Marilyn B. had already lost half of her retirement savings in the stock market crash, so when she received a letter inviting her to become a mystery shopper at Wal-Mart, she was delighted.
Unfortunately, after wiring $2,983 of her savings to her prospective employers (they had asked for the money as a "security precaution"), she found out she had been scammed. The people who had contacted her don't run a mystery shopping program, and the first paycheck they sent her turned out to be a forgery.
Americans like Marilyn, reeling from 401(k) losses, layoffs and/or foreclosures, are under attack from scammers aiming precisely at their desperation.
"Con artists follow the news closely and adapt their schemes to whatever is the crisis of the day," says Susan Grant, the director of consumer protection for the Consumer Federation of America. "In times of economic disaster, they offer to help people get jobs or loans or to help them keep their homes."
Lawyers and consumer advocates around the country say they have noticed a sharp increase in complaints about scams. Not only are there more potential victims, experts say, there are more scammers -- desperate people who have resorted to running fraudulent schemes.
You'll see new depths of trickery behind these scams:
- Offers of money out of the government's economic stimulus plan.
- Work-at-home jobs or other lucrative deals that involve easy paychecks.
- Offers to help homeowners avoid foreclosure or settle debt.
- Guaranteed loans to borrowers with bad credit.
If you think you're not vulnerable, think again. Americans from all walks of life have fallen prey.
"We've seen people across all income levels victimized," says John Breyault, who heads the fraud division of the National Consumers League. "We've even seen law firms victimized."
The government is giving away millions!Most vulnerable are people who are facing foreclosure or have recently lost their savings, jobs or access to credit. They are being aggressively targeted by a variety of scams. For example: the economic stimulus scam. Virtually anytime you surf the Web, you are bombarded with ads that promise large grants or checks out of the government's stimulus plan.
"In 30 days I was able to get a $12,000 check from the US Govt which I never have to pay back," reads one such banner ad, which pops up when you search the Web for "economic stimulus."When you click on such ads, you are redirected to blogs purportedly written by average Americans who succeeded in getting checks from the government and now want to show you how to do the same. They might ask you to buy a software program that "helps" you apply for a grant, sign you up for a monthly subscription without your consent or even ask for sensitive personal identity details.
The reality is that the economic stimulus bill recently passed by Congress -- known as the American Recovery and Reinvestment Act of 2009 -- doesn't include provisions for grants or payments directly to consumers. Rather, consumers should expect a reduction in the amount of taxes withheld from their paychecks every month. Anyway, when the U.S. government wants to give money back to taxpayers, it does so through the Internal Revenue Service, and the IRS never contacts people through banner ads.
"We don't contact people by e-mail or phone with some offer of a refund," IRS spokesman Anthony Burke says. "To get a refund, taxpayers need to file a tax return."
For an idea of what you can truly expect to see, read "How the stimulus bill affects you."
We'll renegotiate your mortgage payment for you!The most widespread scam these days is foreclosure rescue or loan modification, targeted at those who are having trouble paying their mortgage. Typically, scammers offer to renegotiate the terms of a mortgage with the lender in exchange for upfront fees. Many times, these scammers are just after your fees and will disappear once you pay them.
Other times, people who run legitimate loan brokerages or real-estate offices make misleading claims that they can help -- failing to actually do so almost all of the time, says Melissa Huelsman, a consumer attorney in Seattle. They might put in a couple of calls to your bank, and when they fail to produce results, they shrug their shoulders and claim, "We did the best we could." Trouble is, loan brokers and real-estate agents often don't have the expertise or the authority to renegotiate loans for you, Huelsman says."There are some former mortgage brokers and real-estate agents out there scrambling to make a buck, and they think they know everything about foreclosures, but they don't," Huelsman says.
Reza Bavar, a Los Angeles attorney, also warns against using lawyers without any real-estate expertise. "Sometimes you see immigration lawyers offering to do loan modifications."
That's what happened to Faye Assar of Los Angeles. Assar and her husband were lulled into a false sense of security when they visited the offices of their "attorney-backed" loan-modification specialists.
"The office looked official," Assar says. "There were secretaries doing work, they had a logo and a seal, and the guy we saw had certificates hanging behind him."
Assar and her husband had paid $10,000 in fees before they discovered the firm wasn't making any progress with the modification.
Marty Frame, the senior vice president of Cyberhomes, says you may be dealing with a foreclosure rescue scam if the company:
- Has no telephone number or physical address.
- Has an ".org" Web site or e-mail address but isn't a nonprofit.
- Demands a fee in advance.
- Tells you to send your mortgage payment to anyone other than your loan servicer.
- Instructs you to transfer ownership of your property.
- Makes verbal promises that aren't put in writing.
- Asks you to sign a document that has blank lines or spaces.
- Claims to be a national company but has only one or a few local offices.