This year’s Top Ten Scams looks at not only those scams that affected us in 2010, but what to watch out for in 2011. One of the biggest trends is in scam artists taking advantage of the public’s eagerness to embrace new technologies and services, like social media and online commerce, which allows them to cast a net over countless victims from a safe distance.
“Many people view their online personas as separate from their real-life ones, and don’t take the same precautions to protect their identities, their computers, or their money” says Lynda Pasacreta, BBB President and CEO. “They differentiate their online experience from their non-virtual environment, and as a result are particularly vulnerable to scams. Scam artists are savvy to consumers who click first and ask questions later.”
While some scammers have gone online to search for victims, many others are relying on some tried-and-true low tech methods to take advantage of vulnerable people, like senior citizens and the unemployed.
The following Top Ten Scams list, themed “How to Spot Them and How to Stop Them”, is developed jointly by BBB, Consumer Protection BC, and Competition Bureau of Canada. In no specific order, here are the Top Ten Scams to be on the lookout for in 2011:
1. Door-to-Door Scams
Every new season seems to attract a new door-to-door scammer offering unbelievable deals: roofing contractors in the spring, paving contractors in the summer, and heating contractors in the fall. These fraudulent contractors use high pressure sales tactics to frighten people into expensive yet substandard—and often unnecessary—work, with no way to contact them when the product fails.
QUICK TIP: Don’t give in to high pressure sales tactics. Take the time to do your due diligence, getting the name and location of the company and ensuring all details and verbal promises are included in a contract. If you did sign a contract and would like change your mind, BC law states that if it was a door-to-door sales contract then you have 10 days to cancel by advising the company. Suspicious door-to-door sales should be reported to Consumer Protection BC at 1 (888) 564-9963 or www.consumerprotectionbc.ca
2. Not-so-Free Trial Offers
Online ads may tempt you to try out a diet product, acne cream, or teeth whitener, but be careful about signing up for so-called ‘free’ trial offers. Many websites that offer a free trial for products do not disclose the billing terms and conditions on their website. Before giving the company any credit or debit card information, review the website fully and be aware that free trials may result in repeated billing.
QUICK TIP: Consumers considering trial offers are urged to determine whether they are enrolling in a membership, subscription, or service contract that allows the company to charge fees to credit cards. Check with BBB to find a company reliability report at bbb.org.
3. Anti-Social Network
Social networks like Facebook and Twitter are becoming more and more popular. Users are often subject to targeted advertising and direct messages, and scams of all colours use social networks to operate. Fraudulent work-at-home job offers are sent through Tweets and Facebook messages, deceptive “free” trials are advertised, and “clickjacking” on Facebook convinces users to post malicious links on their status updates.
QUICK TIP: Your computer should always have the most recent updates installed for spam filters, anti-virus and anti-spyware software, and a secure firewall. Use the most up-to-date versions of your web browser to offer further protection. Be wary of messages from friends and especially strangers that direct you to another website via a hyperlink. To learn more about how to protect yourself from false or misleading advertising, contact the Competition Bureau at competitionbureau.gc.ca or 1 (800) 642-3844.
4. Advance Fee Loans
Consumers have reported losing substantial sums of money responding to advertisements that “guarantee” loans to people, often online. Consumers complete credit applications and are told the loan (from $5,000 to $100,000) has been approved and the promised funds will be received once a fee is paid. After payment, the loan is never received as promised.
QUICK TIP: It is illegal for a company to charge a fee in advance to obtain a loan, even if that fee is disguised as the first or last month’s payment. Watch for claims of “guaranteed” loans even if you have bad credit, no credit, or a bankruptcy, and demands that you wire or send money before you can have a loan offer confirmed in writing. Report any suspected fraudulent schemes to your local police and the Canadian Anti-Fraud Centre (CAFC) at 1 (888) 495-8501 or antifraudcentre-centreantifraude.ca
5. Phishing, Vishing, and Smishing
Identity thieves are always looking for new ways to strike, and taking advantage of new technologies is a boon for scamming unsuspecting users. “Phishing” scams send emails that look legitimate, requesting that your “account information needs to be updated.” Recipients are sent to a phony, but legitimate looking website and prompted to enter their information details. “Vishing” attacks come via telephone, usually through a recorded message that tells users to call a toll-free number. The caller is then typically asked to punch in a credit card number or other personal information. “Smishing” scams target mobile device users, sending text messages that might ask a recipient to register for a service that downloads a virus or warn that the consumer will be charged unless he cancels his supposed order by going to a website that then extracts such credit card numbers and other private data. These are all tactics to get you to reveal personal or financial information.
QUICK TIP: If you receive these messages just delete them and do not click on any links, and hang up on callers you aren’t familiar with. Never give credit information online or over the phone unless you are sure of the identity of the caller. If you are a victim of ID theft, call your financial institutions to have them cancel your cards and re-issue new ones. Contact your local police and Canada’s main credit reporting agencies: TransUnion Canada at tuc.ca (1-800-663-9980) and Equifax Canada at equifax.ca (1-800-465-7166).
6. Relative Scam
This phone scam targets grandparents who think they are aiding their grandchildren by sending money for an emergency situation, but are in fact giving thousands of dollars to con artists. The victim receives a distressed phone call from someone he believes is his grandchild, who typically explains that he has been arrested or involved in an auto accident and need the grandparent to wire money to post bail or pay for damages—usually amounting to a few thousand dollars.
QUICK TIP: Watch for the common tactics. The scam caller might say, “It’s me, your favorite grandchild” or “Grandma, do you know who this is?”, to which the grandparent will guess the name of the grandchild it sounds the most like, and then the call proceeds from there. Other scammers search Facebook profiles to find out when grandchildren and other family members are out of town before placing their well-timed phone calls. Seniors should always confirm the status of the individual by verifying the story with other family members before taking any further action like wiring money. Victims should report any suspected fraudulent schemes to the Canadian Anti-Fraud Centre (CAFC) at 1 (888) 495-8501 or antifraudcentre-centreantifraude.ca.
7. Job Scams
In tough economic times, scammers target the unemployed and others through work-at-home, online, and mystery shopper job scams. Online job-hunters are told they will be paid to work from home once payment is sent for a start-up kit that never arrives. Mystery shoppers are hired to secret shop a wire-transfer service; they’re sent a cheque, told to deposit it, keep a small percentage of the money as their wage, wire the rest, and then complete the survey on the service you encounter. The so-called business address often turns out to be fake, with the money wire-transferred to another unknown location. In the end, the cheque received is a counterfeit or bogus, which the victim finds out only days later when it’s returned by their bank and they are out the money transferred.
QUICK TIP: Be skeptical of work-at-home and mystery shopper ads in newspapers or online job listings. In most cases, these are bogus services requiring you to pay money upfront. Avoid companies that promise guaranteed jobs and that sell directories of companies that provide mystery shoppers. Check with the BBB first.
8. Business Opportunities
You may have heard about a new investment opportunity presentation in your neighbourhood. Perhaps a good friend or family member has invited you to attend a presentation. These investments appear lucrative, but often are more hype than substance. Attendees don’t know anything about the company and are desperate to hear that it is legit. The promoter convinces investors that they can be part owners of investment portfolios if they enlisted new recruits, often promising commissions.
QUICK TIP: In reality, this is most likely a pyramid scheme. The new capital brought on by new investors is keeping this imaginary investment afloat. Get the facts. If you do go to an information session, collect business cards, promotional materials, and ask questions: Who are the principals of the company? What are the average earnings for a “typical” participant? What is the start-up cost? Gather as much information as possible before agreeing to anything. To report misleading advertising and deceptive marketing practices contact the Competition Bureau at competitionbureau.gc.ca or 1 (800) 642-3844. Visit BC Securities Commission at investright.org for information on how to select an advisor and what to look out for when choosing to invest.
9. Business Directory Scams
Small business owners are often targets of scammers. Unauthorized invoices, unordered packages, and phony business directories are all common tactics used to bilk businesses out of money. Many businesses have received lookalike, or phony, invoices for advertising space in the familiar, locally distributed yellow page directories. These invoices are actually solicitations for listings in alternative business directories that differ from the well-known yellow pages. In fact, the different directory may not be that widely distributed, can be of little or no value to advertisers, or may never be published at all.
QUICK TIP: Businesses can protect themselves by alerting their accounting department or bill-payers to be on the look-out for disguised solicitations and carefully check suspicious bills from companies with which they don’t normally do business. To check the reliability of the company that is sending the solicitation, businesses should contact the BBB.
10. Overpayment Scams
Online buyers and sellers, particularly those that use websites like Craigslist and Kijiji, are potential targets for overpayment scams. A person selling merchandise is contacted by someone claiming to be interested in buying the product. The purchaser arranges to make the payment by cheque and even offers more than the value of the product, asking for the extra money to be sent back to them by cheque or wired to an account. The cheque turns out to be fraudulent, leaving the shipper out of both funds and product.
QUICK TIP: If you sell a product and the purchaser agrees to pay by cheque for more than the asking price, stop right there. The money being wired back will be lost, and the person who cashed the bogus cheque will be on the hook for the whole sum. Online buyers should watch out for deals that appear too good to be true, like items selling for below market value. Sellers of these items claim to reside out of town and will ask for shipping costs to be wired to them, when in fact the goods listed don’t even exist.