June 13, 2018
Unbiased financial information provided by Financial Finesse
Most of us have learned to be leery of the huge number of "deals" that arrive by email every day. But many other scams can find you by US Mail, on your home phone or in a local business storefront.
Here are some of the most common scams to watch out for:
Identity Theft is often the motivation behind a number of other scams. Watch out for emails or calls that appear to be from a company you do business with, asking you to "verify" personal or account information.
Advance-Fee Loans sound enticing. The lender guarantees that you'll get a loan or other type of credit -- but you must pay a fee before you apply. No legitimate lender requires a fee in advance.
Predatory Lending targets borrowers who have low incomes and/or credit problems - and then takes advantage of them by using deceptive practices. For example, refinancing where borrower equity is stripped away by high fees and expensive, unnecessary terms is a form of predatory lending.
Payday Loans are a growing business nationwide. You borrow money by writing a postdated check (to be cashed on your next payday) equal to the amount borrowed plus a "fee." If you can't afford to pay it back, you "roll over" the loan and end up paying the fee each payday - after a few months you have paid more in fees than the amount you borrowed, and you still owe the amount of the original loan! Payday loan interest rates can exceed 400%!
Rent-to-Own stores are geared toward people who need furniture and appliances, but have little cash and bad credit. You can rent these items and pay a small amount weekly or monthly. But you end up paying many times over what the items are worth.
Credit Repair deals are everywhere, since many people have less than perfect credit. But, all legal ways to repair your credit can be done yourself, for free. So don't get fooled by offers to give you a new identity, new Social Security number or "guaranteed" credit cards. You'll be paying high prices for useless services.
Tax Scams prey on people's hopes to pay less in taxes, or receive a refund of taxes previously paid. Don't trust anyone but the IRS or qualified tax professionals such as a CPA or Enrolled Agent to help you out here. The most popular of these scams include posing as an employee of the IRS or a financial institution you do business with. Others involve being told you have won a sweepstakes prize and you just have to pay the taxes on it, or offering a way to "legally" avoid paying taxes by setting up an offshore financial account.
No matter how tempting the deal sounds, stop and think before you pay money or give out personal information like account numbers. If you're not 100% sure, protect yourself with the information below:
- Call the company back on a number from the phone book or your statement.
- Contact the Internet Crime Complaint Center at www.ic3.gov or your local State Attorney General's office.
- Contact the Federal Trade Commission at 877-FTC HELP.
- Be aware that URLs that begin "http" are not secure. Only enter sensitive information on pages with a URL that begins with "https."
The cost of falling for even one of these scams can be high in both dollars and the time needed to resolve the mistake. So think twice before you accept an offer that falls into any of the above categories.