Our Archive of Articles About Financial Literacy and Other Topics
More Consumer Scams to Avoid
September 15, 2007, 1:25 pm
Consumer Advocacy article on some common scams that target consumers.
If you have any money in your checking account, or available credit on a credit card, you can bet there’s someone out there who will gladly swindle you out of it. Consumer fraud is a multi-million dollar business in this country, and it affects people of all income levels.
Your primary weapon against a scam is your common sense, combined with a strong dose of suspicion. Most scams come in too-good-to-be-true packaging, such as a free vacation, zero-percent financing, or a cash prize. These enticements are typically dangled in front of the unsuspecting consumer to generate a response of any kind.
Then, through a variety of means, the scam artist gains your confidence, then asks for access to your money, usually by requesting your credit card or checking account number. Once you’ve handed that over, your money is as good as gone.
You’ve probably either fallen for one of the following scams, or at least been a little tempted by them.
The We-Can-Fix-Your-Credit Scam - Let’s be clear about this. If you have bad credit, the only way to improve your credit record is to improve your credit behavior over the long haul. If you’ve defaulted on loans, consistently paid bills late, and run up huge debts, credit reporting bureaus have the legal right to report that information accurately. And if your credit report contains inaccurate information and you don’t want to correct it yourself, then you need help from someone who is law-abiding and legitimate.
You can find the three major companies that provide these reports at www.annualcreditreport.com. Visit that site once per year to request a copy of your report.
The Earn-Cash-At-Home Scam - This scam preys on people’s desire to make a lot of money without really having to work for it. The scam artist puts an ad in the newspaper claiming that you can make several hundred dollars a week in your spare time at home. And of course, there’s a small, up-front fee of $50 or $100. What you actually get for your money, in most cases, is a useless book with the names of companies that hire freelance telemarketers or writers. What they don’t tell you is that finding the work, completing the work, and getting paid for the work takes a lot of time and effort.
The Don’t-Miss-Out-On-This-Million-Dollar-Investment Scam - How’s this for an investment scam: A broker calls 200 people and tells half of them that a particular stock is going to go up, and the other half that it will go down. The stock goes up, so he calls the first 100 and tells half of them the stock will keep going up and the other half that it will now fall back down. The stock falls and he now has a list of 50 people who think he’s pretty good at picking stocks.
Remember that, any stock that could possibly make you a ton of money is high-risk, and can therefore lose you a lot of money. A good rule of thumb, if you want to invest, is to find a reputable stockbroker on your own, and don’t invest with someone unless you initiate the first contact.
About Springboard Nonprofit Consumer Credit Management
Springboard is a nonprofit credit education and financial counseling organization founded in 1974. The agency offers personal financial education and assistance with money, credit and debt management through confidential counseling. Springboard is accredited by the Council on Accreditation, signifying high standards for agency governance, fiscal integrity, counselor certification and service delivery policies. The agency provides pre-bankruptcy counseling and debtor education as mandated by the bankruptcy reform law. Springboard is a HUD approved housing counseling agency and a member of the National Foundation for Credit Counseling, a national organization of nonprofit credit counseling agencies. The agency has several locations in California and offers face-to-face and nationwide phone counseling services. For more information on Springboard, call 1-800 WISE PLAN (1-800-947-3752) ext. 7750 or visit their web site at www.credit.org.
