Scams: How to Recognize and Avoid Them

Scams are rampant, with new ones popping up all the time as scammers adapt to new technologies, the latest trends and current events. Fraudsters perpetrate scams through phone calls, mail solicitations, emails, phony websites, online ads and by going door-to-door. Con artists often target older adults because they are frequently home during the day, have money saved, and may be too polite to hang up the phone or turn away a solicitor.

To avoid getting conned, be on the lookout for these Red Flags of a Scam:

Being asked to pay money in order to receive a prize
Pressure to act immediately
Use of scare tactics, e.g. telling you a loved one is in danger, that your computer has been hacked or threatening arrest if you don’t act now
Insistence that you pay via gift cards or wire transfer
Get-rich-quick and other promises that sound too good to be true
Promises to recover money you’ve lost in other scams, for a fee

One way to avoid scams perpetrated over the phone is to add your number to the Do Not Call Registry by going to donotcall.gov. Telemarketers are forbidden from contacting you if your number is on the registry, although political and charitable organizations, as well as businesses with which you already have an existing relationship, are still allowed to call you. Being on the registry won’t prevent scammers from calling since they usually disregard the Do Not Call Registry. That means that if you get a call from a telemarketer and you know you are on the Do Not Call Registry, you know it is a scam.

Sweepstakes/Lottery Scams

How it works

You are told you have won a sweepstakes or foreign lottery. In order to collect your winnings, you are informed that you must first pay taxes or customs duties – typically via wire transfer. You send the money, but you never receive your winnings…because there was actually no sweepstakes or lottery to begin with.

What you should know

Legitimate sweepstakes will never ask you to pay taxes or fees to receive your prize. If taxes are owed, you would simply report your winnings to the IRS when you file your annual tax returns.
It is illegal to play a foreign lottery, so if you are informed that you won one, you know it’s a scam. Besides, how could you win a foreign lottery if you never bought a ticket?
Sometimes the scammers will send a check for a few thousand dollars to cover the alleged taxes or fees. They’ll instruct you to deposit the check and then wire the money to them once the check has cleared. Don’t be fooled. The check is a fake. Despite popular belief, just because a check “clears” your bank, it does not mean the check is legitimate. It can take weeks to discover that a check is counterfeit. By that time, the scammers have disappeared with the cash, and you are liable to the bank for the money you wired.

Imposter Scams

Imposter scams are when fraudsters pose as someone you trust in order to trick you into paying them money. These scams often involve intimidation or scare tactics designed to persuade victims into handing over their money before they have had a chance to think it through. There are a variety of these scams. Below are some of the most common ones:

Tech Support Scams

How it works

You receive a phone call from someone claiming to be a representative from Microsoft. The caller tells you the company has detected a virus or malware on your computer and convinces you to allow him/her remote access to your computer to fix the problem. From there, scammers may ask for your credit card information so they can charge you for fake repair services, security software or a monthly maintenance contract. Even worse, they may install malware onto your computer that gives them access to user names and passwords for your accounts.

What you should know

Microsoft does not make unsolicited calls to consumers about viruses, security issues or software fixes. If you get such a phone call, it’s a scam.
Do not give control of your computer to a third party who calls you out of the blue.
Never provide your credit card or financial information to someone who calls and claims to be from tech support.
Don’t click on pop-up ads that claim your computer is infected with a virus, and do not call the number listed on those ads.
If you are in need of technical support, it is best to contact an established electronics or computer retailer.

Social Security Scam

How it works

You receive a call from someone claiming to be a Social Security Administration (SSA) employee or law enforcement officer who tells you your Social Security account has been suspended because it’s been linked to criminal activity. The scammer says your bank account is about to be seized and threatens to arrest you if you don’t cooperate. You’re told that to keep your money safe from the real criminals involved, you must empty your bank accounts, put the money on gift cards and provide the caller with the gift card numbers.

What you should know

The SSA will never call to threaten your benefits, suspend your account or tell you to wire money, send cash or put money on gift cards.
The real SSA number is 1-800-772-1213, but scammers sometimes use spoofing technology that will display that number in the caller ID. If you are not sure if the call is legitimate, hang up and dial 1-800-772-1213 to ensure you’re speaking with the real SSA.

IRS Scam

How it works

A scammer calls, claiming to be an IRS agent. The caller tells you that you owe money to the IRS and threatens to arrest you if you don’t pay immediately by wiring the money or sending it through a prepaid debit card.

What you should know

The IRS will never call you to demand immediate payment, insist that you pay a certain way, (e.g. by prepaid debit card), or ask for your credit or debit card number over the phone.
If you do owe taxes, the IRS will first contact you via the U.S. mail. They will not demand that you pay taxes without allowing you to question or appeal the amount you owe.
The IRS will not threaten to arrest you for not paying taxes.

If you think you do owe taxes and are not sure whether a phone call or email is the real thing, do not respond to the caller or emailer. Instead, contact the IRS directly at 800-829-1040.

Utility Scam

How it works

Con artists pose as representatives from your local gas or electric company. They may call or knock on your door, claiming that you have an unpaid balance and that unless you pay immediately – typically via Green Dot Money Pack prepaid cards, gift cards or your credit card – they will shut off service.

What you should know

Utility providers will never come to your door to collect payment.
Utility companies will not call to ask for your credit card or bank information.
Do not trust caller ID alone to verify the identity of the caller. Many scammers use spoofing technology to make the caller ID appear with a valid company name and/or phone number.
If you think there may truly be a billing issue with your account, do not provide any information to the caller. Instead, hang up and call the phone number listed on your utility bill.

Grandparent Scam

How it works

The scammer claims to be your grandchild, one of his or her friends, or a law enforcement officer. The caller then makes up an urgent scenario requiring that money be sent immediately, e.g. your grandchild is in jail and needs bail money or became ill while traveling in a foreign country and needs money to come home.

What you should know

A scammer can discover many personal details about someone via social media or through identity theft, so do not trust a caller at face value.
If you receive a phone call of this nature, it is best to hang up and then try to verify the whereabouts of your grandchild by calling his or her cell phone directly or contacting his or her parents.

Online Romance Scams

How it works

Scammers create fake online profiles on dating websites using photos of other people. They are charming and smitten with you from the get-go, professing their love quickly, even though they have never met you. They often claim to be living, traveling or working abroad to explain why they are unable to meet in person.

They then make up stories about how they urgently need money — for emergencies, hospital bills or a plane ticket to finally meet you — and ask you to wire it to them. Your money disappears and so does your new romantic partner.

What you should know

If an online date asks you to send money, it’s a scam.
Be suspicious if an online romance is getting very serious but the person is never able to meet face-to-face.

Never agree to open a bank account for someone, transfer money or re-ship goods they send you. These are signs of money laundering, which is a criminal offense.

Investment Schemes

How it works

You receive a phone call out of the blue about an investment that promises a high rate of return and no risk. But to take advantage of this once-in-a-lifetime opportunity, you have to act today. The truth is the investment is questionable at best, and may not even exist at all.

What you should know

Don’t trust promises of unusually high returns or risk-free investments. Every investment contains some amount of risk.
Don’t feel rushed. Pressure to act immediately is a red flag of a scam.
Be very wary of foreign or “off-shore” investments. If there is a problem, it will be much harder to get your money back.
Don’t be persuaded by claims that “everyone” is in on the deal. Many scams target members of the same social circle or religious group to give victims a false sense of security.
Don’t rely solely on the information the investment promoter gives you; a scammer can easily create phony materials. Always do your own research before investing your money – even if the person promoting the investment is someone you know.
If you are considering buying stock, check out the company’s financial statements by using the Security Exchange Commission’s (SEC) EDGAR database (www.sec.gov/edgar.shtml).
Verify whether the person contacting you is licensed to sell securities in Georgia by contacting the Georgia Secretary of State’s office at www.sos.ga.gov or 470-312-2640. You can also use the following resources to see if the person or company is the subject of any complaints or violations:
BrokerCheck (https://brokercheck.finra.org/)
investor.gov
FINRA’s “Scam Meter” tool (tools.finra.org/scam_meter ) gives you a report of any red flags based on your answers to a few questions.

Mystery Shopper Scams

Mystery shopping or “secret shopping” is when a store pays you a fee to pose as a regular shopper in exchange for evaluating the store’s customer service. While some of these opportunities are legitimate, many of the ads you’ll encounter for mystery shoppers are just a ruse to swindle you out of your money. The scammers may lure you with promises that you can make easy money. All you have to do is go to their website and pay a “fee” to register or to get access to a directory of mystery shopping opportunities. But the only one who ends up making money is the scammer who collected the fee.

Another twist some scammers use is to tell you your first mystery shopping job is to evaluate the services of a wire transfer company like Western Union. They send you a large check and ask you to deposit it in your bank account and then wire back a portion of those funds. Unfortunately, the check turns out to be counterfeit and now you’ve wired your own cash to the scammers.

Remember that legitimate mystery shopping jobs do not require you to pay money. In addition, a request to wire money is a big red flag of a scam.

Work-from-Home Scams

While some of the ads for work-from-home jobs are legitimate, many of them are scams. You should always research a potential employer carefully and look out for these red flags:

Requests for payment. The number one sign of a work-from-home scam is that you are asked to pay money up-front – whether for certification, training materials, background and credit checks or a job recruiter fee.
High salary for simple tasks or minimal experience. Remember, if it sounds too good to be true, it probably is.
Requests that you deposit payments to your account and then wire money on behalf of the company. This scenario is often used as a means of laundering stolen money. By carrying out this request you could be committing theft and wire fraud.
Vague job description. Be suspicious of job listings that are vague or overly generic, never stating exactly who the company is, what they do and what the position entails.

Certain types of jobs are more commonly used by scammers. These include:

Envelope Stuffing or Rebate Processing – You pay a small fee for this business opportunity and then learn that there is no work; instead, they want you to get others to buy the same work opportunity as you. You only earn money when they sign up.
At-home craft or assembly work – The company says it will pay you for creating or assembling crafts. But first you have to pay a significant amount of money for supplies and equipment. After you complete and ship your work, the company tells you that the quality is not up to its standards and refuses to pay you.
Medical or claims processing – In exchange for an investment of hundreds of dollars, you’re told you’ll get everything you need to launch your own medical billing business, including the software to process claims and a list of potential clients. But the lists are bogus or out-of-date and the software may not even work. Few people who make the investment are able to find clients or generate any income — let alone get their investment back.

Medical Alert and Home Security Scams

There are two common variations of this scam:

Robocall offering free system – You answer the phone to a pre-recorded message offering a free medical alert system, a system upgrade or saying someone has purchased a medical alert system for you as a gift. The message may state that the call is from Medicare. You are prompted to press “1” to speak with a live person, who immediately asks you to provide your financial information or Medicare account number to “expedite shipping and handling.” You end up getting charged monthly for a system that you didn’t need or one that is never delivered. Remember… calls with pre-recorded sales messages are illegal unless you have given the company your written permission to call. If you receive an unauthorized robocall, just hang up.
Door-to-door salesperson posing as your current provider – In this scenario, the scammers come to your door claiming to be with your existing medical alert or home security system. They may claim that the system is due for an upgrade or that the current provider has gone out of business and they are representatives from the new company that has taken over. They pressure you into signing contracts and providing your payment information. You discover you’ve been conned when you start getting billed for two systems: one from your original, legitimate provider and the “new” system the scammers tricked you into buying.
To avoid this scam:
- Ask the salesperson for a photo ID and business card.
- Call your existing provider using the phone number listed on your bill to verify that the employees and the offer are legitimate.
- Rather than making a decision on the spot, ask the salesperson to leave you with literature that you can review.

Door-to-Door Sales

Door-to-door salespeople frequently target older adults since they are often home during the day. While some door-to-door sales are legitimate, many are scams in which con artists use highpressure sales tactics to coerce consumers into paying money for a product or service they do not need, or one that never materializes.

Tips to Avoid Door-to-Door Sales Scams

It is wise not to allow a salesperson into your home unless you have a prescheduled appointment.
Always ask to see the salesperson’s ID.
High-pressure sales tactics often indicate a scam. If you are feeling pressured, you do not have to be polite. You can interrupt, tell the person firmly that you are not interested and shut the door.
Ask the salesperson to leave you with some written materials to review rather than signing a contract or making a purchase on the spot.
Never sign a contract without first reading it thoroughly and making sure you understand everything.
Get all prices, warranties and cancellation policies in writing.
Never pay in cash.
Door-to-door sales purchases of $25 or more are subject to the FTC’s Cooling-Off Rule, which gives you the right to cancel your purchase within three business days and receive a full refund. If the seller fails to do any of the following, he/she is violating the law:
- Tell you that you have the right to cancel the order within three business days for a full refund
- Provide you with a written summary of your cancellation rights
- Give you two copies of the cancellation form (one to keep and one to send if you decide to cancel your purchase)
- Give you a copy of your contract or receipt

Report any door-to-door scams or violations to the Georgia Department of Law’s Consumer Protection Division by calling 404-651-8600 or by going to www.consumer.ga.gov.

Magazine Sales

Magazine scams may occur via the phone, door-to-door, on-line or through mail solicitations. Scammers trick consumers into paying many times more than the regular subscription price or paying money for magazines that are never received. Refunds may be difficult or impossible to obtain. Here are some common magazine scams:

Mail solicitations designed to look like renewal invoices. You receive a postcard in the mail that looks like a renewal notice from your existing magazine publisher. It indicates that your magazine subscription is about to expire. Although the fine print may disclose that this is a solicitation, not a bill, many consumers do not notice or read the fine print. If you respond to the solicitation, you will end up paying a much higher than normal price for your subscription and you may find it difficult to cancel the subscription and get a refund.
Door-to-door sales benefitting a school activity or charity. A high school or college-aged youth comes to your door selling magazine subscriptions that will supposedly help fund a school activity or charity. The magazines are overpriced, but you are willing to overlook that in order to support a good cause. It turns out that the whole thing is a ruse. You are now out the money you paid, have no magazines to show for it, and cannot get ahold of the company.
You’ve won a prize. A scammer calls and tells you that you have won a valuable prize and that in order to collect it you must order a magazine service that costs just “pennies a day.” You agree to sign up for the service and provide the caller with your credit card information. The scammer then charges you more than $1,000 for magazines and you never receive your prize.

Tips for Buying Magazines

Pay online at the magazine’s website or contact the subscription department by phone using the number listed in the magazine itself or on the magazine’s website.
Never pay in cash. It is safest to use credit cards because they offer protection against fraudulent charges.
Ask to see the terms and conditions for the subscription before you purchase. Legitimate magazines will be happy to provide you with that information in writing.
If someone comes to your door selling magazines to fund a school activity, contact the school directly to verify that it is actually running the promotion described.
Don’t get rushed into making a decision. Take your time and make sure you understand what you are agreeing to.