Cash Money Life» Scams / Fraud

Beware of Job Hunting Scams

Ryan — Sun, 21 Feb 2010 04:03:25 +0000

The FTC recently created a new section of their website to alert people to some of the job scams going on around the country. The folks over at the FTC want you to be aware of scam artists who promise a job, access to special job listings, interviews, or a way to make a big income working from home… all in exchange for paying a fee or sending them your credit or debit card information. Many of these “opportunities” are nothing more than scams that will leave you with no job and a lighter wallet. I recommend this video, “Don’t Pay for a Promise,” for more information about safeguarding yourself.

In addition, the FTC and law enforcement officials are cracking down on these scams. You can find more information at ftc.gov/jobscams or their recent press release which details some of the recent actions by law enforcement officials and the scams they have shut down.

Job Scams Video via Federal Trade Commission

Another video and an interview

While we are on the topics of videos, I recommend checking out Lemonade: It’s Not A Pink Slip, It’s a Blank Page over at Bargaineering.com. This video covers the tough topic of losing your job. However, this video is different. It takes the view that being fired isn’t always a bad thing. It’s not always peaches and cream, but sometimes what you think is the worst day of your life can be a blessing in disguise.

An interview over at Your-Roth-IRA. Cash Money Life: An Interview with Ryan. One of Britt’s questions about military members led me to write an article about the advantages military members have when opening Roth IRAs. Consider this article essential reading if you are a military member and check out the interview for a little more information about me, the sites I run, and my thoughts on investing. And check out the rest of the site while you are there too. Britt runs a tight ship and there are dozens of great articles about Roth IRAs.

Top 10 Consumer Complaints And How to Protect Yourself

Ryan — Mon, 05 Oct 2009 04:42:46 +0000

You work hard for your money, and you should protect it. The last thing you want to deal with is an unethical company making you spend more than you should, or even worse, stealing from you. The best protection against scams or dealing with unethical businesses is learning where they are and how to avoid them. Every year, the National Association of Attorneys General (NAAG) releases a top 10 list of consumer complaints, which can be found here. The top 10 list includes :

Debt Collection
Auto Sales
Home Repair/Construction
Credit Cards (tie)
Internet Goods and Services (tie)
Predatory Lending/Mortgages
Telemarketing/Do-Not-Call
Auto Repair
Auto Warranties (tie)
Telecom/Slamming/Cramming (tie)

Protect yourself from the top 3 consumer complaints

The top 3 consumer complaints are the same for the second year in a row, so let’s take a look at how we can avoid them. The best way to protect yourself against these scams is to be aware of how they work and educate yourself about the process. This is a case where an ounce of prevention is worth a pound of cure!

How to protect yourself from debt collectors.

In the game of debt collection, knowledge of the law is power. Unfortunately, some unethical debt collectors will prey on your ignorance of debt collection laws, often by harassment, false claims, and threats. Not all debt collectors fail to play by the rules, but if you come across one who does, you need to protect yourself. The first thing you need to do is know your rights. Read and understand the Fair Debt Collection Practices Act. Then use the law to protect yourself against unethical or illegal debt collection practices.

Protect yourself from debt collectors:

Read and understand the Fair Debt Collection Practices Act.
Record phone calls/communication.
Send correspondence via registered mail or require a signature for delivery.
Send a drop dead letter; by law, debt collectors not allowed to contact you once you inform them not to (though you will still owe the debt).

How to protect yourself from shady auto dealers

Customer complaints against auto dealers was number two on the list, and the most common complaint was in regard to used vehicles. Unfortunately, most states don’t have laws that require auto dealerships to reveal a vehicle’s history, even if they have the information. That means it may not be against the law for them to tell a lie regarding vehicle accident history, insurance claims, flood damage, etc. To top it off, in most cases used car sales are final and there is no recourse for the customer.

Protect yourself from shady auto dealers

Your best protection is to inspect the vehicle yourself, take it to an independent mechanic, run a CarFax report on the vehicle, and go beyond the CarFax report for more information about the vehicle’s condition. If the auto dealership won’t let you take the car to an independent mechanic to have it inspected before purchase, then you can take that as a sign to move on to a different dealership.

How to protect yourself from home repair fraud

The third most common consumer complaint was home repair and construction. There are many great contractors and home repair specialists out there, but there are just as many hacks and fraudsters.

One common scam is when “contractors” drive through neighborhoods and offer unsolicited bids on contracting jobs. They often quote prices well under the average market price and request a large deposit upfront for “material and expenses.” Once they take your check and several other checks in the neighborhood, they disappear and are gone for good. Other complaints center around contractors using inferior materials, delivering less than promised, finishing the project well behind schedule, cost overruns, and more.

Protect yourself from home repair fraud:

Get a contract in writing with specifics regarding who, what, how much, timeline, materials, warranties, etc.
Get recommendations from family, friends, and neighbors for trusted contractors.
Ensure contractor is licensed, bonded, and insured.

The common factor in these customer complaints

Why do these three complaints lead the consumer complaint list two years running? Because they are difficult to police, difficult for the consumer to prove if a promise wasn’t in writing, and there is often very little that can be done after the fact. The most effective way to prevent falling for similar deceptive practices is to educate yourself about the what you are buying, or the process involved. Knowledge is power and protection.

More about consumer complaints

If you have a consumer complaint you should contact your state attorney general’s office or the Federal Trade Commission (FTC).

Find more information about acceptable practices or where you can report fraud: FTC Bureau of Consumer Protection.
Contact your State Attorney General.
Share your complaint with others @ Ripoff Report.

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Money Merge Accounts – Legitimate or a Scam?

Ryan — Tue, 29 Sep 2009 12:13:20 +0000

What would you say if someone told you that by purchasing a software program and following the directions you could pay off your 30 year mortgage in 11 years and you wouldn’t have to make any financial sacrifices to make it happen? It almost sounds too good to be true, doesn’t it?

Before we sign up, we have some questions to ask: can it be done, is it too good to be true, and how? The answer is yes, maybe, and by using a Money Merge Account, which is also known by the term Mortgage Accelerator Program or similar names. But just because it might work, doesn’t mean it’s the best option for you.

I recently received a reader question about mortgage software accelerator programs:

My husband is trying to convince me to by into a mortgage merge acceleration program using a HELOC. The cost is $3500.00. The program supposedly helps to pay your mortgage off in as little as 11 years (if you follow the prescribed advice) by using your HELOC, putting all the expenses on a credit card and paying them off at the end of the month. It seems too good to be true to me. I’ve never heard of such a thing. What are your thoughts?

Thanks for the question. Let’s take a look at money merge accounts and how they work, then I will give my thoughts at the end.

What is a money merge account and how does it work?

What is a money merge account? A money merge account is an account backed by a software program that helps users accelerate their mortgage payments to eliminate their mortgage more quickly. It requires users to purchase a proprietary software program, open a HELOC, which is basically a second mortgage on your home, and follow the instructions given by the money merge company.

How does it work? The money merge system works by using a revolving credit line in your HELOC to pay your mortgage. The first step is to buy the software program and open the HELOC. You then borrow a large sum of money against your HELOC and apply it to your mortgage, which reduces the principal, and thus the amount of interest you will pay over the course of your mortgage. Let’s say you borrow $10,000 in your HELOC and apply that to your mortgage. You still owe $10,000, but you owe it against your HELOC, not the mortgage. The interest on your HELOC is calculated differently than your mortgage interest, which is one way a money merge account can help people pay down their mortgage more quickly.

Your next step is to deposit each paycheck into your money merge account, which reduces the amount you owe against your HELOC. You then withdraw money from the money merge account for your monthly expenses (which is essentially borrowing more money from your HELOC). When the next month rolls around the balance remaining in your money merge account is used to pay your mortgage payment, and anything above and beyond your normal mortgage payment is used to pay down the principal, reducing the amount of time it takes to repay your mortgage. The process repeats itself and the money merge accounts use “proprietary software” to calculate the best times to make mortgage payments and borrow more money. Essentially it is a revolving line of credit used to shave small percentages off the amount of mortgage interest you are paying. Here is a simplified step by step process:

Buy mortgage software accelerator program (often several thousand dollars)
Open a HELOC (a loan secured against your home, often at an adjustable rate, and sometimes through the sponsoring company or its affiliates)
Borrow against your HELOC to pay mortgage
Deposit your paychecks into the HELOC
Pay your bills out of the HELOC
Remaining funds go toward mortgage and principle

Simplified example: You earn $4,000 each month in salary and you have $1,500 in living expenses and a $1,500 mortgage payment. You deposit your paycheck and spend the $1,500 on living expenses, leaving $2,500 in your money merge account. The remaining $2,500 is used to cover your mortgage payment, with $1,500 going toward your payment and the extra $1,000 going to pay down the principal. How quickly you can repay your mortgage depends on how much extra cash you have at the end of each month.

Wait a minute? Can’t I do that on my own?

What, can you pay down your mortgage more quickly without spending thousands of dollars on software? Absolutely. All you need to do is pay extra on your mortgage payment each month, or send in payments every two weeks. The only difference with the money merge method is that they use the revolving line of credit with the HELOC to reduce (by a small percentage) the amount of mortgage interest you pay each month.

The key to making a money merge account work is to follow their system explicitly – and that means depositing 100% of your income into the money merge account and using all surplus cash to repay your mortgage. To make this work, you have to make your mortgage repayment your number one financial priority – above paying down any other debts, saving for retirement, or other financial goals.

Can I repay my mortgage in 1/3 to 1/2 of the time without changing my lifestyle?

Maybe. How quickly you can repay your mortgage or how much money you can save depends on how much extra money you can divert toward your mortgage each month. If you already have a huge cash surplus each month, then you can do it. If you are already struggling with debt or barely getting by, then a money merge account isn’t for you. It only works if you can put a lot of extra money toward your mortgage each month.

Are money merge accounts a scam?

Money merge accounts are not a scam in the true sense of the word because there is a product that can work – for some people. But they are often called scams because many money merge products are sold by multi-level marketing companies where some people are more concerned about earning a hefty commission than selling products to people who actually need them.

A money merge account might be beneficial for some people, but they need to run the numbers based on their situation and budget, not make a decision by looking at “customer testimonials” or a text book example with perfect numbers. A money merge account only works for people who already have a budget in place and can divert extra money toward their mortgage each month. A money merge account is not a magic bullet to change your lifestyle and bring you wealth or debt freedom.

Pros and cons of money merge accounts

Pros.

The only advantage money merge accounts offer is paying off your mortgage more quickly, which is something you can do on your own.

Cons.

Cost of software ($3,500 for the reader who asked the question)
Effectiveness. You won’t know how well it works until you try it for several months (and after you spend several grand on software).
You need to have a large cash surplus each month for it to be effective.
You must make your mortgage repayment your financial priority.

Are money merge accounts a good deal?

A money merge account can work, but it is not a good deal for everyone. For it to work, you need to set your mortgage repayment as your number one financial priority and you need to have a steady stream of excess cash each month. Without surplus money, you won’t be paying any extra on the principal and you will repay your mortgage at the same pace you would have without the money merge software, effectively losing out on the cost of the mortgage software accelerator program.

Alternatives to money merge accounts

Pay extra on your mortgage each month
Make bi-weekly mortgage payments

My thoughts on money merge accounts: Most people will be better off putting the $3,500 toward their mortgage and making extra payments on their own.

Additional reading about money merge accounts:

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Credit Card and ATM Scams

Ryan — Mon, 18 May 2009 10:40:27 +0000

Credit Cards and ATM cards are two of the most convenient tools used for everyday monetary transactions. In fact, I use my credit card more often than I use cash – I just make sure pay it off in full every month!

Unfortunately, there are always those who are looking for a free ride. These You Tube videos will show you a few scams to watch out for. (If you are reading via a feedreader, you may have to click through to view the videos).

How to Avoid Credit Card and ATM Scams

Skimming on an ATM Machine (5 minutes)

Waitress Card Cloning (5 minutes)

Another restaurant skimming (3 minutes)

The Worst ATM Scam (2 minutes)

Hopefully these videos will help you avoid getting scammed – especially that last one!

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National Consumer Protection Week

Ryan — Wed, 04 Mar 2009 12:31:58 +0000

This week is the 11th annual National Consumer Protection Week. The National Consumer Protection Week was launched by the Federal Trade Commission and its partners to highlight consumer education efforts.

Consumer protection news and information

The information on the National Consumer Protection Week website is designed to help people stay informed about changes in the financial industry, how to improve their credit history and score, avoid identity theft and fraud, understand more about investments and investment scams, protect their mortgage from foreclosure or foreclosure rescue scams, and understand their consumer rights and how to report crimes or file complaints with the appropriate government agency.

Consumer Protection Tools

One of the cool features about the National Consumer Protection website is that it doesn’t look or function like your traditional drab government website. A lot of thought and work went into making the website easy on the eyes and easy to use.

But the look and functionality are only a small part of the site. The tools and information are what matter most. There are numerous tools, calculators, videos, audio downloads, brochures in PDF format, website links, and other information sources to help you find what you are looking for.

For more information about these items, I encourage you to visit the following pages:

Bookmark and share this resource

I encourage you to check out this website to get a quick understanding of what it has to offer. But the sheer number of tools and resources would make it difficult to learn everything at once, so I recommend bookmarking this resource so you can refer back to it later.

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Applying National Security Measures to Your Personal Finances

Ryan — Thu, 30 Oct 2008 15:06:48 +0000

The military prides itself in taking the highest security measures to protect our nation’s secrets. Though most people never deal with matters of national security, that doesn’t mean they shouldn’t take similar measures to protect their personal and financial information.The following definitions are used by the US government for training their military, civilian, and contractors who work on any government computer system. If these issues are important enough for national security, they are good enough for your personal information and finances!

Be aware of these threats to national security, and your personal information:

Phishing: High-tech scam that uses e-mail or websites to deceive you into disclosing your credit card numbers, bank account information, social security number, passwords, or other sensitive information. How to apply this civilian world: Companies will never ask for sensitive information via e-mail. Never click on links in suspicious e-mails; instead, type the url into the address bar.

Espionage: The act of obtaining, delivering, transmitting, communicating, or receiving information about the national defense with an intent, or reason to believe, that the information may be used to the injury of the United States or to the advantage if any foreign nation. How to apply this civilian world: In this example, you can consider yourself the United States, and the national defense is the protection of your personal and financial information. Espionage would be equivalent to identity theft – or any attempt to obtain your personal information to use against you or to benefit someone else. Defend your personal information as you would defend your life.

Hacking: Illegally accessing other people’s computer systems for destroying, disrupting, or carrying out illegal activities on the network or computer systems. How to apply this civilian world: Hackers will attempt to access your personal information to steal your identity, or simply to cause destruction to the system. This could stem from an attack on your personal computer, or a commercial computer system that harbors your information. The best method of preventing this is to maintain up to date firewall and anti-virus measures and scan all downloads and executable files before opening them.

Malicious Logic: Hardware, software, or firmware capable of performing an unauthorized function on an information system. How to apply this civilian world: Examples of malicious logic include AdWare, SpyWare, Trojan Horses, Keyloggers, and other similar programs designed to record information or cause damage to your system. The best method of preventing this is to regularly scan your hard drive for these programs, maintain up to date anti-virus measures, and scan all downloads and executable files before opening them.

Social Engineering: A euphemism for non-technical or low-technology means – such as lies, impersonation, tricks, bribes, blackmail, and threats – used to attack information systems. For example, an unauthorized person who attempts to gain passwords by posing as a service technician with an urgent access problem. How to apply this civilian world: The majority of identity thieves know the criminal responsible for stealing their identity. Often, their information is stolen by people piecing together bits of their information until they are able to gather enough information that they can assume their identity to apply for credit, take out loans, write checks, and otherwise ruin your financial well-being. Always safe-guard your personal information around everyone – neighbors, friends, coworkers, and even family members.

Be vigilant. No, you are not at war. But you should still protect your personal and financial information like the military protects matters of national security. All it takes is one serious security breach to affect devastating and lasting effects on your finances.

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My Debit Card Number Was Stolen

Ryan — Thu, 02 Oct 2008 08:40:15 +0000

I love my bank. I logged on yesterday to take care of a money transfer and I noticed a pending transaction that I didn’t recognize. I did a quick Google search for the name on the charge – SOFTCOM Technologies – and it came up with a webhost located in Canada.

Red Flags. I obviously use a webhost for my sites, but I use LunarPages, which is located in California. I had also never heard of SoftCom, and had no recollection of using them in the past. The other red flag for me is that I use my Discover Business Credit Card for all my business needs, not my personal debit card.

Report a lost ATM/Debit card immediately! I called my bank, USAA, and inquired about the pending transaction. They were great. In the matter of a few minutes the representative was able to determine there had been two charges – one in June and one last night. Somehow I missed the June charge. After the customer service rep and I discussed the issue for a few minutes, we determined it was most likely fraud. I was transferred to USAA’s fraud department and they handled the situation in a few minutes. Once you suspect fraud, immediately contact your bank!

Problem resolved on my end. My card was canceled, a new one was sent to me, and I was informed I would receive a credit for both charges. I asked how the situation would be handled and they informed me they do a charge back with the bank involved to collect the money.

Now to find out what my card has been used for. My curiosity got the best of me and I went back to the SoftCom site and I noticed a phone number, which I decided to call. At this point my debit card was already canceled, so what did I have to lose?

Their customer service rep asked me a few questions, and after I explained the situation, he asked for the first 2 digits of my card number and my last 2 digits to find the account being funded by the card. That didn’t narrow it down enough so I gave him the last 4 digits and he said, “OK, I’ve got your account right here. Roger Williams, right?” Wrong!

He read off the domain name and I typed it into Google. It was filled out in some Eastern European language that I am not familiar with. It obviously wasn’t mine.

The rep was really cool about the situation and said he would flag the site as fraudulent. Within minutes, the site was completely gone.

I was lucky! The entire process took about 20 minutes due to great customer service on both ends. I admit that I was lucky though. I won’t be out any money, and the thieves only made two small transactions (both in the low $20’s). Had they withdrawn more money, they probably could have made me overdraft my account. Of course, I probably would have noticed it more quickly then!

What to do when your debit card is lost or stolen

If your wallet is lost or stolen, you should immediately report it. You will lessen your losses and help prevent identity theft. Here is a story about how a stolen debit card ruined a vacation. Thankfully, Glblguy was able to make it home safely. This event lead him to write about what to do when your debit card gets stolen.

How did they get my number? I honestly have no clue. For a couple years I used my ATM/Debit card as my primary means of payment, but I rarely use it anymore. I now prefer to use cash back credit cards – my current card of choice is the Chase Freedom Card (review).

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How to Detect and Avoid IRS Tax Scams and Identity Theft

Ryan — Thu, 21 Feb 2008 11:40:04 +0000

There is a phishing scam going around purporting to be from the IRS. In this e-mail, they inform the recipient they are entitled to refunds of $92.35 or some other amount due to a calculation error on a past tax return. These e-mails are not from the IRS; they are from thieves who are attempting to extract your personal information to steal your identity and rack up thousands of dollars in charges they will make on your credit.

In this e-mail example, recipients were advised to go to a link and enter their identifying information that would normally be on their tax form, (i.e., name, address, DOB, SSN, etc.) in order to process their refund request. This email is BOGUS. The IRS never sends e-mails requesting personal information; they always send letters advising the individual of a pending problem.

These scams always turn up with renewed force during tax season, when many recipients act without thinking. Never enter your identifying information into a website without understanding exactly why you are doing it and where the information is going. For these types of e-mails, it is best to NEVER click on the link in the e-mail. Instead, type the url directly into the web address bar in your browser.

From the IRS website:

Phishing. Phishing is a technique used by identity thieves to acquire personal financial data in order to gain access to the financial accounts of unsuspecting consumers, run up charges on their credit cards or apply for new loans in their names. These Internet-based criminals pose as representatives of a financial institution and send out fictitious e-mail correspondence in an attempt to trick consumers into disclosing private information. Sometimes scammers pose as the IRS itself. In recent months, some taxpayers have received e-mails that appear to come from the IRS. A typical e-mail notifies a taxpayer of an outstanding refund and urges the taxpayer to click on a hyperlink and visit an official-looking Web site. The Web site then solicits a social security and credit card number. In a variation of this scheme, criminals have used e-mail to announce to unsuspecting taxpayers they are “under audit” and could make things right by divulging selected private financial information. Taxpayers should take note: The IRS does not use e-mail to initiate contact with taxpayers about issues related to their accounts. If a taxpayer has any doubt whether a contact from the IRS is authentic, the taxpayer should call 1-800-829-1040 to confirm it.

The IRS also gives information on how to report suspected tax fraud activity.

Be vigilant. Protect yourself against computer fraud.

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