Scams Schemes and Frauds

Identity Theft Scams

Phishing
By using the names of well-known banks, online retailers and credit-card companies and creating what appear to be official Websites and e-mails, phishers are able to lure people into revealing sensitive personal information such as credit card numbers, user names and passwords, social security numbers, PIN numbers, mothers' maiden names, etc.

The phisher informs the recipient that some type of problem has affected their account (such as an identity theft attempt, a tax issue involving the IRS, a technical update or a problem involving the FDIC or Homeland Security Act). The victim is instructed to click on a link and enter verify or update the personal information needed to fix the problem. The information can then be used to make purchases, steal money from accounts and otherwise illegally use a victim's identity.

For more information on Phishing scams visit the Anti-Phishing Work Group's website at www.antiphishing.org

Advance-Fee Scams

Advance-Fee Loan Scams
A telemarketer, email or advertisement in a newspaper, in a magazine, on the Internet or on a flyer will guarantee you a credit card for a fee paid in advance. The scam will sometimes use a legitimate company's name or a variant of a trusted name. They will also sometimes ask to be called at a "900" number, resulting in charges to your phone bill. They will also usually ask to be paid via overnight or courier service or by wire, so that the payment can't be traced. The victim pays the fee, the scam artist takes the money, and the loan never occurs.

Legitimate guaranteed credit offers do not require payments up front. A lender may ask an applicant to pay application, appraisal or credit report fees, but these fees not usually required before the application is completed and are generally paid directly to the lender, not to the broker or person arranging the loan. Legitimate lenders may also guarantee offers of credit to credit-worthy consumers, but will rarely do that without looking at the applicant's credit report.

To file a complaint or to get more information on this type of scam, visit www.ftc.gov or call 1-877-FTC-HELP

Nigerian or 419 Scam
Back in the 1920s, this was known as "The Spanish Prisoner" con. Businessmen were contacted by someone trying to get a member of a wealthy family out of a prison in Spain. The wealthy family promised to reward those who helped with the release of the prisoner. Victims often paid for one failed rescue attempt after another.

In present form, a letter, fax or e-mail from Nigeria or other foreign nation is sent to an individual or organization promising monetary rewards in exchange for money or the use of a legitimate bank account. The scam may include documents with official looking stamps, seals or logos testifying to the authenticity of the offer. Blank letterhead and invoices are requested from the victim. In almost every case there is a sense of urgency. The victim is sometimes even enticed to travel to Nigeria or a border country.

To find out more about this scam visit the Federal Trade Commission at http://www.ftc.gov/bcp/conline/pubs/alerts/nigeralrt.htm. If you have been victimized by the Nigerian scam, send a copy of the letter or email to the Secret Service, Financial Crimes Division, 950 H Street NW, Washington, D.C. 20223, call (202) 406-5850 or visit www.secretservice.gov/alert419.shtml

Fake Check Scams
Fake check scammers check newspaper and online advertisements for people listing items for sale and check online job sites for people seeking employment. They may claim to be in another country and to have difficulty sending money directly to the seller or employee. They will send, or arrange to have sent via a third party, what appears to be a legitimate check for more than the seller is owed and will ask that the surplus be wired back to them. If the scam is part of a work-at-home scheme, the scammers will place an ad or post a flyer and then ask to have checks processed by the victim for their clients. The victim deposits the checks and then wires them the money minus the agreed upon pay. The checks turn out to be fakes. Even though the bank has already make the deposited funds available, once the forgery is discovered, they will deduct the amount that was previously credited to the account.

There is no legitimate reason for someone who is sending you money to ask you to wire money back to them. If someone wants to pay you for something, ask for a cashiers check for the exact amount, preferably from a bank that has a branch in your area.

Report fake check scams to the National Fraud Information Center at www.fraud.org or call (800) 876-7060.

Disbursement of Will or Charitable Donation Scams
A scam artist posing as a wealthy foreigner contacts an individual or organization wishing to leave or send money to that person or group. They ask for account information or an advance payment to cover taxes or to ensure conversion into dollars. The donation or disbursement is never made.

Online reports on national charities are available from the Better Business Bureau Wise Giving Alliance web site at www.give.org.

Award or Lottery Fraud
The victim is informed he has just won an award or a foreign lottery. In order to collect the money, the victim is asked for advance tax payments or other fees. Some foreign lottery ticket scams lure victims into buying chances in fake lotteries.

Fraudulent Goods Order Scam
A scam artist places an order for goods from a business and pays with a legitimate check drawn on a foreign bank. They then place another order and pay again with a genuine check, establishing trust with the merchant. They eventually inform the victim that they urgently need a large quantity of a product shipped and provide a fake check for payment.

Real Estate Scam
A scam artist offers to serve as broker in selling real estate that either is not for sale or is nonexistent. The victim is then asked to pay a broker's commission in advance. That payment is lost once the scam is discovered.

ATM and Credit Card Fraud

Gasoline coupons
Telemarketers offer gasoline vouchers or coupons in exchange for shipping and handling fees (usually $1 to $5) debited directly from a victim's bank account or charged to a credit card. Unauthorized charges are then made to the accounts without the account holder's permission.

Shoulder Surfing
A thief peers over an ATM user's shoulder to get a PIN number and then using a distraction (like yelling, spilling a drink or dropping money and asking who owns it) steals cash, ATM card or both. Thieves can also use a small camera or cell phone camera to capture an image of your credit card while you have it in your hand.

ATM Skimmers or Lebanese Loops
ATM Skimmers are devices used to steal your ATM card or the information on it, as well as the Personal Identification Number (PIN) associated with that card. One type of skimmer is a thin, transparent-plastic overlay on an ATM keypad that captures keystrokes as they are typed while another transparent device inside the card slot captures data from the magnetic strip on the inserted card. Other skimmers are larger and fit over the entire face of the ATM.

Swipe and Theft
If you use a debit card or credit card at a store or restaurant be aware of this scam using hand-held card skimmers. These skimmers are used by dishonest employees who take your card for payment. While in possession of the card they swipe it in a skimmer recording the information on the card. That data can then be used to make copies of your card or unauthorized charges to your account.

Guaranteed Credit Cards
These frauds often target people who are having trouble getting a credit card. They may claim that they can guarantee you a credit card regardless of your credit history in exchange for a fee paid to them in advance. Sometimes fraudulent credit card offers promise a card from a major card issuer and then provide a charge card that can only be used to buy overpriced goods from that company's own catalogue.

Lending or Mortgage Fraud

Property Flipping
One common mortgage fraud scheme is "property flipping," in which property is bought, appraised at a much higher price than it is actually worth and then resold. The mortgage holder is left with a house worth much less than the loan they were issued.

Predatory Lending
Predatory lending can involve offering only loans with higher interest rates than the borrower can afford, adding unnecessary fees to the cost of the mortgage, Including a large one-time "balloon" payment at the end of a payment schedule to attempt to disguise a high cost loan, moving a borrower from one loan to another near the end of the payment schedule to extend interest payments and add to the overall cost of the loan and/or convincing borrowers to purchase more insurance than the borrower needs If the homeowner falls behind on payments they can lose the home.

For more information visit Fannie Mae's "Don't Borrow Trouble" website at www.dontborrowtrouble.com.
Mortgage brokers must be registered with the New York State Banking Department in order to do business in New York State. Visit http://www.banking.state.ny.us/simbroke.htm to see a full list of registered Mortgage Brokers.

Deed Transfer or Foreclosure Scams
These scams target people who may be having trouble paying their home mortgage or have a home in foreclosure. They advertise over the Internet and in local publications, distribute flyers, or contact people whose homes are listed in foreclosure notices.
They may promise to contact your mortgage lender or to obtain refinancing for you. They then ask you to temporarily sign over your property deed for a certain period and make payments directly to them. They may then borrow against your home or even sell it to someone else.

Homeowners who can't pay their mortgage or face foreclosure should contact their mortgage lender or an attorney for help.

Home Improvement Loan or Steering Scams
This scam involves a dishonest contractor steering a home owner into getting to a home improvement loan through a high priced lender or convincing homeowners to sign blank or undated papers that turn out to be unfavorable loan agreements.

Homeowners should make sure that a contractor is licensed and has responded well to complaints filed against them by finding and contacting your local Better Business Bureau at www.lookup.bbb.org. To file a complaint against a home improvement contractor call the New York State Attorney General's office at (800) 771-7755 or visit www.oag.state.ny.us

Investment Fraud

Wrong number
The scam is executed through a phone message left on an answering machine or a voice mail designed to sound as if the speaker doesn't know that they are leaving a "hot stock tip" for a friend on the wrong machine. The message is actually from someone being paid to trick people into buying over-inflated stock. Once demand drives up the stock price, the scammers dump their shares, pocket the profits, and often start again on another stock.

To read a transcript or hear an actual recording of one of these calls visit the U.S. Securities and Exchange Commission at http://www.sec.gov/investor/pubs/wrongnumberscam.htm. If you receive one of these calls or are the victim of this scam you can also use their online complaint form at http://www.sec.gov/complaint.shtml, or you can call them at 1-800-SEC-0330.

Online or e-mail scams
Online investment scams will sometimes use seemingly independent newsletters to offer investors so-called unbiased information about companies, recommend "stock picks of the month" or to spread false information or promote worthless stocks.

Online bulletin boards and newsgroups have become a popular place for investors to share information. Bulletin boards typically have numerous messages on various threads of conversations between posters on investment opportunities. Many of these threads are planted to pretend to reveal "inside" information about a company's products or dealings. Most bulletin boards let users use multiple anonymous names.

People claiming to be independent observers may actually be company employees, shareholders, or paid promoters. One person may create the illusion of widespread interest in a small or even non-existent stock by posting a series of messages under various names. Scammers may also use spam e-mails to find investors or to spread rumors about a company.

To avoid investment scams, a wise investor should always slow down, ask questions, and get written information on any offer whether promoted in person, by mail, telephone, or on the Internet. Pressure to act immediately is a danger sign of fraud. Get details in writing. Legitimate companies will be happy to give you all the information you need. Take notes so you have a record of what you were told, in case you have a dispute later.

For information on making wise investment decisions contact the federal Securities and Exchange Commission, 800- 732-0330, www.sec.gov, the North American Securities Administrators Association, 202-737-0900, www.nasaa.org and the National Futures Association (for investments in commodities), 800-621-3570 www.nfa.futures.org.

Ponzi or Pyramid Scheme
In a pyramid scheme, participants are asked to invest money and to recruit other investors in exchange for the promise of high returns in a short period of time. Money from new investors is used to pay off previous investors. Ponzi schemes are a type of pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. The scheme eventually collapses when the money coming in from new investors isn't enough to pay earlier investors.

Recovery Room Scam
Consumers who have lost money through fraudulent investments, prize promotions, merchandise sales, or charity solicitations are sometimes placed on lists by scam artists called "sucker lists". These lists have the name, address, phone number and details about previous losses. The lists are sold to telemarketers who inform the victim that they offer recovery services. They often misrepresent themselves as government agents. Some say they are holding money, others offer to file complaint paperwork with government agencies on your behalf or claim they can get you placed at the top of a victim reimbursement list.

These scam artists may guarantee the recovery of your losses, ask for payment up front and may also charge you fees for providing addresses of government agencies that consumer protection agencies or your local library may offer for free.

Legitimate recovery room operators cannot request or receive payment until seven business days after they deliver the recovered money or item to you. If they ask you to pay up front, do not do business with them. Although some government agencies and consumer organizations provide assistance to consumers who have lost money, they do not charge a fee and do not guarantee that they can get your money back.

If you suspect telemarketing fraud, call the National Fraud Information Center at 800-876-7060 or go to www.fraud.org. They will then also file a complaint for the consumer with the FBI, the FTC, and the local police. Reduce the number of telemarketing calls you get by registering with the Federal Trade Commission's Do-Not-Call registry at www.donotcall.gov or by calling 866-290-4236 from the telephone number you wish to register.

Free Money Scam

Government Grant and Loan Scams
This scam targets people looking for funding for small businesses using the internet, phone and newspaper to advertise. A company claims that they can provide a list or guarantee a grant or loan from the government in exchange for a fee. Victims are instructed to send money to pay for 'insurance' on the promised grant or loan. They will usually ask that the money be sent via overnight or courier services or by wire, so it can't be traced. The victim is then provided information that is available in any library or can be ordered directly from the government for free or is not sent anything at all.

For information on small business loans or funding for startups, visit the Small Business Administration at www.sba.gov

Grant projects that have been announced by the federal government appear in the Catalog of Federal Domestic Assistance (CFDA). The CFDA is a free listing of all grant and assistance programs administered by 57 federal agencies. Most public libraries will have a current copy or you can visit the CDFA online at http://www.cfda.gov

Free Government Money scam
This scam involves the perpetrator, in some cases pretending to be a government employee, promising to deposit free government money directly into a bank account. The victim is asked to provide their bank account information so that a small processing fee can be deducted.

Unclaimed Funds scam
In this scam individuals are led to believe that the state is holding unclaimed money for them and are asked to pay a fee for information on how to retrieve those funds.

Occasionally a person or organization loses track of money or personal property due to unclaimed bank accounts, unpaid insurance policies, unreturned utility and rent deposits, undelivered dividends and shares of stock, uncashed checks, and forgotten deposits. In New York, banks, insurance companies, utilities and investment companies are required to surrender inactive accounts to the State. Check every few years to see if there are unclaimed funds that you may be entitled to by visiting the State Comptroller's Website at http://www.osc.state.ny.us/cgi-bin/db2www/ouffrm.d2w/input or call toll free 1-800-221-9311. After a relative or family member dies, do a full search of the United States. For a list of every state unclaimed property program visit the National Association of Unclaimed Property Administrators at http://www.unclaimed.org/mainframe.asp?VisitorType=owner

For more information or to report possible scams call The National Fraud Information Center (NFIC) at (800) 876-7060 or visit www.fraud.org/scamsagainstbusinesses/tips/nigerian.htm

If you have questions or concerns about these or any other scams, schemes or frauds, or would like to learn more about who we are and what we do, call the New York State Banking Department at 1-877-BANK-NYS or visit us on the Web at www.banking.state.ny.us