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Recession Scams Revealed
Debt ConsolidationIn desperate financial times, consumers are far more likely to fall for scams, particularly when they are desperate for financial assistance but do not qualify for government assistance. Here are the top ten scams to watch out for:
- Credit Repair - The FTC has investigated 70% of these companies, and have yet to find one that can get truthful information taken off of a credit report.
- Foreclosure Rescue - These scammers promise to save your home, either by having you send them your mortgage payments while they “negotiate” with your lender, or by getting you to sign over the title to your home. Either way, you lose.
- Free Lunch Seminars - You get tickets in the mail to a free “information” seminar on some moneymaking scheme. If you’re hungry and have a few hours to kill, you can always go for the meal. But keep your hand on your wallet. An SEC report states that, of the seminars it attended, about half presented misleading claims, and 13% seemed to be participating in complete fraud.
- Home-Based Businesses - Never, never, never pay a fee to start a home-based business such as mystery shopping or clerical work. Once you’ve paid the money, you’re on your own. If you are thinking of starting your own home-based business, do some research at the library before you pay anything to anyone.
- Identity Theft - These are always around, but when people are struggling financially, it’s easier to fall for them. You get an email that purports to be from your bank, the IRS, a package delivery company, your credit card company, the FBI, or anything that gets your attention. The email claims that your account has been frozen or the company has some unclaimed money for you, or some other seemingly plausible reason for asking for your personal identifying information. Do not respond to these emails.
- Sneaky Bankruptcy - Some companies promise debt relief by consolidating your bills into one payment without borrowing, or by stopping creditor harassment, foreclosures, and repossessions. What they may actually be offering is bankruptcy. While this may be a valid solution for some, remember that the consequences to your credit rating will remain for some time, and a bankruptcy will stay on your credit report for ten years.
- Grants - Many, many companies promise that you are qualified for at least one government grant totaling $25,000. Usually, they promise to send you certain information for free, then you must purchase their program to learn how to find and send for grants. You can get all of the information you need about grants for free on government websites, which end in “.gov.” However, applying for a grant is not an easy task, nor do the results arrive quickly.
- Ponzi Schemes - These come in many forms, but the principle is the same: you provide a certain amount of money to one or a few people on a list, and you can expect to receive an incredible amount of money in return from people lower on the list than you. These schemes eventually collapse because the money runs out before all of the investors receive their share.
- Pyramid Schemes - Similar to Ponzi schemes, but the difference is that whoever you recruit to join provides direct benefit to you. These schemes collapse much faster than Ponzi schemes.
- Job Scams - When unemployment is up, headhunters appear out of the woodwork, promising to find you the highest-paying jobs. . .for a fee up front. Don’t pay it. The jobs will never materialize.
Protecting Yourself from the Scammers
The important thing to always remember is that anything that sounds too good to be true usually is too good to be true. Don’t let yourself be pressured into giving up any money before you have time to think about your decision. Check with the National Fraud Information Center if you have any concerns.
