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With nearly 318,000 members in West Virginia, AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates.

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Thec Check May Look Real, But It's NOT - Scam Alert

Scam Alert: The Check May Look Real, but It’s Not

Request for debit card payment for “finder’s fee” should be a red light
By: Sid Kirchheimer | Source: AARP Bulletin Today | February 8, 2010
 
It’s a classic con so widespread that an estimated one in three Americans has been targeted. An authentic-looking check arrives unexpectedly in the mail, often billed as a grant from a government agency. The instructions say to deposit it, and then wire back a portion to pay a “finder’s fee” or administrative costs.
 
More than 1 million people have fallen victim, estimates the Consumer Federation of America. They lost an average of $3,000 to $4,000 each after learning that the check was phony and they were liable for the amount wired to the sender, plus any other money drawn from that deposit.
 
Recently, more people have gotten wise to the dangers of money-transfer wires, and a recent Federal Trade Commission crackdown resulted in an $18 million settlement against MoneyGram, the second largest money-transfer business.
 
So now, some “grant-giving” scammers are trying a new route. Instead of wire transfers, they want their finder’s fee on a legitimate Green Dot card—a widely used prepaid debit card sold at pharmacies, gas stations and other businesses.
 
Why Green Dot?
Here’s how it works: A letter accompanying the bogus check says the recipient must pay a 10 percent finder’s fee by buying a Green Dot MoneyPak card, activating it, and sending it to the grant “finder.” Using the card lets the crook bypass the money-by-wire system, which is now under more scrutiny, and instead use the card to instantly and anonymously withdraw cash at ATMs or make debit purchases.
 
The amount of the bogus check typically ranges from $975 to $4,975, and usually the MoneyPak can be loaded with a maximum of $500—which, perhaps not coincidentally, is just enough to cover 10 percent of the typical maximum check amount.
 
“We’ve heard of instances where the scammers say they are Green Dot employees, but I guess it doesn’t register why that private company would now be in the business of issuing government grants,” says Reanna Smith-Hamblin of the Louisville Better Business Bureau.
California-based Green Dot Corp. has generated nearly 800 complaints to the Better Business Bureau in the past three years, often from customers who report difficulty activating the cards or not having funds they add be credited to their accounts. Still, Green Dot, in business since 1999, maintains an A+ rating with the BBB because it has responded to every complaint.
 
However, it has not provided warnings of this scam on its website, even weeks after Scam Alert left a message at the corporate office describing the ruse. Company officials did not return phone calls and there is no e-mail address on its website, only a post office box number. And calls to Green Dot’s customer service department resulted in being placed on hold for as long as 30 minutes, followed by multiple transfers before being disconnected. Automated prompts also ask for callers’ Social Security numbers, an identifier that generally should be kept private.
 
Checks and balances
The bottom line: Legitimate government grants never come to you unexpectedly. You have to have applied for one from the main federal portal or a local government agency. And if you manage to get one, you won’t be asked for any payment.
 
You should be suspicious of any unsolicited check you receive, especially one for less than $5,000. Federal law mandates that deposits of that size be made accessible to consumers within five business days, so the deposit may initially appear in your account statement. But it can take up to two weeks for banks to actually collect those funds, and if the check is discovered to be counterfeit in the meantime, you’re liable for any money used from that bogus deposit. That’s why scammers count on a quick deposit and forwarded payment. 
 
Sid Kirchheimer is the author of Scam-Proof Your Life (AARP Books/Sterling).
Added: February 8, 2010
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CreateTheGood
CreateTheGood says:

Way to Create the Good, West Virginia!!
Posted: February 18, 2009 9:53AM EST
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