The coming year won't herald the end of the world nor will it be the end of scams and rip-offs. Tight government budgets will also favor con artists. District attorneys without funds to prosecute property crimes such as home burglaries certainly won't be quick to chase down $1,000 you lost to an online scammer. You'll need to protect yourself.
See also: Beware the frauds of fall.
To help you know what to watch out for, I've compiled a hit list of the five most malevolent scams you're likely to encounter in 2012.
The Nigerian Letter
- Tip-Off: Someone you don't know offers great riches.
- Tricks: Taking advantage of your kindness, generosity or even greed.
- Targets: Lonely people in financial distress.
While this advance-fee scam is an oldie-but-goody, new variations are making it much more effective in trapping the vulnerable and unwary. The FTC received reports of more than 100,000 victims from imposter scams and counterfeit check scams in 2010. The questionable plea promising millions of dollars has been replaced by more clever approaches: a foreign business person trying to set up a domestic bank account, a parent trying to raise money to help free a hostage child, or even a U.S. soldier trying to ship home war booty to help his dying mother. No longer anonymous, data mining now allows the scammers to appear more legitimate by personalizing the messages.
What you should do: Do not respond. Delete email. Toss paper mail. (Good Samaritans can forward emails to the security departments of any companies or financial institutions mentioned.) Rule of thumb: There's no money for you in Nigeria.
Exploitation by Education
Tip-Off: Their "secret" system makes it easy.
Tricks: They manipulate your emotions while promising great riches or an easy path to success.
Targets: Middle-agers and seniors looking to change careers.
Unemployment woes and job anxiety cause some folks to consider retraining for new careers. Scammers entice the education-seeking unemployed with promises to get rich quick with their secret plan, win a high-paying job with their streamlined schooling, or pass a test for a chance at a swank government gig. Victims often learn little they couldn't find in their local library, but become burdened with thousands of dollars in bogus tuition and fees.
What you should do: Avoid same-day decisions. Any career or education decision deserves at least a day's consideration: research, get referrals and reconsider.
- Tip-Off: They wear two hats.
- Tricks: They exploit your lack of expertise, trust in authority and critical need.
- Targets: No one is immune.
Most of us know to be wary of an auto mechanic discovering a previously undetected, but expensive, car repair. We can see he's got personal interest in pointing-out the pricey problem. That same conflict of interest now is appearing more often in other industries. From the hearing specialist who also hawks hearing aids to the financial planner pitching her own brand of mutual funds, consumers are being taken advantage of by exploiters who prey upon their trust.
What you should do: Separate the diagnosis from the product or service deliverer. While it may take more time, the money saved may be worth many times the delay.
- Tip-Off: An organization or person you don't know attempts to "friend" you.
- Tricks: They exploit your trust of the "safe" social-network environment.
- Targets: Social network users.
Social networking on Facebook, LinkedIn and similar websites is redefining how families and friends stay connected. However, the same walled-off environment of filtered contacts that we've been trained to trust has also led us to let our guard down. Scammers launch topical pages in order to trawl for like-minded social network users. Once "friended," they link the unwary out of the safe environment to an external site where they can be attacked by a virus or pitched scam offers.
What you should do: Do not respond to or "friend" any person or organization that you do not know of from outside of the social network.
- Tip-Off: They are asking you for information they should already have.
- Tricks: They use publicly available information to convince you they are legit.
- Targets: Anyone with a bank or credit card account.
"Phishing" is what security professionals call attempts to trick computer users into providing personal or financial information. Phishers have jumped off the net and onto the phone lines and cell towers with ruses designed to separate you from your hard-earned dollars. Armed with your name, address and phone number, they call you with requests to "verify" other personal information such as social security number, credit card information and banking data.
What you should do: Give no information. Do not engage in conversation. Tell them any further contact will be reported to police and/or the FBI.
The best defense to any of these scams is to avoid making any quick decisions and to hold on to personal information as if your life depended on it. A good rule-of-thumb in scam prevention is to discuss any financial decision over $500 with a friend or relative, and to take at least 24-hours to mull it over.
Go slowly, act wisely, and you won't be sorry.
Ron Burley is the author of Unscrewed: The Consumer's Guide to Getting What You Paid For.
Also of interest: Try the 'Is It a Scam or Is It Real?' Quiz. >>