Every day, thousands of people are taken advantage of by professional criminals and con artists using slick and sophisticated methods to steal people’s money. Often, even as the crime is being committed, the victim is unaware of the scam. Too often, the victims feel ashamed because they placed their trust in people who stole from them – and they are too embarrassed to report the crime. If you have fallen victim to a financial scam, you are not alone.
One of the best ways to protect yourself from financial scams is to be informed. The St. Petersburg Police Department has created this brochure to include information about some of today’s most common scams, as well as helpful tips to protect yourself and your money.
Keep in mind that, with every opportunity, if it sounds too good to be true, it probably is!
The Grandparents Scam
A grandparent receives a frantic call from someone they believe to be their grandchild. The supposed grandchild sounds distressed and may be calling from a noisy location. The supposed grandchild claims to be involved in some type of trouble while traveling in Canada or overseas, such as being arrested or in a car accident or needing emergency car repairs, and asks the grandparent to immediately wire money to post bail or pay for medical treatment or car repairs.
A variation of the scam may involve two scammers -- the first scammer calls and poses as a grandchild under arrest. The second scammer, posing as some type of law enforcement officer, then gets on the phone with the grandparent and explains what fines need to be paid.
A common theme of the scam across the nation is the caller’s request for the grandparent to wire money through Western Union or MoneyGram or to provide bank account routing numbers. Wiring money is like sending cash; there are no protections for the sender. Typically there is no way you can reverse the transaction, trace the money, or recover payment from the telephone con artists.
Pay Up Front Scam
Advance fees, or upfront payments, are an instant “red flag.” Advance fee con artists pose as representatives of companies that seem real. They use slick presentations to trick their victims into paying large upfront fees for bogus loans, loan modifications, loan refinancing or credit cards. They frequently target individuals with poor credit histories by promising easy or “guaranteed” approval. However, in order to take advantage of the offer, the victim must pay high but seemingly legitimate fees for the application, insurance or other “services.” In the end, the scam artist takes off with the fee and the victim gets nothing in return.
People encounter advance fee scams in a variety of ways, including telemarketing calls, text messages, emails, well-designed documents, classified ads and the Internet, including social media.
Ponzi schemes are named after the early 20th century swindler Charles Ponzi, whose most infamous modern successor is Bernie Madoff. Ponzi schemes take many forms, but they all depend upon a steady stream of investors who are promised regular, abnormally high rates of return. Without a steady stream of new investors, the Ponzi scheme becomes a “house of cards” that collapses under its own weight, with the scam artist long gone with investors’ money.
You have received a phone call or email from someone claiming to be working for a government agency like the Internal Revenue Service or the U.S. Treasury. Even though you have not received any notices from the government, the caller claims that you owe money for unpaid or back taxes, or that you missed a paperwork deadline.
The caller then threatens you with arrest or lawsuit if you do not pay them or give them personal information (for example, your Social Security number or date of birth).
The caller demands that you wire them money, purchase a prepaid debit card, or otherwise arrange to send them money in ways that cannot be traced.
The caller sounds demanding and authoritative. What are you supposed to do?
Remember: No U.S. government or state agency is going to call you out of the blue and demand money or information. While they may contact you via phone, the U.S. government and state agencies will always send important legal information by mail.
Counterfeit Cashier’s Check Scam
There was a time when cashier’s checks were considered the next best thing to cash. Today, sophisticated forgeries of this once trusted payment method are being used to bilk private sellers out of big cash.
This scam targets individuals selling expensive items such as cars, apartments, or even horses, through classified advertising and online auctions. The counterfeiter, who is often in another country, poses as an interested buyer and offers to pay with a cashier’s check. After the victim presents the check to the bank, the buyer suddenly backs out of the deal and asks for a refund. Because the funds from the check are available from the bank after a few days, the victim assumes the check has cleared and agrees to return the money. By the time the bank discovers the forgery, up to 60 days later, the bogus buyer is long gone and the victim must now repay the bank for the amount of the fake check.
In other cases, the counterfeiter may send a cashier’s check for more than the asking price of the item and then ask the victim to wire the “overpayment” back or to a third party.
The Romance Scam
You have met someone in another city, state, or country online through an online dating profile or social media. WARNING! This person may be “catfishing” you – a person on the Internet not being who they claim to be.
This person makes him or herself attractive to you, and begins texting, emailing, or even calling you regularly. He or she claims to have fallen in love with you quickly, thereby forming a swift emotional attachment.
Next thing you know, this new love interest has experienced some type of crisis and needs your help quickly. Or maybe you have made plans to marry, which will require travel, a visa, or other wedding-related expenses.
This person needs money and asks for your help – through a money transmitter like Western Union, Money Gram, or by loading up a prepaid debit card. Or you may be asked to provide access to your bank account to make money transfers more easily.
He or she will stay in touch with you and promise anything as long as you keep sending money. You will never actually meet this person and you will not be able to trace the money you sent.