BBB’s top 10 scams of 2009

Posted on 11. Feb, 2010 by nevonnemcdaniels in Community Voices

Questionable activities and downright fraudulent scenarios “dominate” my desk and show no signs of slowing down.

People who work to combat fraud have a saying, “Scams never go away. They merely morph.”

Some scams listed you may already be familiar with because they are activities that continue to plague and victimize both businesses and customers. Other scams are on this list because regionally, they overrode any other industry with questionable complaint activity.

Following, in no particular order, is the BBB’s top 10 list of scams and rip-offs that took the most advantage of businesses and customers in our region in 2009:

1. Stimulus/government grant scams – Even before President Obama announced the stimulus plan in February 2009, scammers had already set up schemes for misleading consumers and small business owners into thinking they could get a piece of the pie. Offers for worthless advice on how to get government grants bombarded individuals as well as businesses online, over the phone, via mail and e-mail.

2. Robocalls – Owning a cell phone or having their phone number on the do-not-call list did not help put a stop to harassing automated telemarketing calls in 2009. The robocalls often claimed that their auto warranty was about to expire — which wasn’t true — or offered help in reducing their interest rate on their credit card. The prevalence of robocalls violating federal telemarketing laws prompted the FTC to increasingly restrict the practice in 2009.

3. Job seeker scams (on and off line) – Scams targeting job hunters vary and include attempts to gain access to personal information such as bank account or social security numbers and requirements to pay a fee in order to even be considered for the job. Another common scam was reported to BBB by job hunters who were told by a prospective employer that they had to check their credit report before being considered for a job. The job offer is actually a marketing ploy for online credit monitoring that costs the victim every month until they cancel.

4. Over-payment scams – Over-payment scams typically target small business owners, landlords or individuals with rooms to rent and sellers on classifieds or sites like Craigslist. Typically the scammer pretends to be a customer, possibly renter or interested buyer. The victim receives a check for more than the amount requested. The scammers then ask the victim to deposit the check and wire the extra amount elsewhere, such as to a shipping company. Ultimately, the check is fake and the victim is really wiring money back to the scammers.

5. Phishing e-mails/H1N1 spam – A perennial problem, especially for financial institutions such as banks and credit unions because their good name is being misused, phishing e-mails pop up in inboxes and can take various forms such as appearing to be from a business, a government agency or official or even a friend. Whatever the setup, the goal of any phishing e-mail is the same: to trick victims into divulging sensitive financial information or infect the victim’s computer with viruses and malware. Spam e-mails selling wares to prevent the spread of the H1N1 virus were particularly rampant in 2009.

6. Small business loan/grant and supply scams — This one’s similar to the stimulus grant scam (#1 on this list), but not really. Looking for credit to keep your business afloat can be tough, and that is why you need to be careful of ‘no credit’ or ‘bad credit’ loan offers. What looks like quick and easy credit can often end up resulting in huge financial loss and possibly ID theft.

Other companies call and pretend to be a regular supplier looking to confirm your address in a directory or to ship office supplies.  Once bills arrive for unwanted advertising or overpriced supplies, aggressive “collection” agents call with threats of legal action.

If you receive an unsolicited phone call, e-mail, or letter from a lender, be suspicious. Avoid dealing with a person who guarantees a loan without checking your credit or reviewing your business plan. Also, beware of lenders who:

• cater to applicants with bad credit;
• pressure you to make a decision on the spot;
• request payment using a wire transfer service such as MoneyGram or Western Union.
• restrict the number of people in your company that can make purchase decisions and insist on a valid purchase order.

7. Company profile hijacking
This issue became more rampant and sophisticated in 2009, and affected more businesses than we have ever seen in one year’s time. What is company profile hijacking? It’s a mess of a situation where fraudsters either lift your Web site and or company profile information (letterhead, business cards, checks, etc.) and manipulate your official information using the “hijacked company” profile to order goods or services on credit which they then sell but never pay for, or to gain personal information from unsuspecting victims who think they are dealing directly with you. The mess of this situation is that the company then has to sort out the problems arising, including correcting its public record.

OF PARTICULAR NOTE: The misuse of the BBB logo on printed materials, fake Web sites, and/or in sales calls ran rampant this past year. For the first time, BBB saw highly questionable (aka unethical) groups lifting complete BBB profiles of A+ rated BBB Accredited Businesses to purport their scams, making it seem as though they were the company with the A+ rating. For a scenario example, go to Tip #3 here to see how ugly it can get

8. Credit card fraud
Every day businesses have to deal with sorting through what online orders are legitimate and which ones aren’t. What a bother! Scams not only hurt the pocket, but they also aim to waste others’ time and energy. The key to not letting this scam get to you is to train staff to know the red flags of a potential credit card scam.

How does it work? Law enforcement spoke with a small company in Florida that ships heavy industrial parts. Scammers in Africa placed an order for about $10,000 in merchandise using fraudulent credit card numbers. The order, made by e-mail only, was to be shipped from Florida to Washington state. The gist of the transaction was the scammers tried to get the company to pay several thousand dollars in shipping costs to the “shipper account” in Ghana, Africa.

Several things in the suspect’s communications indicated it was a scam. 1) The person placing the order used a g-mail address only; 2) the text of the message used poor English and punctuation; 3) when the suspect called, there was considerable background noise – which was most likely a voice-over Internet call.

9. Online payday loan offers — The state of our economy is a reason why this category has blossomed, and even went so far to reach a top 10 scam list this year. The other reason is because when you apply for an online loan, you don’t know exactly who you will end up dealing with. Many vague enticing ads appear online for payday loans. They tout being quick and easy as pie. But, it is too easy to not know where your personal info will land when you reply to one of these ads.
BBB, along with the FTC, advises people to consider other possibilities before deciding on a payday loan, especially one online:

If you need credit, shop carefully. Consider a small loan from your credit union or a small loan company, an advance on pay from your employer or a loan from a family member or friend.

Ask your creditors for more time to pay your bills. Find out what they will charge for that service – as a late charge, an additional finance charge or a higher interest rate.

If you need help working out a debt repayment plan with creditors or developing a budget, contact your local consumer credit counseling service. Nonprofit groups offer credit guidance to consumers for little or no cost.

Finally, contact your local Better Business Bureau for information on any lender.

10. Investment opportunities — We saw this happen to individuals as well as businesses in 2009. (Why businesses, too? The workplace, like churches and other social networking groups can be a “captive” audience for such pitches because the tone of the environment is one based on trust.)

Your friend or a family member may have invited you to attend a presentation involving an investment opportunity. The promoter convinces investors that they can be part owners of an exciting investment portfolio, provided that they enlist new recruits. The promoter may even offer promising commissions in cash and bullion.

In reality, this could be an illegal pyramid scheme. The new capital brought on by new investors is keeping this imaginary investment afloat. Get the facts. If you attend an information session, be sure to collect business cards and promotional materials. You should also ask the promoters questions.

• Who are the principals of the company?
• What are the average earnings of a “typical” participant – with half of the participants earning more than this amount and half of participants earning less?
• How much are the startup costs?

Gather as much information as possible, before agreeing to anything.

Zan Deery is the communications, lead investigator for the Better Business Bureau serving Eastern Washington, North Idaho and Montana. She can be reached at 800-356-1007 or by e-mail at zan@spokane.bbb.org