Tips to keep away from Scam

Telemarketing Fraud

When you send money to people you do not know personally or give personal or financial information to unknown callers, you increase your probability of becoming a victim of telemarketing fraud.

Caution signs -- what a caller may tell you:
  • "You must act 'now' or the offer won't be good."
  • "You've won a 'free' gift, holiday, or prize." But you have to pay for "postage and handling" or other charges.
  • "You must send money, give a credit card or bank account details, or have a check picked up by courier." You may hear this before you have had a probability to consider the offer carefully.
  • "You don't need to check out the company with anyone." The callers say you do not need to speak to anyone including your family, lawyer, accountant, local Better Business Bureau, or consumer defense agency.
  • "You don't need any written details about their company or their references."
  • "You can't afford to miss this 'high-profit, no-risk' offer."
If you hear these--or alike lines" from a telephone salesperson, just say "no thank you," and hang up the phone.

Some Tips to keep away from Telemarketing Fraud: 

It's very complicated to get your money back if you've been cheated over the phone. Before you buy anything by telephone, remember:

  • Don't buy from an strange company. Genuine businesses understand that you want more information about their company and are happy to comply.
  • Always ask for and wait until you receive written objects about any offer or charity. If you get brochures about costly investments, ask someone whose financial advice you trust to review them. But, unfortunately, be careful not everything written down is true.
  • Always check out unfamiliar companies with your local consumer protection agency, Better Business Bureau, state Attorney General, the National Fraud Information Center, or other watchdog groups. Unluckily, not all bad businesses can be recognized through these organizations.
  • Obtain a salesperson's name, business identity, telephone number, street address, mailing address, and business license number before you perform business. Some con artists give out false names, telephone numbers, addresses, and business license numbers. Verify the exactness of these items.
  • Before you give money to a charity or make an investment, find out what proportion of the money is paid in commissions and what percentage actually goes to the charity or investment.
  • Before you send money, ask yourself a simple question. "What guarantee do I really have that this solicitor will use my money in the manner we agreed upon?"
  • You must not be asked to pay in advance for services. Pay services only after they are send.
  • Some con artists will send a messenger to your home to pick up money, claiming it is part of their service to you. In actuality, they are taking your money without leaving any trace of who they are or where they can be reached.
  • Always take your time making a conclusion. Legitimate companies won't pressure you to make a snap decision.
  • Don't pay for a "free prize." If a caller tells you the payment is for taxes, he or she is violating federal law.
  • Before you receive your next sales pitch, choose what your limits are -- the kinds of financial information you will and won't give out on the telephone.
  • It's never impolite to wait and think about an offer. Be sure to talk over big investments offered by telephone salespeople with a trusted friend, family member, or financial advisor.
  • Never reply to an offer you don't understand carefully.
  • Never send money or give out personal details such as credit card numbers and expiration dates, bank account numbers, dates of birth, or social security numbers to unknown companies or unknown persons.
  • Your personal details are often brokered to telemarketers through third parties.
  • If you have information about a fraud reports it to state, local, or federal law enforcement agencies.

Nigerian Letter or "419" Fraud


Nigerian letter frauds unite the threat of impression fraud with a variation of an advance fee scheme in which a letter, mailed from Nigeria, offers the receiver the "opportunity" to share in a percentage of millions of dollars that the author, a self-proclaimed government official, is trying to transfer illicitly out of Nigeria. The receiver is encouraged to send information to the author, such as blank letterhead stationery, bank name and account numbers and other identifying information using a duplicate number provided in the letter. Some of these letters have also been received via E-mail through the Internet. The scheme relies on convincing a willing victim, who has demonstrated a "propensity for larceny" by responding to the request, to send money to the author of the letter in Nigeria in several installments of increasing amounts for a diversity of reasons.
Payment of taxes, bribes to government officials, and legal fees are often described in great detail with the assure that all expenses will be refunded as soon as the funds are spirited out of Nigeria. In reality, the millions of dollars do not exist and the victim eventually ends up with nothing but loss. Once the victim stops sending money, the perpetrators have been known to use the personal information and checks that they received to copy the victim, draining bank accounts and credit card balances until the victim's assets are taken in their sum. While such an invitation impresses most law-abiding citizens as a laughable hoax, millions of dollars in losses are caused by these schemes yearly. Some victims have been lured to Nigeria, where they have been jailed against their will, in addition to losing large sums of money. The Nigerian government is not understanding to victims of these schemes, since the victim actually conspires to remove funds from Nigeria in a manner that is contrary to Nigerian law. The system themselves violate section 419 of the Nigerian criminal code, hence the label "419 frauds."

Some Tips to Avoid Nigerian Letter or "419" Fraud

  • If you get a letter from Nigeria asking you to send personal or banking details, do not respond in any manner. Send the letter to the U.S. Secret Service, your local FBI office, or the U.S. Postal Inspection Service. You can also register a complaint with the Federal Trade Commission’s Consumer Sentinel.
  • If you recognize someone who is corresponding in one of these schemes, encourage that person to contact the FBI or the U.S. Secret Service as soon as possible.
  • Be cynical of individuals representing themselves as Nigerian or foreign government officials asking for your help in placing large sums of money in overseas bank accounts.
  • Do not consider the promise of large sums of money for your cooperation.
  • Protect your account information carefully.

Impersonation/Identity Fraud

Impersonation fraud happens when someone assumes your identity to execute a fraud or other criminal act. Criminals can get the information they need to assume your identity from a range of sources, such as the theft of your wallet, your junk, or from credit or bank information. They may approach you in person, by telephone, or on the Internet and ask you for the information.
The sources of information about you are so frequent that you cannot prevent the theft of your identity. But you can minimize your risk of loss by following a few simple hints.

Some Tips to Avoid Impersonation/Identity Fraud:

  • Never throw away ATM receipts, credit statements, credit cards, or bank statements in a working form.
  • Never give your credit card number over the telephone unless you make the call.
  • Settle your bank account monthly and notify your bank of discrepancies instantly.
  • Keep a list of telephone numbers to call to report the loss or theft of your wallet, credit cards, etc.
  • Report unauthorized financial transactions to your bank, credit card Company, and the police as soon as you notice them.
  • Review a copy of your credit report at least once each year. Notify the credit agency in writing of any questionable entries and follow through until they are explained or removed.
  • If your identity has been assumed, ask the credit bureau to print a statement to that achieve in your credit report.
  • If you know of anyone who receives mail from credit card companies or banks in the names of others, report it to local or federal law enforcement authorities.

Advance Fee Scheme
An advance fee scheme happen when the victim pays money to someone in expectation of receiving something of greater value, such as a loan, contract, investment, or gift, and then receives little or nothing in return.

 The diversity of advance fee schemes is limited only by the imagination of the con artists who offer them. They may involve the sale of products or services, the offering of investments, lottery winnings, "found money," or many other "opportunities." Intelligent con artists will offer to find financing arrangements for their clients who pay a "finder's fee" in advance. They need their clients to sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the "finder" according to the contract. Such agreements may be legal unless it can be shown that the "finder" never had the intention or the skill to provide financing for the victims.

Some Tips to Avoid the Advanced Fee Schemes:
  • If the offer of an “opportunity” emerges too good to be true, it maybe is. Follow ordinary business practice. For example, legitimate business is seldom conducted in cash on a street bend.
  • Know who you are dealing with. If you have not heard of a person or business that you intend to do business with, learn more about them. Depending on the amount of money that you intend to use, you may want to visit the business location, check with the Better Business Bureau, or consult with your bank, a lawyer, or the police.
  • Make sure you fully understand any business agreement that you enter into. If the terms are composite, have them reviewed by a capable lawyer.
  • Be wary of businesses that function out of post office boxes or mail drops and do not have a street address, or of dealing with persons who do not have a straight telephone line, who are never "in" when you call, but always return your call later.
  • Be wary of business deals that need you to sign nondisclosure or noncircumvention agreements that are designed to stop you from independently confirming the bona fides of the people with whom you mean to do business. Con artists often use noncircumvention agreements to threaten their victims with civil outfit if they report their losses to law enforcement.

Common Health Insurance Frauds

Medical Equipment Fraud:
Equipment manufacturers offer "free" products to individuals. Insurers are then charged for products that were not desired and/or may not have been transported. 
"Rolling Lab" Schemes: 
Avoidable and sometimes false tests are given to individuals at health clubs, departure homes, or shopping malls and billed to insurance companies or Medicare.
Services Not Performed:
Customers or providers bill insurers for services never provided by changing bills or submitting fake ones. 
Medicare Fraud:
It can take the form of any of the health insurance frauds described above. Senior citizens are frequent targets of Medicare schemes, particularly by medical equipment manufacturers who offer seniors free medical products in exchange for their Medicare numbers. Because a physician has to sign a form confirm that equipment or testing is needed before Medicare pays for it, con artists fake signatures or carrot corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not prepared.

Some Tips to Avoid the Health Insurance Fraud:

  • Never sign blank insurance claim forms.
    • Never give coverlet authorization to a medical provider to bill for services provided.
  • Ask your medical contributor what they will charge and what you will be anticipated to pay out-of-pocket.
  • Carefully analysis your insurer's explanation of the benefits statement. Call your insurer and provider if you have questions.
  • Do not do business with door-to-door or telephone salesman who tell you that services of medical equipment are free.
  • Give your insurance/Medicare ID only to those who have provided you with medical services.
  • Keep precise records of all health care appointments.
  • Identify if your physician ordered equipment for you.
Redemption/Strawman/Bond Fraud
Proponents of this scheme will claim that the U.S. Government or the Treasury Department reins bank accounts—often referred to as “U.S. Treasury Direct Accounts”—for all U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals encouraging this scam commonly cite various discredited lawful theories and may refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and websites will often charge large fees for “kits” that teach individuals how to commit this scheme. They will often involve that others have had great success in discharging debt and purchasing merchandise such as cars and homes. Failures to implement the scheme successfully are attributed to individuals not following instructions in a specific order or not filing paperwork at correct times.
This scheme predominately uses fake financial documents that appear to be legitimate. These documents are habitually referred to as “Bills of Exchange,” “Promissory Bonds,” “Indemnity Bonds,” “Offset Bonds,” “Sight Drafts,” or “Comptrollers Warrants.” In addition, other official documents are used outside of their intended reason, like IRS forms 1099, 1099-OID, and 8300. This scheme frequently intermingles legal and pseudo legal terminology in order to appear lawful. Lawer may be used in an attempt to make the fraud appear legitimate. Often, victims of the scheme are instructed to address their paperwork to the U.S. Secretary of the Treasury.
Some Tips to Avoid Redemption/Strawman/Bond Fraud
  • Be suspicious of individuals or groups selling kits that they claim will notify you on to access secret bank accounts.
  • Be wary of individuals or groups proclaiming that paying central and/or state income tax is not essential.
  • Do not think that the U.S. Treasury controls bank accounts for all citizens.
  • Be cynical of individuals advocating that speeding tickets, summons, bills, tax notifications, or alike documents can be resolved by writing “acceptance for value” on them.
  • If you identify of anyone advocating the use of property liens to coerce acceptance of this scheme, contact your local FBI office.   
Investment Related Scams
Letter of Credit Fraud
Legal letters of credit are never sold or offered as investments.
Legal letters of credit are issued by banks to ensure payment for goods shipped in connection with international trade. Payment on a letter of credit normally requires that the paying bank receive documentation confirming that the goods ordered have been shipped and are en route to their intended destination.  
Letters of credit frauds are often attempted against banks by providing fake documentation to show that goods were shipped when, in fact, no goods or inferior goods were shipped.
Other letter of credit frauds occur when con artists offer a "letter of credit" or "bank guarantee" as an investment wherein the investor is assuref enormous interest rates on the order of 100 to 300 percent annually. Such investment "opportunities" just do not exist. (See Prime Bank Notes for additional information.)
Some Tips to Avoid Letter of Credit Fraud:
  • If an "opportunity" emerge too good to be true, it perhaps is.
  • Do not invest in anything unless you understand the deal. Con artists rely on composite transactions and defective logic to "explain" fraudulent investment schemes.
  • Do not invest or effort to "purchase" a "Letter of Credit." Such investments simply do not exist.
  • Be wary of any investment that offers the assure of awfully high yields.
  • Independently confirm the terms of any investment that you intend to make, including the parties involved and the nature of the investment. 
  • Prime Bank Note
    International fraud artists have false an investment scheme that offers enormously high yields in a relatively short period of time. In this scheme, they assert to have access to "bank guarantees" which they can buy at a discount and sell at a quality. By reselling the "bank guarantees" several times, they claim to be able to produce outstanding returns on investment. For example, if $10 million worth of "bank guarantees" can be sold at a two percent income on ten part occasions, or "traunches," the seller would receive a 20 percent profit. Such a scheme is frequently referred to as a "roll program." To make their schemes more tempting, con artists often refer to the "guarantees" as being issued by the world's "Prime Banks," hence the term "Prime Bank Guarantees." Other official sounding terms are also used such as "Prime Bank Notes" and "Prime Bank Debentures." lawful documents associated with such schemes often require the victim to enter into nondisclosure and noncircumvention agreements, offer returns on investment in "a year and a day", and claim to use forms obligatory by the International Chamber of Commerce (ICC). In fact, the ICC has issued a warning to all potential investors that no such investments exist. The reason of these frauds is normally to encourage the victim to send money to a foreign bank where it is finally transferred to an off-shore account that is in the control of the con artist. From there, the victim's money is used for the perpetrator's personal fixed cost or is laundered in an effort to make it disappear. While foreign banks use instruments called "bank guarantees" in the same manner that U.S. banks use letters of credit to assure payment for goods in international trade, such bank guarantees are never traded or sold on any kind of market.
    Some Tips to Avoid Prime Bank Note Related Fraud:
    • Think before you spend in anything. Be wary of an investment in any scheme, referred to as a "roll program," that offers abnormally high yields by buying and selling anything issued by "Prime Banks."
    • As with any investment execute due diligence. Independently verify the identity of the people involved, the reality of the deal, and the existence of the security in which you plan to invest.
    • Be wary of business deals that involve nondisclosure or noncircumvention agreements that are designed to avoid you from independently verifying information about the investment.
      What is a "Ponzi" Scheme
    A Ponzi scheme is basically an investment fraud wherein the operator promises high financial returns or dividends that are not accessible through traditional investments. Instead of investing victims' funds, the operator pays "dividends" to initial investors using the principle amounts "invested" by succeeding investors. The scheme normally falls apart when the operator flees with all of the proceeds, or when a enough number of new investors cannot be found to allow the continued payment of "dividends." This type of scheme is named after Charles Ponzi of Boston, Massachusetts, who operated an enormously attractive investment scheme in which he guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his original investors, the scheme dissolved when he was powerless to pay investors who entered the scheme later.
    Some Tips to Avoid Ponzi Schemes:
    • As with all investments, use due diligence in selecting investments and the people with whom you spend.
    • Make sure you fully understand the investment before you spend your money.
    Pyramid Scheme
    Pyramid schemes, also referred to as contract fraud, or chain referral schemes, are marketing and investment frauds in which an individual is offered a distributorship or permit to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Importance on selling franchises rather than the product finally leads to a point where the supply of possible investors is exhausted and the pyramid collapses. At the heart of each pyramid scheme there is normally a representation that new participants can recoup their original investments by inducing two or more forecast to make the same investment. Promoters fail to tell prospective participants that this is mathematically impractical for everyone to do, since some participants drop out, while others recoup their original investments and then drop out.
    Some Tips to Avoid Pyramid Schemes
    • Be wary of "opportunities" to spend your money in franchises or investments that need you to bring in ensuing investors to increase your profit or recoup your initial investment.
    • Independently validate the legitimacy of any franchise or investment before you invest.