Anatomy of a Scam
Scammers use various tactics, including deceit, coercion, intimidation, emotional abuse, undue influence and empty promises.
While anybody can be a victim of a scam, certain vulnerable populations are more likely to be targeted by scammers, such as: seniors; consumers overburdened with debt; people with limited English-language proficiency; and, consumers with limited education.
Con artists often use emotional ploys to make the consumer feel that he/she is part of a special group receiving a "once in a lifetime deal." Some scammers gain trust and confidence through their charisma, or get their victims to let their guard down by using a business name similar to that of a well-known, highly successful company. Others create a sense of urgency that puts pressure on the victim to make an immediate decision.
Some tools of persuasion used by scammers include:
A scammer may claim that an investment opportunity has been reviewed by "the Federal Reserve Bank" or the "New York State Banking Department."
A scammer attempts to quickly build a trusting relationship with the victim. For example, the con artist may talk about the local community to earn trust.
The notion that a consumer should buy a product that has been reduced in price because the consumer is getting a "great deal" in contrast to the regular deal. Many scammers will simply inflate the "regular" price of the product and then "reduce" it to the regular price, calling it a "rare discount."
Tips to Prevent Being Scammed
The New York State Department of State Division of Consumer Protection continues to update its vast library of resources relating to recognizing and preventing scam victimization in order to keep the public current with the latest trends.
Avoiding Advance Fee Loan Scams
- Keep in mind that it is against the law for anyone to ask you to pay in advance to get you a loan or credit.
- Ignore any offer that guarantees a loan for an advanced fee.
- Remember that legitimate credit offers do not require an up-front payment. Legitimate lenders may charge for application, appraisal, or credit history. However, these fees are taken from the amount you borrow and are generally paid to the lender or broker after the loan is approved.
Don't fall for promises that you'll get a loan regardless of your credit problems. Legitimate lenders do not "guarantee" loans regardless of credit history. Legitimate lenders will never guarantee you a loan or a credit card before you apply, especially if you have bad credit, no credit, or a bankruptcy petition on your credit report.
Avoiding Charity Scams
- Contribute to known and verifiable charities. Research the organization's status, registration filings and complaints by contacting the New York State Department of State Division of Consumer Protection, Office of the New York State Attorney General, the Internal Revenue Service (IRS) and/or the Better Business Bureau. You can search the New York State Attorney General's online database of registered charities at www.oag.state.ny.us. You may also seek out information about charitable organizations from various national databases including Guidestar, American Institute of Philanthropy, and Charity Navigator.
- Beware of callers who want your money fast or use high-pressured tactics. When solicited by phone, always ask the caller to send you written materials about the charity. No legitimate organization will insist that you donate immediately. Watch out for solicitors who employ dramatic, emotional or heart-tugging stories. Ask for written information about the charity and how your money will be spent or distributed
- Avoid giving cash. Make checks out to the charity not to an individual. Give your contribution by check or credit card so that you have a record of the donation. If you choose to make a donation via a charity's website, check to ensure that the website is secure and that your computer is equipped with the latest anti-virus protection. Don't send contributions with a "runner," by wire or overnight parcel pick-up
- Ask if the donation is tax deductable
- Ask what percentage of donations is used towards the cause as opposed to administrative costs
- Guard against fake solicitations. Be wary of unsolicited mailings, phone calls and e-mails requesting donations. Unless you have signed up to receive e-mails from a charity of your choice, do not respond to e-mail solicitations. Don't click on any links contained in these e-mails, as you may be directed to a fake website made to look like a legitimate organization's official site. Other e-mails ask for money to be sent to off-shore bank accounts
- Don't disclose personal or financial information. Never give your Social Security number, credit card or debit card number or other personal identifying information in response to an unsolicited charitable request, especially over the phone
Get information regarding contributing to charities after a disaster, when unscrupulous organizations may seek donations, even though only a small percentage of the money, if any, will actually be used to assist victims.
Avoiding Door-to-Door Sales Fraud
- Most jursidictions require that door-to-door solicitors obtain a license from the Municipal Clerk, Police Department, or local consumer protection agency and carry a government-issued identification card. Some of the laws actually regulate the hours when door-to-door solicitation can be conducted
- Look for your local law. Just go to the New York State area and click on the link to your local government's code. (Hint: a good search term is "solicit.")
- Look for your local law. Just go to the New York State area and click on the link to your local government's code. (Hint: a good search term is "solicit.")
- Legitimate salespeople will:
- Identify themselves immediately and have a photo identification in sight
- Not use high-pressure sales tactics
- Respect a consumer's right to end the conversation or transaction at any time
- Explain verbally and in writing the cancellation policy
- Provide information about the offer/product in writing
- Under New York State law, consumers have three business days to opt out of a door-to-door sales contract. Sellers must provide written notification of the right to cancel
Avoiding Employment Scams
In these challenging economic times, get-rich-quick schemes, work-at-home scams, pyramid schemes, and numerous other approaches promising employment and wealth are used to separate job seekers and the underemployed from their money. The New York State Department of State Division of Consumer Protection offers tips and suggestions on how to avoid becoming a victim of an employment scam. These include:
- Remember the adage, "If it sounds too good to be true, it probably is"
- Be suspicious of employment-service firms that guarantee finding you a job. Take time to review contracts from employment firms
- Use caution when contacting entities promoting "previously undisclosed" federal government jobs
- Avoid high pressure tactics that stress paying immediately or risk missing an employment opportunity
- Be aware that some ads may appear to announce a job opportunity, however, it is really an ad selling employment information and services
- Be wary of potential employers who:
- Want personal information prior to an interview
- Offer to hire you without an interview or meeting
- Charge up-front placement fees or other charges as a condition of your employment
- Ask you to transfer, receive and/or deposit money or receive/send packages (especially from outside the United States)
- Do not provide a job description or cannot describe the position for which you are inquiring
- Note possible financial repercussions when dialing a toll-free number. Once connected, you may be unwittingly switched to a pay-per-call number, or asked to call a 900-number without proper fee disclosure
- Surf the Internet cautiously when looking for employment
- Use secure and reputable sites to post your resume
Avoiding Fraudulent "Anti-Aging" or Health Products
- Watch out for solicitations or promotions for "Secret Formulas" or "Breakthrough" products. These offers often are based on inflated promises
- Ask questions about the product and manufacturer. Find out exactly what the product will do for you; check for any ingredients to which you may be allergic
- Research a product thoroughly before you buy it and check for any complaints with federal and state authorities
- Be wary of products that purport to cure a wide variety of illnesses (particularly serious ones like cancer) that don't appear to be related
- Be skeptical about testimonials and/or celebrity endorsements, which are often misleading
- Exercise caution about products that are marketed as having no side effects
- Question products that are advertised as making visits to a physician unnecessary
- Always consult your doctor or medical professional before taking any dietary or nutritional supplement.
Avoiding Health Insurance Fraud
- Never sign blank insurance claim forms or authorizations for health services
- Carefully review your insurer's explanation of benefits statement to ensure it was you who actually received those services
- Give your insurance/Medicare identification number only to those who have provided you with medical services. Increasingly, more people are stealing a consumer's medical benefits information to obtain services in another person's name
- Call your insurance carrier with any questions
- Maintain complete health care records
Avoiding Home Improvement Scams
- Check for a license where required (these counties have licensing requirements for home improvement contractors: Nassau, New York City, Putnam, Rockland, Suffolk and Westchester)
- Ask for proof of insurance coverage (e.g. workers compensation, property, liability)
- Ask for local references and call the references to see if they were satisfied with the work. If possible, visually inspect examples of the contractor's work; do not rely on photographs provided by the contractor
- Get at least three written estimates, especially if the job is big
- Ask about experience and training
- Inquire whether the project requires a permit, and who is responsible for obtaining it. Consider double-checking with local authorities about whether a permit is required.
- Get a written contact. Under the law, contracts for jobs costing $500 or more must be in writing, but it's best to get a written contract in all cases. Make sure the contract includes:
- The approximate start date and completion date of the work, including any contingencies that would change the completion date
- A specific description of the work and materials, including brands, model numbers and other identifying information, along with the price
- A requirement that the contractor will comply with all applicable laws, regulations and codes, and that no work will be done until the contractor has obtained all necessary permits.
- Keep in mind that the law gives you three days to cancel a home improvement contract. Cancellation must be in writing and should be sent to the contractor by certified mail, return receipt requested
Avoiding Home Loan Modification and Mortgage Scams
Loan modification and other mortgage scams are proliferating. Scam artists prey on unsuspecting homeowners who are facing the pressures of foreclosure. Every day, consumers are lured by the promise of a loan modification that they hope will help them stay in their homes. As a result, consumers are losing thousands of dollars and, in some cases, their homes. The New York State Department of State Division of Consumer Protection provides the links and resources below to help consumers avoid falling victim to these offers and schemes.
- NeighborWorks America: Loan Modification Scam Alert Campaign Website
- FTC foreclosure rescue scams brochure: FTC Scam in English, FTC Scam in Spanish
- FTC foreclosure rescue scams bookmark: FTC Bookmark in English, FTC Bookmark in Spanish
Avoiding Investment Fraud
- Research the "investment opportunity." Investments must be suitable for your lifestyle and income-level
- Carefully read over the prospectus or information presented with the investment opportunity before acting
- Check to ensure the broker, investment adviser and their firm are licensed or registered with the U.S. Securities Exchange Commission (SEC)
- Don't be pressured to act quickly
- Ask for advice from a trusted family member or friend
- If you suspect a scam, contact the SEC at 1-800-SEC-0330
Avoiding Nigerian Money Offer Scams
Nigerian money offer scams involve a letter or e-mail that offers the recipient the "opportunity" to share in a percentage of millions of dollars that the author is trying to transfer out of Nigeria. The message instructs the recipient to send money to the author in Nigeria for a variety of reasons, such as payment of taxes or legal fees. In actuality, the millions of dollars do not exist and the victim eventually ends up with nothing but loss.
Scammers have also been known to use the victim's personally identifiying information to drain bank accounts and run up credit card charges until the victim's assets are taken in their entirety.
Be aware that these scams are well-known and there may be variations used by con artists
- Note that these promises are never true
- Once you are on the hook, they'll never let you go
- Be wary of offers to send you an "advance" on your "commission"
- Never provide your bank account or other financial information
- Don't agree to travel anywhere to meet these people
- Remember that these are scam artists/criminals
- If they get your money, you'll never get it back
Avoiding Phishing Scams
Phishing e-mails are designed to trick people into sending money or providing personally identifying information, such as usernames, passwords, credit card details, and Social Security numbers to unauthorized individuals who hijack their information and use it to commit identity theft. Many times, phishing e-mails use the names or likenesses of legitimate businesses to trick consumers. These e-mails trade on the good name, reputation or brand of legitimate businesses. The New York State Department of State Division of Consumer Protection Phishing Scam Prevention Tips help people identify phishing e-mails.
Additional online safety information can be found on the Protect Yourself When Online page.
Avoiding Scams Targeting the Military
Military personnel and their families are attractive targets for scam artists and identity thieves. Many of our military personnel have become the victim of consumer scams and some are currently struggling financially as a result. The New York State Department of State Division of Consumer Protection provides material to help our service men and women protect themselves and their families from these scams.
Identity Theft and the Armed Forces and Veterans
The Division's Special Populations page contains information for active military and veterans regarding identity theft. Active military personnel, veterans and their families can be particularly vulnerable to identity theft and fraud due to nonstandard work schedules, lengthy absences from home, frequent relocations and duty assignments to remote locations.
Rental Housing Scam and Military Families
Card Popping Scam in the Military Community
Avoiding Scams Targeting Seniors
Seniors are often targeted by scam artists because they are easy to reach by phone, are frequently home during the day, often live alone, and tend to be more willing to talk to strangers than others.
The scams directed toward older adults run the gamut. Some scammers promise outsize or significant returns on investment products. Others hawk anti-aging products that are never delivered or are worthless. And others dupe seniors into paying advance fees for sweepstakes or lottery winnings that never materialize.
The New York State Department of State Division of Consumer Protection has developed a resource to empower seniors with information to help them avoid falling victim to these and other scams. The Division also encourages seniors to notify authorities if they have been the victim of a scam.
Avoiding ‘Secret' Shopper Scams
Some retailers hire people to anonymously evaluate the quality of service in their stores. They assign a mystery shopper to make purchases and then report on the experience. Typically, the shopper is reimbursed, and can keep the product or service. However, there are scammers who offer bogus mystery shopper jobs to prey on people seeking employment. Follow the tips below to avoid these scams:
- Ignore unsolicited letters or e-mails claiming to be from a legitimate company
- Note that legitimate secret shopper companies do not guarantee you a job
- Remember there is no legitimate reason for a company which hires you to be a mystery shopper to ask you to wire money back to them or to a third party
- Do not rely on the fact that a check sent to you by a company will be accepted for deposit
- Keep in mind that too often the victim sends money back to the company before finding out that the company's check is bogus
- Research all offers. Be cautious.
Avoiding Social Networking Scams
- Do not click on any link or message that seems suspicious or unfamiliar
- Remember that most social networking sites will not ask for your password in an e-mail, message, or "wall" post
- Do not download any unknown files
- If you get a suspicious message, try to contact the friend who supposedly sent it to verify that the message is legitimate before following any links or instructions
- If you see a post on a friend's social networking page or profile that looks like spam, tell the friend to delete it and reset their password immediately
- Use an updated web browser to benefit from anti-phishing protection.
Avoiding Sweepstake/Lottery Scams
The New York State Department of State Division of Consumer Protection alerts consumers to an increase in lottery scams. Lottery scammers use telephone calls, faxes, e-mails, and cell phone (mobile) text messages to connect with potential victims, and include persuasive messages to lure victims into responding. Consumer should keep the following tips in mind:
- Don't pay anything to collect sweepstake winnings
- Remember that United States residents cannot purchase tickets in international lotteries throughthe mail or over the phone
- NEVER wire or transfer money
- Do not send a check or money order by overnight delivery or courier
- Don't give personally identifying or financial information to callers
- File a complaint with the U.S. Postal Service for lottery or sweepstakes scams perpetrated through the mail
Avoiding Telemarketing Fraud
- Never give out personally identifying or financial information if you receive an unsolicited telemarketing call. Only give out personal information if you initiate a call to a reputable company
- Don't transact business over the phone with an unfamiliar company that calls you
- If you think you are interested in an offer made by a telemarketer, hang up and call the company back to verify that the call is legitimate
- Avoid unwanted sales calls. Place your personal phone number on the Do Not Call Registry by calling 1-888-382-1222 or logging onto www.donotcall.gov
Avoiding Work-at-Home Scams
- Check with the New York State Department of State Division of Consumer Protection and the Better Business Bureau to investigate complaints against any company that offers to pay you to work at home
- Ask questions:
- What tasks will I perform? Be specific
- How will I be paid? Salary or commission?
- Who will pay me? When will I receive my first paycheck?
- What is the total cost of the program, including supplies, equipment and membership fees? What will I get for my money?
- Never fall for the trick of depositing a company's check and having to send or wire money back before the check has cleared