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Scams & Fraud
by Sid Kirchheimer, AARP Bulletin, May 18, 2009
Few notifications can get your attention faster than those from a lawyer—especially when you get word that you’re entitled to a piece of a recent settlement.
But beware: Consumer watchdogs are warning of a flurry of scams by self-described legal beagles whose real goal is to put the financial bite on you.
The class action lawsuit ruse re-emerged to take advantage of today’s economic troubles. In this scam, consumers are notified out of the blue—usually via incoming e-mail or an unsolicited telephone call—that they are entitled to thousands of dollars because of a recent settlement.
Usually the scammers say judgments are against credit card companies who supposedly charged excessive fees, interest or penalties, says Brandolyn Pinkston of the South Carolina Department of Consumer Affairs, which recently issued a warning against the lawsuit hoaxes. These bogus notifications often promise thousands of dollars after you pay hundreds in requested legal fees or taxes on your award.
You may be asked to wire these fees. Or you may be asked to provide your bank account information for a direct deposit of your portion of the settlement. In some cases, you may even be mailed bogus checks as an advance payment and told to call a provided phone number for further instructions on how to get the balance.
Don’t take the bait, as these ploys are sure signs of a scam. In legitimate lawsuits, you never have to pay up front. And, as always, be suspicious of any check you receive unexpectedly. Among the other red flags of a bogus lawsuit scam:
• How you’re contacted. In legitimate class action lawsuits, attorneys may place advertisements to solicit plaintiffs, or they may send letters in the mail. Don’t believe unsolicited notifications that come by e-mail or phone.
• Your “award.” In authentic class action lawsuits, consumer awards are usually only a few dollars, not thousands. And in real judgments against banks or credit card companies, consumers do not need to provide bank account numbers so the award can be direct-deposited—consider such a request a red flag for fraud. Usually consumers provide the attorneys in the case with their account numbers (plus other paperwork) much earlier to prove eligibility to participate in the lawsuit.
• The timing. Scammers often use high-pressure tactics, saying that unless you respond immediately, the settlement will be forfeited.
• The contact phone number. In addition to doing an online search of the supposed legal action to check its authenticity (type the name of the company and “lawsuit”), it’s also smart to google the contact phone number. That’s because the phone number provided in these fake notifications is often an overseas number, and calling it can result in high charges.
Another recent scheme, reports the Better Business Bureau, involves phony notifications to owners of small businesses that they are being sued. The callers pretend to be from the BBB—they claim that the business owner can avoid the lawsuit by paying a fee to have complaints removed from BBB files. In reality, the BBB makes no such calls. Business owners should contact their local BBB chapter if they receive such notifications.
Class Action World maintains lists of legitimate class action suits. For securities-related lawsuits, visit Stanford Law School’s Securities Class Action Clearinghouse.
Report e-mail notifications to the Internet Crime Complaint Center; telephone calls and e-mail correspondence to the Federal Trade Commission and letters received by mail to the U.S. Postal Inspection Service.
Sid Kirchheimer is the author of "Scam-Proof Your Life," published by AARP Books/Sterling.
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