Top 5 "Financial Meltdown" Themed Scams To Avoid
Kiplinger's has an article that lists a few "financial meltdown" themed scams that are out there taking advantage of people lately.
There are some old favorites and some new ones, too.
- Foreign Currency Scams — These scammers offer outrageous returns on investments in foreign currency — taking advantage of the volatility of the dollar to trick consumers into believing their lies. Kiplinger's says:
For example, in May 2008 the SEC charged Las Vegas-based Gold-Quest International with running a Ponzi scheme that raised more than $27 million from 2,100 investors by promising profits of 87.5% from trading foreign currency. Ouch.
- Energy Scams — Cold callers have been pitching complicated oil and gas scams and soaring energy prices made consumers greedy.
Kiplinger's says:
In one such case, the SEC recently charged Donald Allen of Colorado Springs and his two companies of defrauding investors by diverting for his personal use more than $2.3 million raised in a series of oil-and-gas deals. - Debt Negotiation Scams — The financial meltdown has left millions behind on their bills — and scammers are ready to offer them a helping hand... Kiplinger's says:
For example, the Federal Trade Commission last fall censured four companies that falsely claimed they could reduce clients' debts by up to 60%. The companies had also advised clients to stop paying their bills without telling them they could be sued by creditors. And the four falsely told clients they could help repair credit reports. - Bank Phishing — Bank consolidation has put a new twist on the same old bank phishing scams. Kiplinger's says:
Popular phishing schemes — e-mails designed to get you to relinquish private security information, including your Social Security number — falsely tell you your bank has been acquired. The FTC gives this example: "We recently purchased ABC Bank. Due to concerns for the safety and integrity of our new online-banking customers, we have issued this warning message ... Please follow the link below to renew your account information." - Reverse Mortgages — Reverse mortgages aren't a scam — but some scammers try to tack on other products as a condition of the mortgage. Kiplinger's says:
Outright fraud is rare, although it does occur; one adviser pocketed $42,000 from a reverse-mortgage payout without his client knowing.A more common problem: obliging reverse-mortgage applicants to buy additional products or services as part of the loan agreement. Lanier, the Florida official, says some reverse-mortgage providers push clients to buy deferred annuities. These insurance products can come with high fees and tie up cash that the borrower may need immediately. New rules from HUD prohibit lenders from linking reverse mortgages with other products.
Scams Ripped From Today's Headlines [Kiplinger's]
(Photo: The Joy Of The Mundane )
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Comments:
@downwithmonstercable: And by "the rest", we mean the ungainly burden of your financial assets! It's a favor!
My mom got a reverse mortgage. That business is like the wild, wild west with fees. The first mortgage company she went to gave her a quote and said, basically, "here are the fees, and don't even question them, they're set by HUD". Both me and my mom's next door neighbor, who is a realtor, were suspicious and had her go to another company for a second quote. Whadda ya know, lower fees!
@downwithmonstercable: Personally...I never answer calls on my cell if I don't recognize the number. I think it's a good practice.
I did some of the forcast models for a GSE on reverse mortgages..... The fees (insurance, servicing fee, fee to the GSE....) are out of control.
Before the market meltdown I thought this product was foolish and that most home owners (they target the 55+ who own their homes) were better off getting a HELOC (home equity line of credit), but now you can't get them any more and this is one of only a few options to getting cash out on your house.
The catch is you can only get around 30-50% of the value of your home, but by the time you die (average life span in model was around 7 years) no value was left in your home.
@RurouniX: Usually I don't, but a couple times it's been my bank letting me know of suspicious activity. So if it's an 800 number I'll usually answer it. I'm just wondering how they got my cell phone number, since I think it's illegal to telemarket to cell phones.
The big banks,like Wells Fargo,are pushing the reverse mortgages like crazy on TV lately...Figured there must be some sporty fees attached!
@chilled:
My first clue that Reverse Mortgages are a scam (or I guess have great scam potential, anyway) is the amount of ads I see on TV for them. Like law firms that advertise on TV, or subprime lenders like Ditech (how are those bastards still in business?), and BS frauds like freecreditreport.com -- nothing legitimate gets that much airtime.
The banks are well protected too, since they will only lend between 30-50% of the value chances are they will be able to recover any losses if for some reason they need to forclose. It is like putting down 50-70% down payment, the bank is safe.
@stennieville: So true. I tend to gauge all products and services that way. The harder they try to sell, the less likely it is that what their selling is as great as they say it is. Legitimate, valuable and reliable products and services don't need that type of advertising. Quality is the best advertisement, and the cheapest.
disagree with foreign currency scam thing. I mean I obviously wouldn't listen to some infomercial trying to pitch me something. But I think it's absolutely rational to open a foreign account, maybe have a few thousand of your $$ converted into francs or something. or maybe some older silver coins, just as security. Just a way of covering your ass, the dollar's not moving up and a thou in silver could keep your family fed for a few years in a depression.
@AlvinChimera: Why not just in internetional ETF's, precious metals ( physical gold ), or cash? Investing in foreign currencies has all sorts of weirdness attached that can usually be avoided.
@AlvinChimera: They're not talking about legitimate foreign currency investments. They're talking about companies that sell foreign currency investments because that's the hot thing on the news lately, and then take all your money. Hence the word scam.
The market only gets broken when some altruistic do-gooders try to tilt the playing field to their advantage.
Pay-day loans don't count?
@AlvinChimera: Yes. One currency that illustrates the possibilities in doing this is the yen, which went from 125 to the dollar to 95 to the dollar over the course of a few months.
Buyer beware!
I still think the best way is the old fashioned way.. put all your money in jars and bury them in the woods.. only get them out if you need it ..Total savings that no one can steal..Keep the emails deleted and dont ever read one ..Safety net of course.. Keep a shotgun handy for anyone even turning in your driveway.. Best way is the old way
I still think the best way is the old way.. Put all your money in Jars and bury them in the woods . Only go there with a shotgun for cover if you need some of your money..Keep a big dog handy also..Stay clear of all emails and phone calls that you dont know who it is .. just hang up ..Dont ever answer the door for anyone you dont know .. only get things by going to the company and getting them yourself..
ok i just received a check of $25,000 and i threw it in the trash can . someone scamming me telling me deduct your share and send the rest through western union . thinks we American are stupid but we are not .
I saw a posting recently that a guy used when cold called by a west coast salesman, the posting went something like this - Who is calling? Did you know the deceased? What was your connection with him?
Aside comment - make sure you get photos of the body and the blood stains, and bag the knife for forensics.
We need to get your statement sir, the LAPD will be given your number which we have been tracing, a detective will be calling on you in the next hour.
sounds of the phone being dropped
@AlvinChimera: I'm pretty sure they're not talking about opening account in foriegn banks using foriegn currency. They're saying there are scams where people will contact you and ask you to invest in a foriegn currancy for a small percentage of the value in American currancy. Or in foriegn bonds or some other financial vehicle. I've had the e-mails, I spammed them. It's getting bad the way you have to screen your e-mails and your calls as well.
Actually got a scam e-mail yesterday. Wanted me to give them my SSN, bank account info and home address and fl name. Said they would deposit nine million dollars into my account, to help out with the economy *rolleyes*
I've been coldcalled a few times (on my cell phone no less) to pitch reverse mortgages and switching energy companies. Kinda scary.
"All we need is your SSN and major credit card number, and we take care of the rest!"