" results or says it can reduce your debt without hurting your credit should raise red flags in your mind.
Unemployed -- and now scammed
Plenty of red flags shot up for Dena Briggs Amos of Bedford, Va., when she was solicited, twice, by someone offering her a job as a personal assistant.
"He wants to send me a check to cash at my bank and purchase fixtures for his new office, and take my salary out in cash, no taxes or (Social Security) being paid out of it," Amos said.
This isn't how a legitimate business would operate, of course. For one thing, a personal assistant typically would be a W-2 employee, not a contractor, and the employer would be required to pay employment taxes for Social Security and Medicare.
A con artist could compound the scam by asking Amos to wire back to him any excess money -- since the check she received would almost certainly be a fake. (Fake-check schemes were the most-reported scams on the National Consumers League's top 10 list last year.)
"He has his 'fixtures,' and I am the one figuring out how to pay back the bank for the bad check," said Amos, who didn't actually fall for the scam.
Employment scams often find their marks in a troubled economy, unfortunately. Offers of jobs can be used to trick people out of private information, such as their Social Security and bank account numbers, that can be used for identity theft.
After applying for jobs on Craigslist, Melanie Leary of Fort Worth, Texas, was asked by a "reputable-seeming firm" to submit to a credit check. She entered her Social Security number and other details at a website, and then never heard another word.
"The whole situation was very suspicious," Leary said. "If I hadn't felt so desperate at that time I would have been much more critical."
