Common Scams

Scam artists are experts at separating people from their money.  To learn about some of the most common scams facing consumers today, click on the topics below.

Topics of Interest - Common Scams 1

Charities

  • Scammers may set up fake organizations after a tragedy or that look similar to well established charities. Before giving money to them, verify them with sites like the Better Business Bureau or your state attorney general and don’t give them money if they pressure you to donate immediately.
  • Don’t donate if the organization refuses to provide detailed information about the charity and how your donation will be used.
  • If they can’t provide proof that a donation to them would be tax deductible, don’t donate to them.
  • A reputable charity will not ask for cash or a wire-transfer, but a check that can be traced for tax purposes.

Employment

  • Scammers will pose as real employers but will ask you to pay to get a job. Real employers should not ask you to pay to get a job.
  • They will create job advertisements online, in newspapers, or on TV. If you see such an advertisement, you should contact the company directly to see if they are actually hiring.
  • A job placement company should never pressure you to sign a contract or pay for their services. They should allow you time to think things over before making a decision. The contract should also set out in sufficient detail the terms of the contract, such as payment, what services they are providing, and what happens if you do not find a job.
  • Common employment scams ask for credit card information, say you must pay for a credit report or training, or offers you a job without an application or interview.
  • Government agencies post their jobs publically and for free on usajobs.gov.

Funeral

  • Grief sometimes creates opportunities for scammers to take advantage of families and loved ones dealing with loss and planning funeral services.
  • Some scammers will attend funerals to take advantage of a grieving spouse or relative by claiming that the deceased owed a debt.
  • Funeral homes may also take advantage of people who are unfamiliar with funeral services by adding additional costs that are not needed to the overall funeral arrangements.
  • Be an informed consumer. Take time to call and shop around before making a purchase. Take a friend with you who may offer some perspective to help make difficult decisions. Funeral homes are required to provide detailed general price lists over the telephone or in writing.
  • Educate yourself fully about caskets before you buy one, and understand that caskets are not required for direct cremations.
  • Understand the difference between funeral home basic fees for professional services and any fees for additional services.
  • Know that embalming rules are governed by state law and that embalming is not legally required for direct cremations.
  • Carefully read all contracts and purchasing agreements before signing, and make certain that all of your requirements have been put in writing.
  • Make sure you understand all contract cancellation and refund terms, as well as your portability options for transferring your contract to other funeral homes.
  • Before you consider prepaying, make sure you are well informed. When you do make a plan for yourself, share your specific wishes with those close to you.
  • As a general rule governing all of your interactions as a consumer, do not allow yourself to be pressured into making purchases, signing contracts, or committing funds. These decisions are yours and yours alone.

Government Lookalikes

  • Federal government agencies will not ask for payment over the phone, ask you to wire money, or ask you to pay taxes to collect a prize for winning a sweepstakes. They will not threaten to arrest you or take you to court if you fail to pay.
  • Check phone numbers to see if it is a legitimate government number before calling. Scammers can make a phone number look like it is from Washington, D.C. or have the caller ID appear like it is from a legitimate government agency.
  • Scammers may know some of your personal information to appear legitimate but you should not provide additional personal information over the phone, text, email.

Grandparents and the Elderly

  • A common scam that targets the elderly is when a scammer calls someone they suspect to be older and more vulnerable to pretend they are a distant grandchild. The person will call and ask if the grandparent knows who they are. Once they state a name, they will pretend to be that grandchild and ask for money to solve some financial problem.
  • Another common scam is when a scammer tells the person that their child or relative is in the hospital and they need to wire funds over to pay the costs.
  • Internet scams include pop-up windows that older American’s are more likely to click on since they are less familiar with the internet. After clicking the link, a virus will download that will collect personal information, which can be used to steal their identity.

Grants

  • Scammers gain your money by promising a free government grant and asking for your bank information so they can cash the grant. They then have access to your bank account and can take your money.
  • Do not pay money to get a grant. Government agencies do not charge processing fees.
  • Beware of people claiming to work for grants-related government agencies that do not actually exist. The person may even give you a valid address for a government office, adding a touch of legitimacy to their claim, but do not be tricked.

Home Repair

  • A common scam is when a person will call or come to your door saying they can repair or remodel something in your home, and will ask for a deposit or for you to pay for it up-front. They will then take the money and run.
  • Some scammers target older Americans, especially those with memory issues, making unnecessary repairs to con them out of their money.
  • If a contractor pressures you to sign a contract immediately or asks for all payments in cash or up front, be suspicious.
  • Some states require contractors to be licensed, so check with your local consumer protection agency to see if contractors must be licensed in your state. If they are, ask for their license and research them thoroughly. Also ask for references and before and after photos to show they can do quality work.
  • Some will offer “free inspections” as a way to see what is in your home that they could steal, or as a way to get business for problems that don’t actually exist.
  • Make sure to get your estimate, timeline, and what the contractor will do in a written contract.
  • Make sure the contractor has a physical address so if something goes wrong, you can still locate them and hold them accountable.

Imposter

  • The person will claim to be someone you know, such as a relative or friend, or claim to be from a government agency to gain your trust. They will then say there is an emergency and they need money, you owe a debt, or you have won a prize that requires you to pay taxes to receive.
  • They will ask you to wire money to them or get a prepaid card and give them the card information. Once you wire the money, you may never hear from them again.
  • Never send money by gift card, cash reload card, or money transfer.
  • Don’t give out your personal information to anyone who calls, texts, or emails.

Investment

  • Investment scams prey on those who hope to earn a high income by investing.
  • If an investment says there is no risk and guarantees return on your investment, it is a scam to get your money.
  • Verify the person is a legitimate investment professional by checking with Financial Industry Regulatory Authority (FINRA), the Securities Exchange Commission (SEC), or your state securities regulator. Legitimate investment professionals must register to provide their services

IRS

  • Scammers will sometimes pose as a representative of the IRS to obtain sensitive information from you or attempt to take money from you.
  • Scammers will use official IRS letterhead in emails to look legitimate. The IRS does not use email or text messages to contact you.
  • The IRS does not call you to demand immediate payment or threaten to arrest you for not paying. Generally, if you owe a debt the IRS will first mail you a notice of the debt owed.
  • If the IRS does call you, they will expect the debt to be paid to the U.S. Treasury, not through a wire transfer, a gift card, or by asking for a credit or debit card number over the phone.
  • You have the right to question or appeal the amount you owe to the IRS, so if a caller demands that you pay them right away, it is a scam.
  • The IRS will not threaten to revoke your driver’s license, business license, or your immigration status.
  • IRS scammers alter their caller ID to make it seem like the IRS is calling, and will use fake badge numbers. They may know basic information about you to seem legitimate.
  • To report a scam call: report the caller ID and/or callback number to the IRS by sending it to phishing@irs.gov (Subject: IRS Phone Scam). To report it to the Federal Trade Commission use the FTC Complaint Assistant on FTC.gov. Add “IRS Telephone Scam” in the notes.

IRS 2019 “Dirty Dozen” Tax Scams (to view the full article, please click here):

  • Phishing
    • Taxpayers should be alert to potential fake emails or websites looking to steal personal information. The IRS will never initiate contact with taxpayers via email about a bill or tax refund. Don’t click on one claiming to be from the IRS. Be wary of emails and websites that may be nothing more than scams to steal personal information.
  • Phone Scams
    • Phone calls from criminals impersonating IRS agents remain an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent years as con artists threaten taxpayers with police arrest, deportation and license revocation, among other things.
  • Identity Theft
    • Taxpayers should be alert to tactics aimed at stealing their identities, not just during the tax filing season, but all year long. The IRS, working in conjunction with the Security Summit partnership of state tax agencies and the tax industry, has made major improvements in detecting tax return related identity theft during the last several years. But the agency reminds taxpayers that they can help in preventing this crime. The IRS continues to aggressively pursue criminals that file fraudulent tax returns using someone else’s Social Security number.
  • Return Preparer Fraud
    • Be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest, high-quality service. There are some dishonest preparers who operate each filing season to scam clients, perpetuate refund fraud, identity theft and other scams that hurt taxpayers.
  • Inflated Refund Claims
    • Taxpayers should take note of anyone promising inflated tax refunds. Those preparers who ask clients to sign a blank return, promise a big refund before looking at taxpayer records or charge fees based on a percentage of the refund are probably up to no good. To find victims, fraudsters may use flyers, phony storefronts or word of mouth via community groups where trust is high.
  • Falsifying Income to Claim Credits
    • Con artists may convince unsuspecting taxpayers to invent income to erroneously qualify for tax credits, such as the Earned Income Tax Credit. Taxpayers should file the most accurate tax return possible because they are legally responsible for what is on their return. This scam can lead to taxpayers facing large bills to pay back taxes, interest and penalties.
  • Falsely Padding Deductions on Returns
    • Taxpayers should avoid the temptation to falsely inflate deductions or expenses on their tax returns to pay less than what they owe or potentially receive larger refunds. Think twice before overstating deductions, such as charitable contributions and business expenses, or improperly claiming credits, such as the Earned Income Tax Credit or Child Tax Credit.
  • Fake Charities
    • Groups masquerading as charitable organizations solicit donations from unsuspecting contributors. Be wary of charities with names similar to familiar or nationally-known organizations. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations.
  • Excessive Claims for Business Credits
    • Avoid improperly claiming the fuel tax credit, a tax benefit generally not available to most taxpayers. The credit is usually limited to off-highway business use, including use in farming. Taxpayers should also avoid misuse of the research credit. Improper claims often involve failures to participate in or substantiate qualified research activities or satisfy the requirements related to qualified research expenses.
  • Offshore Tax Avoidance
    • Successful enforcement actions against offshore cheating show it’s a bad bet to hide money and income offshore. People involved in offshore tax avoidance are best served by coming in voluntarily and getting caught up on their tax-filing responsibilities.
  • Frivolous Tax Arguments
    • Frivolous tax arguments may be used to avoid paying tax. Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish claims about the legality of paying taxes despite being repeatedly thrown out in court. The penalty for filing a frivolous tax return is $5,000.
  • Abusive Tax Shelters
    • Abusive tax structures including trusts and syndicated conservation easements are sometimes used to avoid paying taxes. The IRS is committed to stopping complex tax avoidance schemes and the people who create and sell them. The vast majority of taxpayers pay their fair share, and everyone should be on the lookout for people peddling tax shelters that sound too good to be true. When in doubt, taxpayers should seek an independent opinion regarding complex products they are offered.

Lottery and Sweepstakes

  • Scammers will claim that a person has won a lottery or sweepstakes, but they must pay a fee to receive the prize.
  • Legitimate sweepstakes don’t make you pay a fee or buy something to enter or improve your chances of winning that includes paying “taxes,” “shipping,” or “processing fees” to get your prize. There’s also no reason to give someone your checking account number or credit card number in response to a sweepstakes promotion.
  • If the “contest” asks you to provide personal information or enter your bank information, it is most likely a scam to gain your information or access to your bank account.
  • If you receive a phone call or a piece of mail saying you won a high-stakes foreign lottery, it is a scam. It is illegal to play in a foreign lottery.

Medicare

  • Scammers will call people who may have Medicare benefits claiming they are a Medicare representative. The scammer then requests personal information that can be used to file false Medicare claims.
  • Taking personal information, such as your Medicare number, is a form of identity theft. If you receive Medicare benefits, Medicare will send you a card with a unique Medicare number, rather than your social security number, in order to protect your personal and sensitive information.
  • A Medicare representative will only call you for information if it is an agent who previously helped you become a member of a health or drug plan, or if you contacted customer service and left a message requesting assistance, or if you spoke to a Medicare representative who said they would call you back.
  • Pay attention to your claims and statements to make sure you are never billed for services you did not receive, or items, like medical equipment, you did not get.
  • If someone calls you and asks for your Medicare number or other personal information, call 1-800-MEDICARE (1-800-633-4227) and report it.

Ponzi Schemes

  • A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors, whose funds to payreturns to  the earlier investors. Eventually there isn’t enough money to go around.
  • Ponzi schemes must rely on new customers and must discourage current customers from cashing out their investment.
  • If the investment promises to continuously pay you returns despite how the market is doing, it is most likely a Ponzi scheme.
  • These schemes are not registered with the Securities Exchange Commission or state regulators, so check with them before investing.

Pyramid Schemes

  • A pyramid scheme is a business model that works by recruiting an increasing number of members at different levels. Instead of supplying any actual goods or services, the model promises profits for enrolling other members into the scheme. These recruits are required to make an upfront payment that is used for the payments to earlier participants.
  • Pyramid schemes often mask themselves as business opportunities but require you to bring in more participants and continue to buy their product. There is usually no genuine product or service sold.
  • Pyramid schemes are different than Multi-Level Marketing (MLM) in that in an MLM, you are being recruited to sell an actual product or service. You make a profit by selling the product, and are not required to recruit people under you to make a profit.
  • Pyramid schemes are illegal in the United States and elsewhere in the world.

Ransomware

  • Ransomware occurs when a hacker sends a malicious link or pop-up that takes control of your computer and encrypts your files after you click the link. It then demands a ransom to get the decryption code to unlock your files. If you don’t pay the ransom, they can wipe out all of your files on your computer.
  • Always be very careful about opening up unknown links or pop-ups on your computer.
  • Have a backup system in place so if you are attacked you can retrieve your files without having to pay the ransom.

Romance

  • Scammers will use social media and online-dating sites to gain your trust, and then they will claim an injury, loss of a job, inability to afford travel expenses to see you, or other financial difficulty to gain your sympathy and ask for money. You should never give money to someone you know only online.
  • If you have met someone online, beware if that person always comes up with an excuse as to why they cannot meet you in person or talk over video chat. They are most likely a scammer hiding behind their computer.
  • You should never give money to someone you haven’t met in person and that you don’t know.

Social Security

  • Scammers may pose as a representative or agent from the Social Security Administration to get your personal information. The scammer may say that either your social security number or your benefits have been suspended due to suspicious activity, and will request that you confirm your social security number in order to get that information from you.
  • A scammer may also claim that your bank account is going to be seized and ask you to send money immediately in order to keep it safe.
  • The caller may be able to fake the real Social Security Administration’s phone number, but if you receive a call from a number that appears to be the Social Security Administration, you can always hang up and call back on your own to verify.
  • Remember that someone from the Social Security Administration will never call to threaten to take your benefits or money.
  • If you get a call you suspect to be a scammer, report it to the FTC at ftc.gov/complaint.

Tech Support

  • Some scammers call and claim to be computer techs employed by well-known companies like Microsoft or Apple. Other scammers send pop-up messages that warn about computer problems. They say they’ve detected viruses or other malware on your computer. They claim to be “tech support” and will ask you to give them remote access to your computer. Eventually, they’ll diagnose a non-existent problem and ask you to pay for unnecessary – or even harmful – services.
  • If you get a pop-up message, phone call, or email, do not follow its directions. Don’t click on any links. If you are worried your computer might be infected, call your security software company to get your computer checked, but do not call the number in the pop-up message or email.
  • Real error messages from our computer’s security system do not display a phone number to call for tech support.

Utilities

  • A common scheme is when a scammer calls claiming you have past due utility bills, and to avoid being shut off you must pay them immediately. Most utility companies will mail you a notice of a past due bill before shutting off your service. They will never ask you to wire money or give them the number of a prepaid debit card. If you believe you may have a past due bill, call the number on your utility bill and don’t give any personal or financial information to the person that called you.
  • In some states, you can choose your utility provider. Some places will claim they can offer you a lower rate, but fail to tell you that the lower rate is only good for a short period of time. After that time period is up, your rate will drastically increase. If you are interested in switching companies, avoid these unsolicited offers and compare rates yourself.
  • Some places will claim to be your utility company and will ask you for your account number. They will then switch you to a different company without your permission and it will have higher rates.
  • Avoid unsolicited energy auditors who may be looking to steal items from your home or gather personal information for identity theft. If your utility company wants to audit your energy use, they will send a notice first.

Veterans Benefits

  • Watch out for advisers who claim they can get you additional benefits, or offer you cash now in return for future benefits.
  • Be wary of people who offer to move your assets around, like in a trust fund, to qualify you for veteran’s benefits. If you have to move assets around to qualify, then you don’t actually qualify and could be required to pay back the benefits.
  • If you see an advertisement that says the company can guarantee you a veteran’s loan, don’t buy into it. Veteran loans are not guaranteed.