Cons and Frauds – NPD

How Not to Get Conned

The con artist’s philosophy is “the gullible were put on this earth to be gulled.” In the past, con artists were usually referred to as con men. This is no longer the case as more and more women have become involved in con games and numerous variations of con games. Before we proceed with some tips on “how not to get conned” you should always remember that a con artist can be a male or a female. In addition, many times the con artist will work with a child who will assist them in accomplishing their goal. That goal is to GET YOUR MONEY.

Rules to Follow

Here are some good rules to follow all the time – whether or not you suspect a fraud:

1. Don’t believe in something-for-nothing offers. You get what you pay for.
2. Be suspicious of high-pressure sales efforts.
3. Take your time; think about it before you part with your money.
4. Get all agreements in writing. Insist that agreements be in plain English and not legalese.
5. Read all contracts and agreements before signing. Have a lawyer examine all major contracts.
6. Beware of anyone who comes to your door asking for money for charity or for personal reasons.

Home Improvement Fraud

Home repairs and improvements can be costly. Watch out if:

1. Somebody offers to do an expensive job for an unusually low price
2. If a firm offers to make a “free” inspection or if the person just happened to be in the neighborhood.

The most popular home improvement frauds are roof repair and painting, driveway sealing, and termite inspection. To avoid home improvement and repair fraud, try the following:

1. Always get several estimates for every repair job, and compare prices and terms. Check to see if there is a charge for estimates.
2. Ask your friends for recommendations. Alternatively, ask the firm for references – and CHECK THEM!
3. Check the identification of all “inspectors.”
4. Call the loan Consumer Affairs office or the Better Business Bureau to check the company’s reputation before you authorize any work.
5. Be suspicious of high-pressure sales tactics.
6. Pay by check – never with cash. Arrange to make the payments in installments.

Charity Fraud

Charity fraud does a lot of harm. The con artist takes advantage of people’s good will and takes their cash – money that was meant for people in need. You can make sure that any money you give gets into the right hands. Just remember these tips when somebody asks you for a donation.

1. Ask for identification – the organization AND the solicitor. Find out what the purpose of the charity is and how funds are used.
2. Ask if contributions are tax deductible.
3. If you’re not satisfied with the answers-don’t give.
4. Give to charities that you know.
5. Check out the ones you’ve never heard of before, or others whose names are similar to a well-known charity.
6. Don’t fall for high-pressure tactics. If solicitors won’t take no for an answer, tell them NO anyway – BUT DON’T GIVE THEM YOUR MONEY.
7. Be suspicious of charities that only accept cash.
8. Always send a check made out to the charity and not the individual requesting the donation.

The Pigeon Drop

A person approaches you and says that he just found a large amount of money. What should he do with it? Maybe his “boss” can suggest something. He then leaves to check with his “boss” and comes back a few minutes later. His boss said to divide the money, but first, each of you must put up some, “good faith money”. Once you hand over your share, you’ll never see it or the con artist again.

The Bank Examiner

A con artist will contact you and tell you he is a bank official and that he needs your help to catch a dishonest bank teller. All you have to do is withdraw your savings and give the money to him so he can check the serial numbers. IF you do, you’ve been “stung”. A real bank official would NEVER ask you to withdraw your money. Is it hard to believe that people fall for such tricks? Con artists may be the greatest actors you’ll ever meet. The pigeon drop and the bank examiner schemes are two of the most successful con games around. Don’t be fooled. CALL THEIR BLUFF BEFORE IT’S TOO LATE.

809 Scam Costs Victims Big Bucks

The “809” scam works basically like this…

You get home and notice that the message light is blinking on your answering machine. You listen to the message, which has several wrinkles, but the best one is the caller asks you to call a number beginning with area code 809 to receive information about a family member who has been ill. (They may also tell you someone has been arrested, died, you have won a wonderful prize, etc.)

In any event, concerned or curious, you make the call. Sometimes the phone will be answered by a person who claims to speak broken English. (The idea is to keep you on the line to build up charges.) Or, sometimes you will just get a long recorded message. The bottom line is, when your phone bill comes, you see this incredible charge, oftentimes more than $100.00 dollars!

Crooks are using the 809 numbers as “pay-per-calls” and to get around the US Regulations and 900 number blocking. Every time you call the number, they get a greatly inflated rebate from the foreign phone company. Since the 809 numbers are in the Caribbean, they aren’t bound by US 900# regulations that require them to warn you of the charge and rate involved, and also to provide a time period during which you may terminate the call without being charged.

The newest twist to this scam is to page people using the 809 numbers. With the new area code changes, people unknowingly are returning these calls. When the bill comes, there are HUGE charges for the calls.

Another suggestion is that no matter how you get the message, if you are asked to call a number with an 809 area code that you don’t recognize, DON’T RETURN THE CALL! It’s bad enough that the criminal is invading your privacy, don’t let them invade your wallet as well!

Scams of this type are extremely hard to prosecute and since you did actually make the call, neither your local phone company or your long distance carrier will want to get involved. They’ll tell you that they are simply providing the billing for the foreign company. You end up trying to deal (over the phone) with a foreign company that feels they have done no wrong. It can turn into a real nightmare!

Identity Theft: What to do if it Happens to You

This guide provides victims of identity theft with the major resources to contact. Unfortunately, at this time victims themselves are burdened with resolving the problem. It is important to act quickly and assertively to minimize the damage.

In dealing with the authorities and financial institutions, keep a log of all conversations, including dates, names, and phone numbers. Note time spent and expenses incurred. Confirm conversation in writing. Send correspondence by certified mail (return receipt requested). Keep copies of all letters and documents.

1. Credit Bureaus: Immediately call the fraud units of the three credit reporting companies — Experian (formerly TRW). Equifax; and Trans Union. Report the theft of your credit card or numbers. Ask that your account be flagged. Also, add a victim’s statement to your report. (“My ID has been used to apply for credit fraudulently. Contact me at my phone number to verify all applications.”) Be sure to ask how long the fraud alert is posted on your account, and how you can extend it if necessary.

Beware that these measures may not entirely stop new fraudulent accounts from being opened by the imposter. Ask the credit bureaus in writing to provide you with free copies every few months so you can monitor your credit report.

Ask the credit bureaus for names and phone number of credit grantors with whom fraudulent accounts have been opened. Ask the credit bureaus to remove inquires that have been generated due to the fraudulent access. You may also ask the credit bureaus to notify those who have received your credit report in the last six months in order to alert them to the disputed and erroneous information (two years for employers

2. Creditors: Contact all creditors immediately with whom your name has been used fraudulently – by phone and in writing. Get replacement cards with new account numbers for your own accounts that have been used fraudulently. Request that old accounts be processed as “account closed at consumer’s request.” (This is better than “card lost or stolen” because when this statement is reported to credit bureaus it can be interpreted as blaming you for the loss.) Carefully monitor your mail and credit card bills for evidence of new fraudulent activity. Report it immediately to credit grantors.

Fraud Verifications Requirements: You may be asked by banks and credit grantors to fill out and notarize fraud affidavits, which could become costly. The law does not require you to provide a notarized affidavit. A written statement and supporting documentation should be enough (unless the creditors offer to pay for the notary). Overly burdensome requirements by creditors should be reported to the federal government authorities. For help in determining which agency to contact, call the Privacy Rights Clearinghouse.

3. Law Enforcement: Report the crime to your local Police and Sheriff’s Departments with jurisdiction in your case. Give them as much documented evidence as possible. Get a copy of your police report. Keep the phone number or your fraud investigator handy and give it to creditors and others who require verifications of your case. Credit card companies and banks may require you to show the report in order to verify the crime.

4. Stolen Checks: If you have had checks stolen or bank accounts set up fraudulently, report it to the check verification companies. Put stop payments on any outstanding checks that you are unsure of. Cancel your checking and savings accounts and obtain new account numbers. Give the bank a secret password for your account (NOT mother’s maiden name).

5. ATM Cards: If your ATM or debit card has been stolen or compromised, report it immediately. Get a new card, account number and password. Do NOT use your old password. When creating a password don’t use common numbers like the last four digits of your Social Security Number or your birth date.

6. Fraudulent Change of Address: Notify the local Postal Inspector if you suspect an identity thief has filed a change of your address with the post office or has used the mail to commit credit or bank fraud. (Call the local Postmaster to obtain the phone numbers.) Find out where fraudulent credit cards were sent. Notify the local Postmaster for that address to forward all mail in your name to your own address. You may also need to talk with the mail carrier.

7. Secret Service Jurisdiction: The Secret Service has jurisdiction over financial fraud, but it usually does not investigate individual cases unless the dollar amount is high or you are one of many victims of a fraud ring.

8. Social Security Misuse:Call the Social Security Administration to report fraudulent use of your Social Security number. As a last resort, you might want to try to change your number. The SSA will only change it, however, if you fit the fraud victim criteria. Also order a copy of your Earnings and Benefits Statement and check it for accuracy.

9. Passports: If you have a passport, notify the passport office in writing to be on the lookout for anyone ordering a new passport fraudulently.

10. Phone Service: If your long distance calling card has been stolen or you discover fraudulent charges on your bill, cancel the account and open a new one. Provide a password that must be used any time the account is changed.

11. Driver License Number Misuse: You may need to change your driver’s license number if someone is using yours as identifications on bad checks. Call the state office of the Department of Motor Vehicles (DMV) to see if another license was issued in your name. Put a fraud alert on your license. Go to your local DMV to request a new number. Also, fill out the DMV’s complaint form to begin the fraud investigation process. Send supporting documents with the completed form to the nearest DMV investigations office.

12. False Civil and Criminal Judgements: Sometimes victims of identity theft are wrongfully accused of crimes committed by the imposter. If a civil judgement has been entered in your name for actions taken by your imposter, contact the court where the judgement was entered and report that you are a victim of identity theft. If you are wrongfully prosecuted for criminal charges, contact the state Department of Justice and the FBI. Ask how to clear your name.

13. Legal Help: You may want to consult an attorney to determine legal action to take against creditor an/or credit bureaus if they are not cooperative in removing fraudulent entries from your credit report of if negligence is a factor. Call the local BAR Association to find an attorney who specializes in consumer law and the Fair Credit Reporting Act.

14. Dealing With Emotional Stress: Psychological counseling may help you deal with the stress and anxiety commonly experienced by victims. Know that you are not alone. Contact the Privacy Rights Clearinghouse for information on how to network with other victims.

15. Making Change: Write to your state and federal legislators. Demand stronger privacy protections and fraud assistance by creditors and credit bureaus.

Protect Your Financial Identity

1. If you think you’re a victim of fraud, contact your credit card issuers to close or “flag” your account(s), and call your bank to put an alert on your checking accounts.
2. Empty your wallets of extra credit cards (and Ids) – or better yet, cancel the ones you don’t really use and keep a list of the ones you do use.
3. Never give out personal information over the phone, such as your date of birth, mother’s maiden name, credit card number(s), social security number or bank PIN code, except to someone you know or an established firm.
4. Shred pre-approved credit applications, credit cards receipts, bills and other financial information you don’t want before tossing them in the trash.
5. Financial institutions or business that handle personal information should protect consumers’ privacy by storing such material securely and ensuring it has limited access. It is essential to shred such material before disposing of it.
6. Consider removing your name from the marketing list of the three major credit reporting bureaus:
   • Experian at 800-353-0809
   • Equifax at 800-219-1251
   • TransUnion at 800-241-2858.

This reduces the number of pre-approved applications you receive in the mail.

1. Order your credit report once a year to check for accuracy or fraudulent use.

International Investment Fraud

American investors, swept up in the overseas investment boom, would do well to temper their euphoria with the utmost since a new breed of con artist are cashing in on the rush to global investing. U.S.-based swindlers with bogus overseas investments schemes and high-pressure telephone “boiler-room” sales operations located outside the United States will potentially defraud individual investors of billions of dollars during the 1990s.

Complaints about overseas investments swindles involving precious metals, penny stocks, mining, coins, currencies speculation, and special foreign banking instruments, such as certificates of deposits (CDs) with “sky-high, no risk” rates, are reported to state securities agencies and local Better Business Bureaus (BBBs) on a regular basis. Officials warned that the rise of offshore or boiler-room operations will make it much more difficult, if not possible, for investors to recover their funds and for law enforcement agencies to investigate and prosecute. Even mainstream foreign investments sometimes involve special risk and circumstances due to differing standards of marketplace regulations.

Legitimate Overseas Investments North Americans are investing overseas in greater numbers and with more money than ever before. In part, this is a reflection of the fact that the international marketplace is becoming increasing integrated and that international funds have made investing abroad easy. By the end of 1994, assets of the United States managed international and global stock funds exceeded $160 billion with $40 billion invested in that year alone. Today, there are hundreds of funds divided into four categories:

1. Global funds that invest in both United States and foreign markets
2. International funds that invest only outside United States
3. Regional funds
4. Country funds

The number of foreign listings have also grown steadily on U.S. exchanges. By late 1996, the average daily volume of the New York Stock Exchange, for sample, included some 12 percent each day from trading in non-U.S. securities. Chile was the fourth largest contributor.

Investors venturing overseas for the first-time need to remember, however, that there are major risk involved. A strengthening dollar reduces the value of foreign investments owned by the U.S. investors. A 20 percent drop in the value of a foreign currency relative to the U.S. dollar has the same impact as a 20 percent drop in that country’s stock market prices. On the other hand, if the dollar weakens, foreign assets rise in value.

Foreign governments could be over thrown-touching off market declines-or they could nationalize industries. In some countries, only a few hundred stocks trades in large quantities. This may result in exorbitant premiums not justified by the book value and fundamentals of the company involved.

Although the trend is toward more open markets, major differences among national markets in procedures, practices, rules and the threshold for fraudulent conditions can still trip up investors. For example, the Korean stock market, which is considered to be one of the least open to the world, bars non-residents from owning South Korean stocks, except indirectly through nine trust funds. The Bogota (Columbia) Exchange has been identified by some law enforcement officials as a major front for many illegal operations, including the laundering of drug dollars. Investors who participate in Taiwan’s 104 percent return in 1993 were disappointed when they try to bring their capital home. The Taiwanese government imposed a three-month waiting period before capital could be repatriated.

There also are sometimes differing views among nations about what are acceptable market activities. For example, the London Stock Exchange does not ban “bear raids” in which speculators try to drive down the price of a stock through short selling, a practice which is sharply limited under the New York Stock Exchange Rules. In some countries, including Italy, Sweden, Belgium and Taiwan, there exist few prohibitions against inside trading. Malaysia, Greece and Kenya are among the nations with no government agencies to safeguard the interest of investors and to guard against marketplace misconduct.

These are among the issues and differences that regulators will grapple with as the worlds marketplace becomes even more tightly interwoven. Through in NASAA, state security agencies have taken a major role in the promotion of uniform registration requirements in the U.S. for foreign offerings and have joined in cooperative enforcement agreements in the international arena.

Phony Overseas Investments Con artists are quick to pick up on the psychology of the investment climate and create “look alike” investments swindles that mirror “hot” investments in legitimate markets. During the worldwide oil crisis of the 1970s, scammers capitalized on the inclination of investors to dip their toes into the rising oil market by concocting oil and gas lease lottery application mills. After the “Black Monday” stock market crash of 1987, investments swindlers were quick to jump on investors newfound distrust of paper investments by fashioning their own phony versions of tangible gold and mining investments, the so-called “dirt pile” scams that took an estimated $250 million from investors in 1988.

Today, con artists see that U.S. investors are paying increasingly attention to overseas investment opportunities. The new generation of scams have also “gone international.” Most troubling is a growing pattern of former U.S. boiler-room operators who have moved their telephone sales operations outside United States, frequently to Canada, Hong Kong, the Bahamas, Panama, Costa Rica, Europe, Liberia, and even South Africa. Some of these veteran con artist originally did their business in Florida and then moved onto Southern California, hopscotching once again offshore. The locations of the boiler-room are carefully chosen, with con artist dialing out of countries that have no extradition arrangement with U.S. law enforcement agencies.

Protecting Yourself From International Securities Swindles What is true of all security swindles-that the best protection is to hang onto your money and not turn it over to a con artist-is perhaps “truest” when it comes to international securities swindles. Enforcement efforts aimed at con men located overseas are extremely difficult and, in some cases, virtually impossible, due to poor relations between some nations and the absence of crucial enforcement mechanisms, such as extradition treaties. Here are some simple steps that investors can take to protect their investments:

1. Don’t be stampede in today rushed to international investing. If you listen to fellow investors and read the business days columns, it is easy to get the impression that everyone is investing overseas. But don’t give into the pressure to send your dollars overseas just to join the crowd. Make sure your investment is appropriate for your financial objectives and, in particular, your ability to assume risk.

2. Learn something about foreign markets. How are investments regulated in the nation where you are thinking about sending your money? To what extent are investors in this market protected from investment fraud and abuse? What if you had to resolve some sort of dispute related to your investment? To what government agency would you go for assistance resolving your problem?

3. Remember: International isn’t necessarily better. Even if investing overseas is one the “hottest” activities going today for investors, it doesn’t mean that the quality of the investment opportunities in other nations is any higher than those in the United States. In fact, because of enforcement complications, the actual level risk in overseas investments-even in mainstream market products-may be considerably higher than it is here, were markets are well regulated. (And once your money is gone, it may be impossible to recover, due to the practical difficulties involved in pursuing court actions against foreign entities and individuals.) Keep your head on your shoulders when it comes to the hoopla about international investing.

4. Consider the U.S. investment alternatives that provide foreign exposure. Many American corporations listed on U.S. exchanges have large operations in foreign countries and get a significant portion of their revenue from sales overseas. Investing in the stocks and bonds of these companies, or in mutual funds made up several of these companies, is one way to participate in the growth of foreign markets while keeping your dollars invested in U.S.-regulated corporations. The business reference section of the local library is a good place to research these companies. Keep in mind that while these U.S. corporations may face stricter regulations and foreign firms, a company’s earnings, and potentially its stock price, will still be affected by foreign currency fluctuations and political instability.

5. Check with your state securities agency and BBB for complaints. If an investment is being sold to you, its promoters should be registered with your state securities agencies. (For the number of your states agency, call NASAA at 1-888-8-4-NASSA.) Ignore claims that overseas investments promoters are somehow exempt from state and federal security law registration requirements-they aren’t. Also, take the time to acquire with your BBB about the company in question. It may have a record of customers experience with, or government actions against, the company.

6. Keep in mind that if you are dealing with a stranger about something you can’t check out with your own eyes…trouble may follow. Just because someone says that they have an oil well in Europe or a gold mine in South Africa does not mean that you have enough information on which to base an investment decision. Don’t be deceived by slick-produced brochures that might make an enterprise look legitimate. If you don’t have the contacts or financial resources to personally inspect your investments, consider carefully before giving up your money. In general, investors are best advice to deal with people they know and in investments they understand. If a stranger calls, pressuring you to invest “right away” in a huge profit potential in Singapore options, think twice!