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The Worst Scams in America

The Year in Scams


The National Consumers’ League recently released their report of top scams of 2009 based on the number of consumer complaints filed with their Fraud Center. Like most Americans, scammers also learned to adapt to changing economic realities, and shifted their tactics to cash in on households desperately looking for cheap goods, extra cash and educational training.

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The Rise of Education Scams


One unfortunate finding in the Fraud Center report is the emergence of scholarship and education grant scams. These scams, which ask consumers to pay upfront for scholarship awards and/or financial aid, were one of the top 10 telemarketing fraud tactics. As the Fraud Center explained in their report, “Consumers coping with the recession appear to be increasingly falling victim to scams that purport to help them boost their incomes or enhance their professional skills.” Nice job, fraudsters. Americans try to better themselves and you pull the rug out from under them. How low do you have to go?

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Scammers Go After Older Americans More Often


According to the Fraud Center, older Americans seemed to be the hardest hit by scams last year. Consumers 56 and older accounted for 25% of all complaints. On top of that, this was the only age group to actually file more complaints in 2009 than the previous year, which seems to indicate that scammers were targeting them more often. Either that, or this age group just felt like complaining more.

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Wyoming Gets it the Worst


After not being anywhere in the top 10, Wyoming suddenly became the state with the most fraud complaints per capita this year. Then again, it was also one of the drunkest states in the country, so maybe the people there were just a little bit confused and thought they’d been defrauded.

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And now, the Most Popular Scams


With those facts in mind, here are the top nine scams from last year. Several of these are the result of more Americans relying on the Internet to buy goods and meet people. Others are con methods that have plagued consumers for years.

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9. Friendship and Sweetheart Swindles


It can be hard sometimes to distinguish peers from predators (I’m looking around skeptically at my coworkers as I write this.) This is especially true online. Friendship and Sweetheart Swindles, as defined by the Fraud Center, are when con artists try to foster a relationship with you in order to make you feel comfortable enough to give them money. It kind of sounds like salesmanship on steroids.

In one notorious case, a woman from San Francisco who has been described by authorities as a “serial sweetheart swindler” (who can resist the alliteration?) actually pretended to be an uninsured cancer victim in order to con elderly men. She apparently succeeded in defrauding two men of nearly $50,000.

In the past, the National Consumers League has warned people against using online dating sites because they are a breeding ground for this scam.

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8. Internet Auctions


Auction fraud used to be the leading online scam a few years ago, but consumers seem to be wising up to it. Internet auction scams, where consumers never receive goods that they paid for online, accounted for just 1.17% of all consumer complaints to the Fraud Center.

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7. Advaced Fee Loans and Credit Arrangers


One common lesson you can learn from scams is that if something seems too good to be true, it usually is. According to the Fraud Center, one popular scam tactic last year was to offer personal and business loans for an upfront fee, regardless of your credit score. There’s no doubt that in the rough economy last year, a deal like that might sound impossible to turn down, and indeed, it accounted for nearly 2% of all consumer complaints.

The Federal Trade Commission has several key tips for spotting this scam before it happens. If the lender in question seems eager to do business with you despite your bad credit, you should think twice.

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6. Business Opportunities and Franchises/Distributorships


The Fraud Center notes that these scams were absent from the top 10 list in 2008, but this year, they accounted for more than 2% of all complaints. According to the Fraud Center, victims of these scams are “promised unrealistic or ‘guaranteed’ profits in return for a significant upfront investment in a business – such as magazine stands, vending machines, or internet kiosks.” Apparently, this scam was more successful with Americans this year than previously because they were more desperate for easy money in this tough economy. So remember, when a strange man approaches you online or over the phone and asks for money for his fledgling vending machine enterprise, it might just be best to let that opportunity pass you by.

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5. Nigerian Money Offers (Not Prizes)


Sometimes I can’t help but feel bad for people who live in Nigeria and have to deal with the fact that so many scams are named after their country. In this  version, someone from a distant country contacts you, asking you to transfer money with the promise of some fantastic returns. According to the Fraud Center, “One common ploy is to tape money around a block of wood or bundles of paper to make it look like a large amount of currency. Sometimes the crooks even sprinkle harmless powder on the money and tell victims that it’s a toxic chemical used to protect it. Then they offer to sell a special substance to remove the powder!” This scam accounted for 2.88% of all consumer complaints.

The Fraud Center offers several tips on how to avoid this scam.

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4. Phishing/Spoofing


Phishing is one of the most common ways Internet users get defrauded, and accounts for 7.17% of all consumer complaints reported to the Fraud Center. In this scam, users are tricked into giving away their personal information, either over the phone or by e-mail. What’s particularly frightening about phishing is how successful the tactic seems to be across platforms. Phishing has been used to steal information on social networks like Twitter, to mess with environmental enforcement abroad and even to spook the Director of the FBI.

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3. Prizes, Sweepstakes and Free Gifts


Americans love free stuff, especially in a recession. But in these scams, consumers are asked to send in money to claim their prizes. One of the better known examples is the Publishers Clearinghouse scam, where people receive letters congratulating them on some monetary prize they’ve won.

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2. Internet: General Merchandise


One quarter of consumer complaints to the Fraud Center were about goods that had been purchased on various online retail sites, but were “never delivered or misrepresented.” The Fraud Center urges consumers to be cautious when buying products online, and to be skeptical of deals that seem too good to be true. However, if like most people, you do make online purchases, they recommend using your credit card because it’s easier to recoup any losses if you are scammed.

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1. Fake Checks


This was the most common scam last year too, and it only became more prevalent as the economy worsened and Americans became more desperate for easy money. Fake check scams accounted for 42% of all consumer complaints in 2009, which is up slightly from 2008. According to the Fraud Center, this scam occurs when “fraudsters dupe consumers into cashing bogus checks and wiring a portion of the proceeds.” The checks inevitably bounce, but not before the scammers have your hard-earned money in their hands.

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