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Top 3 Most Common Scams and How to Avoid Them

by on March 7, 2012

According to the Federal Trade Commission (FTC), 11 percent of American consumers are victims of fraud and scams each year.  With over 350 million people residing in the United States, that’s almost 4 million people each year that lose time, money and trust because of unethical practices.  There are so many different types of scams and fraudulent activities that could happen to you dealing with health care to paying off debt to even buying a product online.  As the fourth day of National Consumer Protection Week 2012, we have conducted some research to find out the most common types of scams and how you can avoid them.

Remember to share this information with friends and family members. Educating one another is the first step to fighting back!

1. Mortgage help scams.  The past 3 years millions of Americans have faced some of the harshest economic times when it comes to owning a home.  With the housing market collapse leaving many Americans home values “underwater” or losing significant value in their mortgage forcing them to owe nearly 50 percent more on the home than the home’s estimated value, many Americans have become desperate for a way to recover.  You may receive an email or call from a “debt settlement” or “Mortgage Hardship” company claiming they can help you refinance or get a modification on your mortgage terms.  These fake companies will ask you for an up-front fee to negotiate your mortgage terms on your behalf.  Usually the fee is significant ranging from $1,000 to $5,000. This is when you should cut off all communications.  It is illegal to pay a fee before you have rendered a service and any legit mortgage help company will receive funding from the government and does not charge any fee and if there is a fee its always under $100.

How to Avoid the Scam: Look for organizations that are Housing & Urban Development (HUD) certified.  If they are not HUD certified, don’t trust them because they have no legal power in negotiating your mortgage rate or terms.  Remember to only work with organizations in which their websites end in “.gov” or “.org” and remember again — there are no upfront fees to getting your mortgage refinanced or modified.  Find a Better Business Bureau A+ rating housing counseling organization or a reliable government agency.

2. Viral Video Scams.  You may have noticed on your Facebook timeline or Twitter feed where a bunch of your friends have “shared” a video about a very sensationalized and dramatic video with a headline like “Justin Bieber naked” or “Rihanna having sex with Chris Brown again!”  For the common person who loves a juicy celebrity gossip story, this could easily temp users to click away, but don’t!  You may fall prey to a computer virus or have your social network account and personal information compromised.

How to Avoid: Think twice before you click on websites, videos or links, especially if they have an outrageous or sensationalized title. Hover over the video or link with your mouse and see what URL pops up – this will give you an indication if the video is legit or not.  Finally, search in Google for that same gossip story and see if it comes up on an accredited news site.  If it doesn’t, chances are that it’s a scam.

3. Prize Scams. If you receive an email, call or text claiming that you have randomly been selected to win $1 million or a free vacation for two to Europe, don’t get all excited.  There’s about a 99 percent that it is a scam.  If they tell you that you have won a huge prize but you need to pay taxes on it or provide an upfront fee and fill out paperwork with personal information, a red flag should appear in your mind as a scam!

How to Avoid: If you have to ask yourself if it’s too good to be true, it most likely is.  Don’t let anyone pressure you into providing your personal credit or banking information.  Afterall, if the prize was “free,” why would they need your personal information? Remember that nothing is free and do your research before you take any “prize winning” seriously.

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