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Michigan Credit Union League Home » CU Community » SAS Credit Unions » Marketing » Newsletter Help » Fraud and Scams  

Additional Newsletter Topics

Lori Bahnmueller
Michigan Credit Union League - Your Money Matters

A previous column mentioned some of the tricks con artists use to rack up hundreds of dollars on your credit card. Today, I'd like to expand on the games con artists play and how to avoid them.

The clever con artist is a good actor who disarms his victim with an affable "nice guy" approach. But, behind this friendly exterior is a shrewd psychologist who can isolate potential victims and break down their resistance to his proposals.

The typical con artist is amoral, but seldom violent, and mobile with an excellent sense of timing. He sincerely believes his victims deserve their fate. And, if caught, he'll probably strike again later. Con artists are seldom rehabilitated.

Anyone can be a victim - even someone who considers himself too intelligent or sophisticated to be "conned." During the 1920s, "Yellow Kid" Weil routinely swindled bankers, saying "that's where the money is."

However, may victims share certain characteristics. Often, but not always, they are older, female and live alone. They are trusting of others, even strangers, and may need or desire supplemental income. Loneliness, willingness to help and a sense of charity are all characteristics a con artist will exploit to gain a victim's cooperation.

Since a con artist is difficult to detect by looks alone, you can often spot him by his words or expressions, including:

"Cash Only" - Why is cash necessary for a proposed transaction? Why not a check?
"Get Rich Quick" - Any scheme should be carefully investigated.
"Something for Nothing" - A retired swindler once said that any time you are promised something for nothing, you usually get nothing.
"Contests" - Make sure they aren't a "come-on" to draw you into a money-losing scheme.
"Haste" - Be wary of any pressure that you must act immediately or lose out.
"Today Only" - If something is worthwhile and available today, it's likely to be available tomorrow.
"Too Good to be True" - Such a scheme is probably neither good nor true.
"Last Chance" - If it's a chance worth taking, why is it offered on such short notice?
"Left-Over Material" - Left-over material might also be stolen or defective.
"Secret Plans" - Why are you being asked not to tell anyone?

The following is a short list of some of the most common ways a con artist steals your money.

* Free Gifts or Prizes: You may receive notification of winning a prize or gift either through the mail or over the phone. The notification tells you to call a toll-free number. Mink coats, diamond rings or watches, cameras or even savings bonds are promised if you order their product. Watch out, there is a catch to the giveaways. Prices for the products may be inflated. You may never receive your gift after you order, and if you do, the mink coat or diamond ring may be quite different than described or promised.

* Penny Stocks: The North American Securities Administration Association recently reported that this con game, where high pressure salespeople sell unlisted stocks over the telephone, is "the No. 1 threat facing typical investors today." Penny stock brokerage firms sell these risky shares, which may range from one cent to $3 for prices which are manipulated to suit their profit goals. Make sure of your investments before you buy and check out the firm that is offering the deal.

* Magazine Sales: Buying magazine subscriptions from the telephone or door-to-door salespeople, even those who seem to represent legitimate organizations, is risky business. Sometimes the costs for the subscription actually exceed what you might pay at the news stands. On other occasions, the presenter pretends to be taking a survey about reading habits and offers free or prepaid subscriptions or even a special deal for sweepstake customers. These come-ons are often gimmicks to sign you up for multiple subscriptions you do not want. Check the seller's reputation by asking for references and office phone numbers that service the subscriptions before you buy.

* Work-at-Home Schemes: You may have seen the classified ad for a "guaranteed salary" for individuals who want to work at home by stuffing envelopes, assembling craft items or reading or editing book manuscripts. You can tell a scam by the fact that you will have to purchase a plan, system or even equipment before you begin working. Sometimes envelope stuffers are charged a $1 to $25 fee for their letters and envelopes. You should be skeptical of any claim of a guaranteed wage. It may be inflated and the work may not be available to make it profitable.

* 900 Numbers: When you dial a "900" number for information on everything from the weather to the latest baseball score, you are charged for the time you stay on the telephone line. Be careful of services that do not tell you exactly how much the call will cost for each minute and how long the call will be to obtain the information. Some "900" numbers are answered by machine and place the caller on hold until an automated message is available. You will be billed for the entire call, not just the time the message was played. You could also receive a letter in the mail stating you have just won a guaranteed prize. The letter may state the possibility of already winning $10,000 and all you have to do is call a "900" number to obtain the winning information. The letter even states the odds of winning. The call however is where the company makes the money. Each call will average $25 per person inquiring, but you're most likely only going to win a buck.

* Pigeon Drop: A person who you do not know may ask you for a favor. This person has some how come in possession of something very valuable but for certain reasons cannot cash in on the item. The person gives you the circumstances in which he has obtained the item of value and why he cannot cash in on the money. He will also tell you why he needs the money. He asks for your advice and help. He offers to share the profits if you help. Another person unknown to you and seemingly unknown to the person who has the valuable item comes into the conversation. The third person says he overheard the conversation and has an idea of how to help and would also like to share in the profit. The third person says he knows where he can sell, transfer or otherwise obtain cash for the item. He offers "good faith money" to the person with the item for the period of time he has the item until it is converted to cash and split up. The third person asks you to put up the same amount of "good faith money" to the first person just as he has so that the owner of the item will not feel as if he might loose the item's value. If you give them the money, you've lost it. Of course the first unknown person knows the third unknown person. They are wonderful actors and very convincing. This scam has been going on for decades and will continue as long as people try to get rich quick or obtain something they don't deserve.

* Bank Examiner: You receive a call at home and the caller identifies himself as a bank security officer. He tells you a story of theft occurring at the branch you commonly use. The security officer says there is a teller stealing customers deposits and he would like your help to gain proof of the thefts. The bank security officer asks if you could withdraw $1,000 in cash from your account. He says the teller is suspected of making the bank records look like you withdrew $2,000 and is suspected of pocketing the difference, ultimately stealing from the customer. The security officer says he will be with you the whole way and right after you make the withdraw he will verify the transaction as being a $1,000 withdraw. He will take the money and the receipt as evidence and audit the transaction made by the teller. The bank security officer guarantees the money you withdraw will be credited to your account and the thief will be caught. If you make the cash withdrawal and meet the bank security officer at the designated spot, you just lost your money.

In any situation, you should always follow some simple rules. Always investigate before investing money or signing a contract, be suspicious about extraordinary promises of high or unusual monetary returns, don't discuss your personal finances or give cash to strangers and report that you've been victimized or swindled and testify in court to help stop this kind of crime.

Don't be embarrassed if you do fall for a scam. Some con artists could win an Academy Award for their acting. They count on the fact that their embarrassed victims won't tell anyone they've been had, so they turn around and do it again and again.

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