On this page we have alphabetically listed all well known scams and a short description of each. Please refer to the scams articles page for detail information on each of these scams.

What is a....

90# Scam

809 or International telephone fraud

900 Scam

Auction Fraud

Bank Examiner Scheme

Black dollar scam

Business Opportunities Scam

Cable Descrambler Kits Scam

Chain Letter Scam

Charity scam

Cheque Overpayment Fraud

Copier Service Scheme

Cramming scam

Credit Repair Scam

Credit Repair

Free Goods Scam

Fax back scams

Health and Diet Scam

Home Repair Fraud

Investment Opportunities Scam

Letter of Credit Fraud

Lottery Scam

Lottery Scams

Love scams

“Mystery Shopper” Fraud

Nigerian 419 Scam

Nigerian Letter Scam

Nigerian Scam

Odometer Rollback scam

Online Auction Fraud

Phishing Scam

Phoney Charities Scam

Phoney Inspectors Scam

Phoney fraud alerts

Phoney Workers Scam

Pigeon Drop Scam

Ponzi schemes

Prime Bank Investment Scheme

Prize Pitch Scam

Pump and Dump Scam

Puppy Scam

Pyramid Scheme

Recovery Pitch Scam

Ring tone scams

Romance scams - see love scams

Short and Distort Scam

Telemarketing Fraud - link to FBI site

Telemarketing Scams

Top 10 Scams of 2007

Top 10 Scams of 2007

Travel Scam

Vishing Scam

Work from Home Scams

Work from Home Scams

You won a prize

Auction fraud involves fraud attributable to the misrepresentation of a product advertised for sale through an Internet auction site or the non-delivery of products purchased through an Internet auction site.

Consumers are strongly cautioned against entering into Internet transactions with subjects exhibiting the following behavior:

• The seller posts the auction as if he resides in the United States, then responds to victims with a congratulatory email stating he is outside the United States for business reasons, family emergency, etc. Similarly, beware of sellers who post the auction under one name, and ask for the funds to be transferred to another individual.

• The subject requests funds to be wired directly to him/her via Western Union, MoneyGram, or bank-to-bank wire transfer. By using these services, the money is virtually unrecoverable with no recourse for the victim.

• Sellers acting as authorized dealers or factory representatives in countries where there would be no such dealers should be avoided.

• Buyers who ask for the purchase to be shipped using a certain method to avoid customs or taxes inside another country should be avoided.

• Be suspect of any credit card purchases where the address of the card holder does not match the shipping address. Always receive the card holder's authorization before shipping any products.

Black dollar scam

The scammer claims to have a large supply of dollar bills which have been treated with a black dye to disguise that it is money. If treated with chemicals, the money will be cleaned up and turned into legitimate currency. The victim is asked to pay for the chemicals to make the transformation, but the fee will be much less than the total value of the currency, so the victim thinks there is a profit to be made. The victim may be shown photos of the black money or invited to visit the scammer for a live demonstration of the cleaning process. In fact, all the so-called money is just black paper, and the cleaning demonstration relies on sleight of hand to substitute a real banknote or bill for the piece of black paper.

(Source: Scamwarners )

Business Opportunities Scam

 

Email business opportunities claim that you can make $150 a day, $1,000 a day, or more, and that the business doesn't involve selling, meetings, or personal contact with others. Many business opportunity solicitations claim to offer a way to make money in an Internet-related business. The email messages usually offer a phone number to call for more information. In many cases, you'll be asked to leave your name and phone number so that a salesperson can call you back with the sales pitch. Many of these are illegal pyramid schemes disguised as legitimate opportunities to earn money.

(Source: Florida Attorney General's Office)

Cable Descrambler Kits

 

You can buy a kit to assemble a cable descrambler that supposedly allows you to receive cable without paying any subscription fee. Once assembled, the descrambler probably won't work. Moreover, even if it worked, stealing cable service is illegal.

(Source: Florida Attorney General's Office)

You are asked to send a small amount of money - $5 to $20 - to five or more names on a list, then replace one of the names with your own and forward the revised message via bulk email. The letter may claim that the scheme is legal, that it has been reviewed by a lawyer, or it may refer to sections of the law that supposedly legitimize the scheme. Don't believe it! Chain letters, in any form, are almost always illegal, and nearly all of the people who participate in them lose their money.

(Source: Florida Attorney General's Office)

Charity scams

 
These play on the good nature of people moved by disasters and the misfortunes of others. The scammer will claim to be an orphan in need of assistance, or a pastor or churchman looking for contributions to the work of his ministry. Remarkably quickly after almost every natural disaster in recent years, there have been scammers capitalising on it and pretending to be a charity helping the victims. Examples include 9/11, the Indonesian tsunami, and Hurricane Katrina.

(Source: Scamwarners )

Cheque Overpayment Fraud

Fraudulent cheques are used in a variety of scams such as advance fee letter fraud, overpayment and prize pitch to name a few.

Overpayment scams is the type of fraud where the person receiving the cheque is actually owed money for goods sold.   The seller receives a counterfeit cashier's cheque personal cheque or corporate cheque from the “purchaser” in an amount in excess of the amount owed; is asked to deposit the cheque and wire the excess funds immediately back to the sender/purchaser or the purchaser's agent or shipper; and, the deposited cashier's cheque is subsequently returned as counterfeit and charged back to the seller's account.

Anyone selling goods should be suspicious of any cheque, especially if it is for more than the agreed selling price. Consider an alternative method of payment, such as an escrow service or online payment service.   Talk to your bank about the safest way to receive funds from overseas.

To protect yourself against this sort of scam, never agree to a deal in which the payer wishes to issue an amount for more than the agreed price and expects you to reimburse the balance. The scammers use a variety of excuses to explain the overpayment, but any such excuse should be treated with the utmost suspicion.

In order to avoid overpayment scams, remember the following general words of advice:

• Know whom you are dealing with – independently confirm your buyer's name, street address, and telephone number;

• Never accept a cheque for more than your selling price;

• Never agree to wire back funds to a buyer – a legitimate buyer will not pressure you to do so, and you have limited recourse if there is a problem with a wire transfer;

• Resist pressure to “act now.” If the buyer's offer is good now, it should be good when the cheque clears; if you accept payment by cheque, ask for a cheque drawn on a local bank or a bank with a local branch. You can visit that bank branch to determine if the cheque is legitimate; If the buyer wants to use a service you have not heard of, be sure to check it out to be sure it is reliable – check its Web site, call its customer service hotline, and read its terms of agreement and privacy policy. If you do not feel comfortable with the service, do not use it.

•  

(Source: www.phonebusters.com)

Copier Service Scheme

In this brazen scam, the con artist poses as a service technician for your office equipment. Once he gains access to your copier or other expensive machinery, he then substitutes an inferior machine or steals the office equipment altogether. Always ask service technicians for identification, and if they show up unannounced, call your provider to double-check identity.

Cramming

The Federal Trade Commission (FTC) recently issued a statement warning the public about cramming.

Cramming is the practice of some Internet service providers charging for services that were supposed to be free or that were never ordered in the first place. These charges are then crammed onto the customer's credit card without the customer's consent. In one recent reported case, a church that had engaged the web site hosting services of a company, found out that it was being charged for the cost of the company web hosting a duplicate but somewhat more skeletal site. The church didn't know of the second site.

Here are some suggestions to avoid being crammed:

• Read your bills carefully line by line. Check your bill as soon as possible and don't wait to complain. If you didn't order a service or if the service was charged higher than represented, don't pay. You do not have to pay for services that you didn't order even if you received such services.

   

• If you are a business, inform your employees of this scam so that they will be on the outlook for such scams.

   

• Only deal with internet service providers that you know. Don't be pressured into buying any offers made by unsolicited calls. Don't be afraid to say no.

   

• If your bills are crammed, cancel your service with that company and retain the services of another company. Even after you have cancelled your service with that company, check your credit card to ensure that the company is still not charging the amount to your card. Call your credit card provider and let them know about the problem.

   

• Finally report the scam to your local law enforcement agencies.

•  

Source: The Fraud Bureau

Credit Repair

 

Credit repair scams offer to erase accurate negative information from your credit file so you can qualify for a credit card, auto loan, home mortgage, or a job. The scam artists who promote these services can't deliver. If you follow their advice by lying on a loan or credit application, misrepresenting your Social Security number, or getting an Employer Identification Number from the Internal Revenue Service under false pretences, you will be committing fraud. Only time, effort, and a personal debt repayment plan will improve your bad credit.

(Source: Florida Attorney General's Office)

Free Goods

 

Some email messages offer free computers, electronic items, and long-distance phone cards. The catch, you have to pay a fee to join a club, and sign up additional members to earn the free goods. Most of these email messages are covering up pyramid schemes.

(Source: Florida Attorney General's Office)

Fax back scams

A faxback scam is an unsolicited fax that can offer you anything from amazing diets to fantastic deals, business directory entries and competition entries—all you have to do is send a fax back to a premium rate number (starting with 190). Premium rate faxes can be charged at more than $6.00 per minute. The scammers make sure your fax will take several minutes to get through, resulting in hefty, unnecessary phone bills (a single fax could cost you $20 or $30).

They usually target small business, often with offers of directory entries and catalogues of goods and services. (Read more...)

Health and Diet Scams

 

Pills that let you lose weight without exercising or changing your diet, herbal formulas that liquefy your fat cells so that they are absorbed by your body, and cures for impotence and hair loss are among the scams flooding email boxes. Gimmicks don't work. Successful weight loss requires a reduction in calories and an increase in physical activity. Beware of case histories from "cured" consumers claiming amazing results; testimonials from "famous" medical experts you've never heard of; claims that the product is available from only one source or for a limited time; and ads that use phrases like "scientific breakthrough," "miraculous cure," and "secret formula."

(Source: Florida Attorney General's Office)

Home Repair Scams

Consumers routinely file complaints about workers who accept money for repair jobs they never finish or who fail to honour warranties on home improvement projects.

A common complaint concerns a deceptive asphalt scheme. In this scam workers offer to use leftover asphalt from one job to repave your driveway. More often than not, the workers either start the job and then say it will cost hundreds or thousands more to complete it, or they will just lay black paint instead of asphalt on the driveway and leave town with your money.

Another common complaint concerns work on foundations and attics, which you are unable to see. Many times, recommended repair work is worthless, unnecessary and vastly overpriced.

(Source: The Consumer Law Page)

Investment Opportunities

 

Promises of outrageously high rates of return with No risk. Don't believe it. One opportunity seeks investors to help form an offshore bank. Others are vague about the actual investment, stressing the rates of return instead. Many are Ponzi schemes, in which early investors are paid off with money contributed by later investors. This makes the early investors believe that the system actually works, and encourages them to invest even more. However, the scheme will generally operate only for a short time. They will quickly spend the money they take in, close down before they can be detected, and then reopen under another name, selling another investment opportunity. Ponzi schemes eventually collapse because there isn't enough money coming in to continue simulating earnings.

(Source: Florida Attorney General's Office)

Letter of Credit Fraud

• If an "opportunity" appears too good to be true, it probably is.

   

• Do not invest in anything unless you understand the deal. Con artists rely on complex transactions and faulty logic to "explain" fraudulent investment schemes.

   

• Do not invest or attempt to "purchase" a "Letter of Credit." Such investments simply do not exist.

   

• Be wary of any investment that offers the promise of extremely high yields.

   

• Independently verify the terms of any investment that you intend to make, including the parties involved and the nature of the investment.

   

Source: Federal Bureau of Investigation

Lottery Scams

Lottery scam emails are increasing at an alarming rate. Fraud Watch International have compiled a list of over 380 allegedly Fraudulent Operations from a variety of official sources.

It begins with an email claiming the recipient has won a lottery. They are to contact a claims agent to collect their winnings, usually at a free email address. The unsuspecting consumer contacts the claims agent who sends a claim form to verify their identity. They must return the form with their personal details along with copies of their passport and driver’s license to “verify their true identity.” This is where the scam begins. The fraudsters now have enough information to duplicate the consumer’s identity.

The responding consumer receives an email with three options of how to collect their winnings. They can have the money wired to their bank account, they can open an account with a specified bank (bogus), or they can pick up their winnings personally (normally from Amsterdam).

Most people want their winnings transferred into their bank account. This involves upfront fees for taxes, insurance or even legal fees. Victims transfer money as requested via Western Union. If they do not want to pay upfront fees, they can open an online account with a specified bank, who’s ‘policy’ requires a deposit of around US$3,000. This bank is fake. Alternatively, victims are able to pick up their money personally by travelling to Amsterdam, where they are required to pay a release fee in cash, and receive their winnings in counterfeit currency.

Source: Fraud Watch International

Love scams

The scammer pretends to be looking for love, and engages the affection of their potential victim, often using photos from the internet to present an attractive view of themselves. They target people on dating sites or in chat rooms and will often say that they are in love remarkably quickly in an effort to attach the victim to them. Once they think their target is falling for the lies, the scammer will ask for help with living expenses or the cost of a visa or flight to the victim's home country. Or the scammer may say that a relative is ill and needs urgent medical attention, or that they need help paying for their education.

(Source: Scamwarners )

“Mystery Shopper” Fraud

In this fraudulent scheme, victims receive emails, or letters, stating that they have been selected to be “Mystery Customers”, or “Mystery Shoppers”. The letter will state that the company they represent was contracted by several clients to ascertain the quality of their customer service. The victim is asked to visit several retail stores, and make purchases, then offer feedback to the “Mystery Shopping” firm by using an enclosed “Customer Service Evaluation Tool” form. To pay for their purchases, the victims are sent a check, and instructed to deposit the item to their financial institution account, then contact their “coordinator” for further instructions.

At first, the victim is asked to make purchases of $40.00 to $50.00 at retailers such as Wal-Mart, The Gap, or Old Navy. However, the instructions then direct them to make wire or money transfers for larger amounts (often $1,400.00 - $2,600.00), via Western Union and MoneyGram. Again, the victim will be told this is for “Customer Service evaluation” purposes, and they are to offer feedback in regards to the “friendliness”, or “professionalism” of the clerk who assisted them. For their efforts, the victims are “paid” from the proceeds of the deposited check, and may keep the goods purchased for $40.00 - $50.00.

As you can guess, this is a scam, and the check that was enclosed with the letter is worthless, and will eventually be returned to the victim’s financial institution, probably as “Counterfeit”. The victimized mystery shopper will lose the amounts that were wired out, usually to places in Canada, or overseas. These wires could total $4,000.00 dollars or more! If you receive one of these letters, the best course of action would be to destroy it, or report it to the Federal Trade Commission (FTC). Their complaint form can be found online at: https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01.

Source: Coastal Federal Union: www.coastalfcu.org

Nigerian 419 Scams

The Nigerian Advance Fee Scam, also known internationally as “4-1-9” fraud after the section of the Nigerian penal code which addresses fraud schemes, has been around since the early 1980's. There is a perception that no one is prone to enter into such an obviously suspicious relationship, and be conned by such a scheme, however, the Financial Crimes Division of the U.S. Secret Service receives approximately 100 telephone calls from victims and potential victims and 300-500 pieces of related correspondence per day!

The Nigerian 419 scams use the following tactics:

• An individual or company receives a letter, fax or email from an alleged official representing a foreign government or agency;

• An offer is made to transfer millions of dollars in “over invoiced contract” funds into your personal bank account;

• You are encouraged to travel overseas to complete the transaction;

• You are requested to provide bland company letterhead forms, banking account information and telephone/fax numbers;

• You receive numerous documents with official looking stamps, seals and logos testifying to the authenticity of the proposal;

• Eventually you must provide up front or advance fees for various taxes, attorney fees, transaction fees or bribes.

(Source: Fraud Watch International)

Odometer rollback

As the price of new cars increases, many consumers are considering used cars. One factor most car shoppers consider is mileage.

However you need to watch out for odometer tampering.

To increase a used car's selling price, some unscrupulous dealers will roll back the odometer. Odometer tampering is illegal and can be very costly to consumers.

Checking for Rollbacks

Even if the seller appears to be honest it is a good idea to check out the car's history. You can do this by:

• Requesting a title search from your local traffic department.

• Asking dealers who sold the vehicle previously for copies of the vehicle's odometer disclosure forms.

• Checking oil change stickers which are usually inside the door frame.

• Checking the inspection sticker for mileage at vehicle's last inspection.

• Taking the car to a trusted mechanic or the AA for an opinion.

Source: The Consumer Law Page

Online Auction Fraud

Online auction fraud includes fraud due to the misrepresentation of a product advertised for sale through an Internet auction site, the non-delivery of an item purchased through an Internet auction site or a non-payment for goods purchased through an Internet auction site.

For Tips to protect yourself click here

Phishing Scam

The term 'Phishing' (pronounced 'fishing') is a slang IT word, made up by replacing the letter 'f' with 'ph.' Phishing, is exactly that, fishing for information - usually personal information such as credit card, bank account or social security numbers.

Scammers 'Phish' for your personal information in a variety of ways, but most commonly through fraudulent emails claiming to be from your bank or another institution that already has your personal details, asking you to confirm these details.

Once scammers have 'phished' out your information, they could use it in a number of ways. Your credit card could be used for unauthorized purchases, or your bank account could be cleared out, or they may simply gather the information for an identity theft scam, or sell your information to identity theft rings.

Phishing emails are commonly used in association with a fake web site that looks very similar to a real website from the relevant institution.

(Source: Fraud Watch International)

Phoney fraud alerts

A phoney fraud alert is similar to a phishing scam. It can come in the form of an email or a phone call claiming to be from your bank or financial institution. The scammer will usually tell you that your credit card or account has been cancelled because it was involved in criminal activity, or because they suspect your card or details have been stolen. This is a trick to get you to given them your account details.

You will be told that a suspicious transaction has recently occurred on your account, perhaps a large purchase in a foreign country. You will be told that if you did not authorise the transaction, you need to take immediate action as your credit card details have been stolen.

The scammer will ask you to confirm your credit card or account details so the ‘bank’ can ‘investigate’. If you receive an email, it may ask you to visit a website to confirm your credit card details or to find out more information on the supposed ‘fraud’ to your account.

In some variations of this scam, the scammer may already have your credit card number (that they have stolen previously), and may even quote this to you. They will then ask you to confirm that you are the cardholder by telling them the 3 or 4 digit security number printed on the card. If the scammers have this number, they can use your card to buy things over the internet or phone.

These phoney fraud investigations are used to steal your banking details so the scammers can use your account. They work by lowering your guard with the phoney fraud alert. They hope that you panic and do what they suggest to fix the ‘problem’. They are particularly tricky to spot because real banks and credit unions often do contact people if there has been suspicious activity on their account. (Read More...)

Phoney Workers - also see Home Repair Scams & Phoney Inspectors

Phoney workers like these are a special breed of con artists called "gypsies." Unfortunately seniors are often their prime targets.

The reason is simple: Half of all seniors own their own homes and most of them live in older homes.

Sometimes these homes do need repair work and crafty con artists look for this situation. They usually ask for a large down payment before they begin the work, and there even have been reported cases where the repairman goes to the bank with the consumer to withdraw the money.

Sometimes con artists use the obituaries or city directory to find seniors living alone.

Some con artists claim to be city building or health inspectors who are there to check out the furnace. Once in the basement they either cause damage or claim a health or safety threat exists.

(Source: The Consumer Law Page)

Phoney Inspectors

Be wary of anyone who offers to inspect your home for free. They may be looking for defects ranging from a leaky roof to termite or foundation damage. If they tell you damage exists, always get a second opinion before you sign a contract or agree to have any repair work done.

Other con artists simply use repair come-ons to get into your home. These people usually work in groups of two or three. For example, one distracts you with a bogus furnace inspection while the others search and burglarize your home. Once they have your money and valuables they leave.

(Source: The Consumer Law Page)

Pigeon Drop Scam

In the pigeon drop scam, swindlers work in pairs or in teams. One befriends an unsuspecting consumer, the "pigeon," while the other approaches them with money or valuables he claims just to have found. After some rehearsed conversation, the con artists agree to split the money three ways with you and arrange to meet at a lawyer's office or somewhere else of their choosing. But can they trust you, they ask. To get your share, you'll need to put up some "good faith" money, which they will return to you after the goods are divided. To prove yourself trustworthy, you turn over a large sum of money to them and, later, go to meet them at the designated spot. Soon after arriving, you realize the pair is long gone--and so is your money.

Tips To Avoid this scam

If the situation seems unusual or if you feel uncomfortable, just walk away.

No financial institution or government agency ever uses customers to conduct internal investigations. Many financial institutions request that their customers read and sign a form when they wish to withdraw a large amount of cash. The form alerts consumers to these scams and encourages them to talk to a bank or law enforcement officer if these conditions are present. This is not an attempt to keep your money or control how it's spent--it is an effort to protect you from fraud.

Trust only people you know. Do not trust someone because he or she has a friendly voice or appears to be an authoritative figure. Swindlers usually are friendly and have honest faces and pleasant personalities. That is how they gain your trust--and steal your money.

Talk to a law enforcement officer or your banker before withdrawing large sums of money at someone else¹s suggestion.

(Source: The Consumer Law Page)

Ponzi schemes

A Ponzi scheme is essentially an investment fraud wherein the operator promises high financial returns or dividends that are not available through traditional investments. Instead of investing victims' funds, the operator pays "dividends" to initial investors using the principle amounts "invested" by subsequent investors. The scheme generally falls apart when the operator flees with all of the proceeds, or when a sufficient number of new investors cannot be found to allow the continued payment of "dividends."

This type of scheme is named after Charles Ponzi of Boston, Massachusetts, who operated an extremely attractive investment scheme in which he guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his initial investors, the scheme dissolved when he was unable to pay investors who entered the scheme later.

• As with all investments, exercise due diligence in selecting investments and the people with whom you invest.

• Make sure you fully understand the investment before you invest your money.

Source: Federal Bureau of Investigation

Prime Bank Investments

An old scam known as the Prime Bank investment has been raising its ugly head on the net. This scam involves the fraudster offering a prime bank investment with risk free annual returns of more than 20%. These investments are purportedly guaranteed by the world leading banks - prime banks. Once invested, the fraudster disappears with the investor's money.

This scam comes under different names: secured trading programs, high-yield investments, prime bank notes and standby letters of credit. In all cases the investor is told that the investment is guaranteed by a prime bank.

There is always an air of secrecy about them such that no one knows about them. These schemes tout that they are usually only available to the "elites".

If you come across one of these prime bank investments, think twice about investing in it. Call your broker to determine whether the investment is legitimate. If it is not legitimate call you local securities commission in your country (Financial Services Board or the SAPS in South Africa)

(Source: The Fraud Bureau)

Prize Pitch

One of the most common scams is the "prize pitch". Consumers are told they have been specially selected to win a prize, or have been awarded one of three or two of five prizes. These prizes usually include cash or a vehicle. You must purchase a product and pay in advance to receive your prize. These products may include "coin collections", personalized pen sets, etc. The products are generally cheap or overpriced, but may sound valuable over the phone.

Remember, in a legitimate contest you do not have to purchase a product to qualify for a prize.

You may also encounter the "sweepstakes scam". After entering a fake sweepstakes contest in the mail, you will receive a call within two to four weeks from a fraudulent telemarketer. This person will usually identify themselves as a lawyer, judge, customs agent or other official. They will represent themselves as an agent for a particular company. You will be told that you have won a large cash award, but money must be sent up front for taxes, etc.

(Source: www.phonebusters.com)

Pump and Dump Scam

For those who are unaware of the classic Pump and Dump scam, we thought a quick primer is in order. Don't be surprised if the following scam rings true with some experience that you might have had with a penny stock.

Phase 1: Preconditions. For purposes of this scam, you need a worthless stock, with a tight float and which is thinly traded. Small or micro cap companies are needed as a precondition to this scam. Tight float means that most of the stocks are held by insiders and promoters and not by the general public. The reason for this is that it is much easier to manipulate the price of the stock when there are fewer stocks held by the general public since fewer buying of stock is needed to increase the price.

Phase 2: The Front Load.  The manipulator buys stock of an otherwise worthless stock at low prices. This sets the stage for the manipulator to make money when the stock price elevates.

Phase 3: Behind the Scenes Promotion.  The manipulator will now start a promotional campaign to create interest in the stock. This is done in a number of ways. Promoters use advertising campaigns, cold calls, newsletters, newsgroups, message boards, chat rooms, emails and any other method to promote the stock. The information that they use is usually rumour and not fact. They try to entice the average investor with visions of making the big score, quickly and without much risk. The promoters will tour investor roads shows to drum up excitement. Essentially, the promoter is playing on the investors' strings of greed to try to make the investors feel that he can't miss the next great investment play. With the advent of internet, today's promoter has a larger array of tools at his or her side to mislead the public than years of past.

Phase 4: The Pump. Promoters now will attempt to inflate the price of a stock. This is achieved in one of two ways or a combination of both. Because the stock is thinly traded, promoters and insiders can quietly raise the price by buying up the stock. In other words, instead of putting bid offers at lower prices, they take the ask bids out and go up the price ladder. Since there is little public float, it doesn't take a lot of buying to get the price up.

The second method is to get the price up on promotion. With little public float, a little bit of buying will result in the price elevating.

(Source: The Fraud Bureau)

Puppy Scam

There seems to be an increasing number of Classifieds Scams targeting dog lovers.

Much like other advance fee scams this involves the promise of a puppy when all the necessary fees are paid. Adverts are placed in newspapers and the Internet and usually involves someone that has moved or is moving or resides in another country.

Some scam artists use stolen photos in their ads, claiming they are pictures of puppies for sale. Actually, the seller does not have the puppy that he/she is trying to sell. The seller will ask for money in advance and refer them to a money wiring service such as Western Union or Money Gram. The advance fee in this case, being for the purchase of the puppy, shipping and customs charges. The buyer waits for few days and when they do not receive the puppy attempts to contact the seller, but with no answer.

In order to avoid these types of scams, remember the following general words of advice:

Know whom you are dealing with - independently confirm your seller's name, street, address, and telephone number.

Resist pressure to “act now.” If an offer sounds to good to be true it usually is.

If the buyer wants to use a service you have not heard of, be sure to check it out to be sure it is reliable Check its Web site, call its customer service hotline, and read its terms of agreement and privacy policy. If you do not feel comfortable with the service, do not use it.

(Source: www.phonebusters.com)

Pyramid Scheme

Pyramid schemes are frauds that are based on recruiting an ever-increasing number of investors. The initial promoters (those at the peak of the pyramid) recruit investors who are expected to bring in more investors, who may or may not sell products or distributorships. Recruiting newcomers is more important than selling products.

No new money is created in pyramid schemes. Investors who get in early take their profits from investors who join later. At some point, no new investors can be found and as a result the last investors, who are at the bottom of the pyramid, lose their money. They also face prosecution, as pyramid schemes are illegal.

Before you invest any money in a multi-level company that could be a pyramid, get all the facts about the company, its officers and its products. Get written copies of the company's marketing plan, sales literature, contracts and prospectus (a legal document that gives prospective investors information about the company). Avoid promoters who fail to clearly explain their plans. Have a lawyer or accountant explain anything you do not understand. Find out if there is a demand for the product, or if there are similar products on the market. Remember that the greater the promised return, the greater the risk.

(Source: www.phonebusters.com)

Recovery Pitch

If you buy into any of the Prize Pitch schemes, you are likely to be called again by someone promising to get your money back for you. Be careful not to lose more money to this common practice.

Here are two examples of the stories you may be given over the phone:

A caller claiming to be a law enforcement officer tells you that money has been seized, and that their records indicate that you have lost money to the company or companies. They will help you recover the money you have lost for a small fee. DO NOT BELIEVE THEM. If money is seized, you will be advised by a police agency but they will never request money in advance for any reason.

The caller may claim that they have bought out a particular company that promised you prizes that were never sent to you. They are an honest company, and they are eager to get those prizes right out to you if you can pay some related costs.

(Source: www.phonebusters.com)

Ring tone scams

These scams might attract you with an offer for a ‘free’ or low cost ring tone. What you may not realise is that by accepting the offer, you are actually subscribing to a service that will keep sending you ring tones—and charging you a premium rate for them. There are many legitimate companies selling ring tones, but there are also scammers who will try to hide the true cost of taking up the offer.

The scammers don’t tell you that your request for the first ring tone is actually a subscription to an expensive service. A scammer will also make it difficult for you to stop the service. You actually have to ‘opt out’ of the service to stop the ring tones and high charges. Some people have been charged over $100 for what they thought was one ring tone. (Read more...)

Short and Distort

The classic Pump and Dump is a well known scam used by promoters to try to make unsuspecting investors part with their money. What one does not hear that much about is the stock scam of making money off the fall of a stock price. Around the investment water cooler, this is sometimes referred to as the Short and Distort. The Short refers to short selling, that is, the selling of stock by an investor who does not own the stock that he or she is selling.

We have set out below, the various stages of the Short and Distort.

Phase 1: Research. The short and distort player will look for stocks that might be overvalued.

Phase 2: Short Sell. When there is a bit of activity on a stock due to news, the short seller comes into the market and sells short (sells stock that he doesn't own).

Phase 3: Rumour Mill. Unlike the scamster in the Pump and Dump, the scamster will now engage in a campaign to undermine the worth of the stock is shorted by spreading rumour. This can be done by negative posts to message boards, chat rooms, newsgroups, issuance of newsletters recommending the sale of the stock, etc. This plan of distortion is aimed on enticing investors to dump their stock with the prime objective of driving the price down. Instead of excitement, the distorter tries to stimulate fear.

Phase 4: The Cover. Now that the price is falling, the distorted must buy stock to cover his or her position. The distorter buys the stock at a discount thereby making his profit. In order to create a selling frenzy which the distorted must do in order to buy enough stock to cover his position and not drive the price up in the interim (thereby minimizing his profits) he will create the impression that there is a great deal of selling taking place. He will do this by having his friends and brokers cross stock to each other giving the impression of large volume.

Phase 5: The Loss. The buyer who initially bought the stock at elevated prices, sold at lower prices on the mistaken belief that the stock was worthless based on the distortion campaign.

(Source: The Fraud Bureau)

Travel scams

Beware of free vacation offers

If you receive a phone call or postcard offering a free vacation, beware. There's a good chance your dream vacation may turn into a real nightmare if you aren't careful.

The hook used in a free vacation scam

In some travel scams, the consumer is sent a postcard saying he has won a free vacation. In others, the "vacation" is one of several prizes in a sweepstakes. In most cases, the consumer is required to call a number for more details or to "claim" the prize.

In one version of the scam, the consumer is told he will receive a package in the mail detailing the vacation offer. The operator then asks for his credit card number, saying there will be a small service charge made to his account if he accepts the vacation. The consumer is assured he will have a review period to decide if he wants the package before his account is billed for the service charge. This promise usually proves to be false.

According to calls made to the Attorney General's Consumer Protection Hotline, these companies are slow in sending the vacation package materials and when they do arrive, the review period already has expired. The firm quickly bills the consumer's credit card for hundreds of dollars for its "service fee."

Other travel scams

In other scams, a consumer is offered a "dream vacation" for an incredibly low price. After the consumer agrees and discloses his credit card number, he learns the catch: To qualify he has to buy a second round-trip fare at "regular price" -- only this price may cost two or three times more than it would if he bought his ticket in advance or from an airline or reputable travel agency.

In other instances the salesperson fails to mention that the "free" vacation doesn't include meals, taxes, deposits or surcharges.

In a similar scam, consumers win a "free" vacation when they pay several hundred dollars to join a travel club. The problem? When the consumer picks dates and tries to book the trip, he is told all of those dates are unavailable or already booked.

A similar twist played by some con artists involves selling consumers "discount travel packages." What the consumer actually buys, however, may be a book containing coupons and discounts available for free to all vacationers from chambers of commerce and business promoters.

The end result in vacation scams is when you finally are ready to take the trip, the company has disconnected its phones, moved or closed without notifying you or issuing a refund.

Source: Attorney General Of Missouri

Work from Home Scams

What are they?

These are work opportunities advertised in local newspapers, magazines, shop windows, on lamp posts or on the web which claim to offer you a quick way to make a lot of money from home without having any qualifications, skills or expertise.

You might see an advertisement that looks something like this:

'Imagine owning your own business, being your own boss, working only a few hours per week, never having to set an alarm clock again… a business that's fun, easy, even exciting work. No staff, no overheads, no bookwork, no selling, working from the comfort of your home. Guaranteed income of £30k a year.'

The catch is that before you start any work you have to pay money.  This is in the form of a registration fee, buying goods or making a premium rate phone call.  After you have paid your money you find that there is either no work to do or that you will not be paid for any work that you have done.

There are usually about 300 work from home scams known to be in operation at any one time. Typically the initial outlay is between £10 to £60.

How it works - some common examples

Addressing or stuffing envelopes: this scam involves you paying a registration fee to join in return for simple advice on how to place similar advertisements to attract other people into the scam

Home assembly kits: this scam involves you paying a fee to receive a kit for making things from baby boots and aprons to toys. However, the kit is usually inadequate for making the goods required. Then the scammer either promises to pay you for the goods but then rejects them because your work is sub-standard or the scammer suddenly tells you that you have to sell the goods yourself and when you come to do so you find that there is no market for the goods.

Home working directories: this scam promises you a variety of different home work opportunities however once you pay the fee of £10 to £25, you only receive a directory of other companies who have their own registration fees and a list of shopping catalogues

How do I know it is a scam?

• they will ask for money up front

• they promise large sums of money for performing simple tasks

• they use a post office box address or a mobile phone number so you never meet them and cannot find them once you realise it is a scam

• the advertisements will not state clearly what is involved.

Source: Office of Fair Trade - United Kingdom