While identity theft and phishing get much of the attention, other types of online fraud continue to proliferate. Many of these schemes are online incarnations of old fashioned con games. The first step toward protecting yourself is learning how others have been duped online. (Read more...)

Advanced Fee Scams

Advance Fee Scams are exactly as the name implies - a fraud in which the victim is persuaded to voluntarily remit some sort of fee in anticipation of receiving something of value. Once Freddy the fraud feasor gets their money, he will continue to persuade them to send more money until the victim cannot, or will not, send more.

As with so many swindles, these tend to follow the, "load, reload, recovery" format. The victim pays money, then they pay more money and continue until they get suspicious. Questions result in excuses, concern brings out indignance, contact is usually broken off, phones are disconnected or unanswered, messages are not returned, weeks go by (or months), desperation begins to set in and then their phone rings - salvation!! (Read more...)

Read more on Advance Fee Frauds

Affinity Fraud; With Friends Like You . . .

"You cannot scam an honest man!" How many times have we all heard that? Aside from being one of the most asinine statements I ever heard in my life, it is irresponsible. If taken to be true, it serves to assure the honest man that he can not be defrauded.

The word "affinity" connotes attraction, similarity, connection and relationship. Affinity Fraud is an insidious crime that honest people are particularly susceptible to.

Personally, lecturers and experts who seek to define and model their subject by declaring that, "There are three rules . . ," "The five governing principles are . . .," yadda, yadda, yadda, make me tired. Nevertheless, I find myself saying that all "crimes of persuasion" are based upon three fundamental elements.

First, the victim must have something the fraudman wants; there can be no swindle in the absence of value. Second, the fraudman induces the victim to trust; the mechanism of the fraud is a voluntary relinquishment - the word "voluntary" being used as a layman would use it. Third, the fraudman betrays the victim's trust, deliberately and by design.

The word "con" is derived of "confidence," con artists are confidence men why ply their trade by inducing trust. Simply stated, affinity fraud is a confidence game where the "trust" is pre-existing. (Read more...)

How Your Personal Information is Used from Phishing Scams

What happens to the personal information when collected?

There are a number of ways in which personal information collected is used by the fraudsters:

Hijacking user accounts
Fraudulent use of credit cards
ATM card duplication
Identity Theft (Read more...)

Foreign Advance-Fee Scams

Chances are you or your clients have received a letter similar to the one shown in the exhibit below (usually with more errors of punctuation and usage). If not, it’s probably just a matter of time. These solicitations used to come by mail, but now they appear in your e-mail inbox. Have you lucked out, about to receive a big windfall? Hardly. Someone is attempting to victimize you in an “advance-fee” fraud. Advance-fee frauds operate on only one premise: They make false promises of forthcoming funds in order to get a target to part with money. This article explains how these schemes work so you and your clients can avoid becoming unfortunate statistics of this crime. (Read more...)

Odometer Fraud

With the new-car market lagging and the used-car market catching momentum once again, sleazy middlemen and low-life used-car dealers out to make some cheap bucks (and give the honest ones a bad name) will be especially busy rolling back odometers. (Read more...)

Miracle Cures: A Prescription for Fraud

Whether it is looking for a fast way to lose weight or a cure for a serious disease, consumers may be spending billions of dollars on unproven, fraudulently marketed health-related products, devices and treatments.

Fraudulent “cure-all” health products promise quick cures and easy solutions to a variety of problems, from obesity to diabetes and cancer. Any product that claims to be a miracle cure may be a fraud that could cheat you of time, money and most importantly, your health.

As part of Fraud Prevention Month, the Competition Bureau is advising consumers to be smart and be skeptical: if it looks too good to be true, it probably is. To avoid becoming victims of health fraud, it’s important to learn how to assess health claims and to seek the advice of a health professional.

Here are some tips for spotting scams: (Read more...)

The Friend in Need

"Spare Change" "Spare Change" used to be the standard panhandling request but lately there is a growing trend to use a fraud technique called "Friend in Need" to get wallets and purses to open. The net result is a plethora of individuals working parking lots and residential districts for dollars. The "Friend in Need" Con has a number of different "stories". (Read more...)

Weight Loss

Looking for a quick and easy way to lose weight?

You're not alone. An estimated 50 million Americans will go on diets this year. And while some will succeed in taking off weight, very few--perhaps 5 percent--will manage to keep all of it off in the long run.

One reason for the low success rate is that many people look for quick and easy solutions to their weight problems. They find it hard to believe in this age of scientific innovations and medical miracles that an effortless weight-loss method doesn't exist.

So they succumb to quick-fix claims like "Eat All You Want and Still Lose Weight!" or "Melt Fat Away--While You Sleep!" And they invest their hopes and their money in all manner of pills, potions, gadgets and programs that hold the promise of a slimmer, happier future.

The weight-loss business is a booming industry. Trying to sort out all of the competing claims--often misleading, unproven or just plain false --can be confusing and costly. Here are the facts behind the claims to help you avoid outright scams and to encourage you to consider thoroughly the costs and consequences of dieting decisions you make.

Weight-Loss Facts

Being obese can have serious health consequences. These include increased risk of heart disease, stroke, high blood pressure, diabetes, gallstones and some forms, of cancer. Losing weight can help reduce these risks. Some points to remember:

Any claims that you can lose weight effortlessly are false. The only proven way to lose weight is either to reduce the number of calories you eat or to increase the number of calories you burn off through exercise. Most experts recommend both.

Extreme low-calorie diets are risky and should be pursued only under medical supervision. When unsupervised, they can deprive you of important nutrients and potentially are dangerous.

Fad diets rarely have any permanent effect. Sudden and radical changes in your eating patterns are difficult to sustain over time. In addition, so-called "crash" diets often send dieters into a cycle of quick weight loss, followed by a "rebound" weight gain once normal eating resumes, and even more difficulty reducing when the next diet is attempted.

To lose weight safely and keep it off requires long-term changes in daily eating and exercise habits. Many experts recommend a goal of losing about a pound a week. A modest reduction of 500 calories per day will achieve this goal - a reduction of 3,500 calories is required to lose one pound of fat.

(Source: The Consumer Law Page)

How to Spot Online Investment Scams

There are signs that you can always look out for before you invest in a company which is being improperly promoted:

Beware of any stock that you learn about on a bulletin board, chat room, newsgroup or email. Promoters usually use these to promote stock.

Be on guard for high pressure tactics to buy from people you don't know. Promoters make their money from inflating the price of stocks in order to allow them and insiders to sell their cheap stock at higher prices. This is called pump and dump and it is a favourite tactic of promoters who are improperly promoting stock.

Watch out for information that you see in online newsletters. Such information might appear to be unbiased and independent but usually such information is being provided by individuals paid to recommend the stock.

Look out for information contained in publications that contain good investment information along with recommendations or stories about praiseworthy stocks. These publications are veiled attempts to advertise a company even though at their face the articles appear to be unbiased commentary when it fact the publishers have been paid to promote a stock.

Beware of promises high profits and sales relating to products of a new startup company. It takes time for businesses to become successful and usually the path to success is a gradual increase and not an overnight success. Be realistic when reviewing promises made by companies.

Never be fooled by press releases or announcements of pending or imminent acquisitions. Unless such acquisitions become reality, this is a warning sign that there is nothing behind the announcement but an attempt to fool you in buying a stock.

If the company has weak fundamentals, then its low stock price is a reflection of what its worth and not what a promoter tells you its worth. Review the financials of a company and rely on only what you see and not on what you are promised.

Techniques Promoters Use to Promote Online Investments

Promoters have long been paid by companies to promote shares of their company which are intrinsically worthless. Direct mailing and cold calling techniques are still used to promote these companies. Promoters, however, have found a new place to market their companies:

Email. The use of junk email (also called spamming) has given the promoter an easy vehicle through which to promote an otherwise worthless stock. The use of email permits the promoter to contact the investor directly and personalizing his/her messages at a greater rate than previously used methods such as cold calling.

Online Investment Newsletters. The growth of the internet has spawned legitimate and illegitimate online investment newsletters. These newsletters purport to offer free impartial advice under the guise of professional credentials. In fact many online investment newsletters are written by promoters paid by the very companies which the promoter promotes. The information is not unbiased but meant to fool the innocent investor in thinking that the advice is informative and independent.

The promoter makes his/her money by getting investors to purchase shares of worthless companies at inflated prices. These shares are sold by the promoters and company insiders at a profit to these innocent investors. After buying these shares at inflated prices, these innocent investors find the price of their shares suddenly fall resulting in a huge loss.

Bulletin Boards. The use of Bulletin Boards, chat services, newsgroups and use networks are utilised by promoters, insiders and large shareholders of worthless companies to share seemingly unbiased information with users of these sites. The scam involves a number of individuals or even one individual using aliases to plant information about a company to lures the unsuspecting investor to buy a stock Sample messages on a Bulletin Board might run along these lines:

Person A: " I just heard about a new company that a friend heard about. Had a name like Somtex."

Source: The Fraud Bureau

Phight Phraud

You receive an e-mail that appears to be from your bank. You recognize the logo and the letter format. It’s even signed by the bank officer you deal with. It says there has been a glitch in your account and asks for verification of some information—credit card numbers, passwords and other personal information—which you quickly supply.

Congratulations, you’ve just inadvertently given a crook the key to your bank account. This fraud technique, known as a phishing (pronounced fishing), is growing in frequency and sophistication. This article will tell you how to guard against it. (Read more...)

Goin' Phishing

Banks have battled worms, viruses, trojan horses and spyware with ample equanimity for years. But the most formidable combatant on the scam scene is proving to be purveyors of phishing, the distribution of spoofed e-mail messages with return addresses, links and branding art that make the e-mails appear to come from banks, insurers, payment firms, retailers or credit card companies. Their goal? To suck in bank account, password and credit card data from unsuspecting accountholders. (Read more...)

Avoid the hook in the Phisherman's bait

In May 2005 the first phishing scam imitating South African banks hit South Africa. “Phishing” is deduced from the words “password harvesting fishing” and according to Webonline currently one of the fastest growing methods of online fraud. Recent British research conducted for the 2005 Infosecurity Europe event, revealed that an alarming 90% of the individuals questioned, were willing to part with the personal information necessary for fraudsters to conduct identity theft.

Phishers attempt to trick unskilled computer users and rely heavily on the victim's innate sense of truth in automated systems or (apparent) figures of authority. Phishing thieves typically pose as banks, credit card companies and other institutions that are in authorized possession of sensitive personal information of their clients. (Read more...)

Ten Questions To Ask About Any Investment Opportunity

With any investment, whether promoted in person, by mail, telephone, or on the Internet, a wise investor should always slow down, ask questions, and get written information. Take notes so you have a record of what you were told, in case you have a dispute later.

Is the investment registered with the SEC and the state securities agency in the state where I live or is it subject to an exemption?

Is the person recommending this investment registered with my state securities agency? Is there a record of any complaints about this person?

How does this investment match my investment objectives?

Where is the company incorporated? Will you send me the latest reports that have been filed on this company?

What are the costs to buy, hold, and sell this investment? How easily can I sell?

Who is managing the investment? What experience do they have?

What is the risk that I could lose the money I invest?

What return can I expect on my money? When?

How long has the company been in business? Are they making money, and if so, how? What is their product or service? What other companies are in this business?

How can I get more information about this investment, such as audited financial statements?

Source: US Securities and Exchange Commission

Be Alert for Telltale Signs of Online Investment Fraud

Be wary of promises of quick profits, offers to share "inside" information, and pressure to invest before you have an opportunity to investigate.

Be careful of promoters who use "aliases." Pseudonyms are common on-line, and some salespeople will to try to hide their true identity. Look for other promotions by the same person.

Words like "guarantee," "high return," "limited offer," or "as safe as a C.D." may be a red flag. No financial investment is "risk free" and a high rate of return means greater risk.

Watch out for offshore scams and investment opportunities in other countries. When you send your money abroad, and something goes wrong, it's more difficult to find out what happened and to locate your money.

If a company is not registered or has not filed a "Form D" with the SEC, visit the website of the North American Securities Administrators Association to find your state securities regulator.

Source: US Securities and Exchange Commission

Boiler Room Antics

With the recent years' bull market and the increase in the number of retail customers investing in stocks, boiler room operators are back at work trying to defraud investors.

What are Boiler Room Operators

Boiler room operators are sales people who sit in one room making cold calls to potential investors and trying to pressure them into purchasing worthless investments. They are usually armed with sophisticated sales scripts and high-pressure sales techniques used to convince their victims to purchase dubious investments. Their victims are usually individuals with money such as business people, professionals and retirees.

What Type of Investments do Boiler Room Operators Peddle

Boiler room operators will try to sell:

Penny or Microcap stocks
Foreign Exchange Investments
Risky Initial Public Offerings (IPO's)
House Stocks

(Read more....)

Auction Scams - A Guide for Sellers and Buyers

The number one online scam involves auction scams. This is not surprising given that the buyer doesn't inspect the merchandise before he or she purchases it and pays for the merchandise before he or she receives it. Throw in the fact that the buyer doesn't ever see the seller and that the seller could be on a different continent, and you have the makings of the right conditions for a scam. To protect yourself against an auction scam, you need to know the different ways that you can get scammed. Below we survey the different types of online auction scams and how to protect yourself so that you won't become a statistic.

Shilling

This is a frequent scam that will sure raise your blood temperature as well as the final bid price. Shilling is the practice of the sellers and their partners bidding the price of an item higher so that the ultimate buyer ends up paying for the item at a higher price than he or she would otherwise have but for the actions of the partners. The scenario occurs as follows. The time to bid is drawing to an end and you have the highest bid. Suddenly, you notice that a large number of bids come in pushing up the price. You continue to bid on the item and in the end win. But where did all these bids come in when there was so little activity during the bidding process until the final moments. Answer: Shills (Read more...)

How scams work

Why do scams succeed?

Scams target people of all backgrounds, ages and income levels across Australia. There is no one group of people who are more likely to become a victim of a scam. If you think you are 'too clever' to fall for a scam, you may take risks that scammers can take advantage of.

Scams succeed because of two things.

Firstly, a scam looks like the real thing. It appears to meet your need or desire. To find out that it is in fact a scam, you must first make the effort to check it properly. You need to ask questions and think carefully before you decide what to do. Being aware of the dangerous myths below will help you with this. Depending on the issue, you can decide if something is a scam on the spot, or you might need help—and that could take several days.

Secondly, scammers manipulate you by ‘pushing your buttons’ to produce the automatic response they want. It’s nothing to do with you personally, it’s to do with the way individuals in society are wired up emotionally and socially. It’s because the response is automatic that people fall for the scam. To stop scammers manipulating you into their traps, it can be useful to know how to prevent the automatic response they expect. (Read more...)

How to protect yourself

Almost everyone will be approached by a scammer at some stage. Some scams are very easy to spot while other scams may appear to be genuine offers or bargains. Scams can even take place without you doing anything at all.

Most scams need you to do something before they can work. You may send money to someone based on a promise that turns out to be false. You may give your personal details to people who turn out to be scammers. Some scams rely on you agreeing to deals without getting advice first, or buying a product without checking it out properly.

The simple tips below will help you protect yourself and your family from scams. Scams can cost people a lot of money and cause a great deal of distress. By following these simple tips, you can protect yourself against scams. (Read more...)

Top 10 Work At Home and Home Based Business Scams and How to Avoid Them

Home-based business and work-at-home opportunity scams rank very high on the list of the top types of Internet fraud.

In this issue, we'll focus on the Top 10 home-based business/work-at-home scams. We'll give you the straight goods on envelope stuffing, mystery shopping, and other common home-based business "opportunities" you may have seen floating around the Net.

Then in the next issue, we'll give you some important tips you can use to kick the tires of any online job offers or business opportunities you find so you can protect yourself from those that are scams. (Read more...)

Scholarships and Scholarship Scams

A college education -- your own or your child's -- is one of the most expensive undertakings you'll ever commit to. And, for many people, it would be an impossible dream without the extra help of scholarships.

Unfortunately, the scholarship field is also riddled with unscrupulous operators and scams that have cost American consumers over $100 million annually.

Here are some things you need to know so you don't get taken by scholarship scams. (Read more...)

Timeshare Scams

The sale of real estate by dividing it into 'timeshare' units has become an extremely profitable way for developers to sell real estate - particularly condos in vacation hot spots.

Essentially, buying a timeshare means that you and other people are all buying one property -- and sharing the time you spend in it (hence the name).

Some timeshare properties guarantee you a week a year, others allow for up to 3 weeks annually.

All of them have you pay a portion of the property value itself, and all of them have you pay a 'common area' cost for upkeep on the building and grounds, etc.

There are also many timeshare scams, and the incentives are where the trouble usually begins...(Read more...)

Are free magazine subscriptions really free -- or are they scams?

Our friend Jessica sent us this on free magazine subscriptions: I love ScamBusters and wanted to share this with your readers.

A few months ago I received an offer for a free magazine subscription. It looked like a magazine that I'd be interested in, so I decided to take the company up on the offer and I accepted the free subscription. (Read more...)

Don't Go Breaking My Heart: The Top Four Online Dating Scams

Could your soul mate be waiting for you somewhere out there in cyberspace? And if so, how can you avoid dating scams that might lurk there as well?

If you've ever been tempted to try online dating, you're not alone. An Online Publishers Association study showed U.S. residents paid $600 million on online dating and personals in 2006, capturing the largest segment of paid content anywhere on the World Wide Web.

Online dating scams range from minor white lies to outright thievery. Here are the four most common dating scams and what you can do to avoid them. (Read more...)

Top 5 Christmas Scams to Watch for This Christmas Shopping Season

As the Christmas shopping season shifts into high gear, take time to think carefully before making your purchases and any charitable donations.

Although scammers are always prowling for victims with the following scams, consumers are especially vulnerable during the holidays. With so much to do, many otherwise cautious people let their guards down. (Read more...)

Protect Your Business from Phishing

MARCH 2007: The latest news about "phishing" is not good for small and mid-size businesses. Phishers – people who send fraudulent emails and try to lure unsuspecting recipients into revealing confidential information on a phony website -- are no longer impersonating only big commercial banks. They've started using the names of smaller companies, too. (Read more...)

Phishing: A Growing Threat to Financial Institutions and E-Commerce

My earliest memories of fishing as a child in Philadelphia were of fun, laughter, and friendship. Fishing offered my friends and me the opportunity to discuss sports, young love, and our dreams for the future. Today, those fond memories of summers past and innocent childhood pursuits have been replaced by a new kind of "phishing," one far removed from the muddy waters of my childhood recollections. (Read more...)

Criminals head after bigger fish as cyber ’whaling’ catches on

While ’phishing’ attempts indiscriminately target large numbers of Internet users and are aimed at the mass theft of identities - often constituted by credit card numbers and other forms of personal information - the organised crime syndicates behind these attacks have begun to vary their techniques to specifically target high income individuals and companies. (Read more...)