Fraud scams are the latest pandemic in America


After a full year of investigating, Eric Nelson could find nothing suspicious about the company he planned to invest in. Satisfied he’d done his homework, he began funneling money into a business he hoped would make him thousands. Instead, it left him in ruins. Years later, he is still trying to pick up the pieces.

Scams such as the one Nelson encountered are becoming increasingly more common, invasive and difficult to identify. According to Nelson, they can happen to anyone, despite circumstances or safeguard made to avoid them.

“It’s not a matter of victims being idiots,” he said, “but of a free market system that needs to be held accountable.”

According to a press release from the Idaho Attorney General’s Office, many reports have been made in recent years in regards to various financial scams including not only investments but financial institutions as well.

“Your bank will never contact you to ask for your account number,” cautioned Idaho Attorney General Lawrence Wasden. “Your bank already knows your account number. These messages are ‘phishing’ attempts by people trying to steal your account information so they can steal your money.”

As scams become more common, it is increasingly more important to be aware and informed about major scams plaguing the nation.

Banking Scams:

Frequently, persons involved in banking scams will receive an automated phone call or e-mail in regards to a false bank account or car loan payment. Institutions named have included, but are not limited to, Wells Fargo Bank, Boise Federal Credit Union and Home Federal Bank. The premise of the call or email is that the individual’s account has been locked or compromised and additional information is required to reactivate it.

Amy McDevitt, a representative from Wells Fargo Bank, said caution should be used by individuals receiving calls seeking personal information.

“While Wells Fargo may make outbound calls on occasion, we will not ask for the customer’s account information, pin number, or other form of identification information,” she said. “Customers should never share [those things].”

Mortgage Scams:

A scam specifically targeting homeowners has been a problem across the nation in the last several months. Advertisements, which appear to be government forms and notices, have been posted on the doors of, or mailed to, recipients. The advertisements claim homeowners are able to gain large amounts of money by joining a false lawsuit against mortgage lenders. A request is generally submitted, seeking a retainer fee or information for credit card payments.

According to current federal laws, upfront charges of fees for foreclosure rescue or mortgage modification are prohibited and homeowners should be aware of such laws before investing in claims as mentioned.

Reverse Mortgage Scams:

The Financial Industry Regulatory Authority explains a reverse mortgage is “an interest-bearing loan secured by the equity in your home.” To be eligible, individuals must own their home and be more than 62, though in some cases the age is lowered to 60. Equity is converted to cash and the loan is only due at death, the selling of the home or when the owner must move for more than 12 months, such as to an assisted living facility. Individuals can be pressured into reverse mortgages on the lure of getting needed cash immediately, but it often leaves individuals in a worse debt situation than they began with.

Home Improvement Consumer Fraud:

“Every year, people spend billions of dollars for home improvements,” states an AARP Fraud Kit Catalogue. “Usually the work is done well, but each year, many homeowners are victims of poor, overpriced or never-completed work. Some people posing as home repair specialists are simply con artists looking for easy money.”

In order to avoid such fraud, AARP counsels individuals looking to do home improvement to be cautious if contractors claim to have left-over material available to use from another job, sell door-to-door or put on pressure to borrow from their lender. Often, fraudulent contractors will talk quickly in order to confuse potential victims or increase pressure to sign an immediate contract. Often, they will claim to be doing work ‘up the street’ or ‘in the neighborhood’ and either accept only cash or seek entire payment for a job upfront.

Other suggestions include deciding what needs to be done and how much can be paid, as well as taking time to search out a reliable contractor.

Pyramid Investment Scam:

The nation’s current financial crisis combined with a difficult job market have led many citizens to find alternate sources of income. One way many Americans increase their income is through investments, including pyramid investing, where fraudulent directors claim recruiting leads to success. The programs appear to be genuine multi-level marketing, but instead bring more people into a financial trap. Make sure to check into the program and what it claims to offer before recruiting.

Ponzi Schemes:

According to the Financial Industry Regulatory Authority, Ponzi Schemes take place when a central fraudster gathers money from newer investors to pay off earlier investors, instead of actually managing it as agreed upon. This keeps the scammer afloat as he attracts new investors. The scam usually falls under when no new investors are able to be attracted.

Off-shore Scams:

These scams originate from out of the country and target U.S. residents. They can take on many forms and frequently involve “Regulation S,” which, according to the Financial Industry Regulatory Authority, exempts U.S. companies from registering their securities sold exclusively to foreign investors. Those investors re-sell the securities to individuals in the U.S. against legal regulations.

Gold Investments:

According to the State of Utah Department of Commerce, Gold investments are on the rise. Though the value of gold fluctuates frequently, it usually has an inverse relationship with stocks, so when stocks are down, investments go up. Investors can put money on gold, CDs, in mining companies or in mutual funds, among other ways, and though it’s easy to catch gold fever, investors should be cautious. Scams often involve sellers who offer to sell actual bullion for investors as the prices rise. Frequently, the gold isn’t real.

Senior Life Settlement Scams:

If an individual has a life insurance policy that is no longer wanted or needed, they can surrender it for cash value, allow it to lapse or sell it to an entity other than the company issuing the policy. Though issues don’t often occur in removing former policies, scams often arise when seniors seek to sign onto a new policy. Investors are encouraged to discover if the broker is licensed in state and what information needs to be provided to whom. Tax consequences are also an important factor.

Phishing Scams:

These scams often come in the form of email or internet links that appear to come from friends or family. When the recipient clicks on the link, the email account is hacked or compromised. One instance includes email hacking frauds that occur when account security is violated, and the hacker sends out mass emails to contacts claiming to be the person hacked, stating they are stuck in a foreign country and need to have money wired. Other phishing scams may seek personal information or connect the individual to viruses.

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