Consumer Scams & Frauds
Potential fraud victims should report scams to the Department of Public Safety by calling 877-382-4357. Submit information at www.ftccomplaintassistant.gov.
Surrounded by hundreds of counterfeit checks and fraudulent solicitations, the Attorney General is calling on Minnesotans to be alert to a variety of financial scams that are proliferating in the marketplace due to advancements in cheap technology.
According to Attorney General Lori Swanson, "These scam artists operate from other countries, and they are on the run. Cheap technology has allowed them to proliferate. Once a person's money is gone, it is usually gone for good."
Scam artists operate with pre-paid cell phones, post office boxes, and throw-away e-mail addresses. The con artists are slippery and on-the-move, making them hard to catch.
The Magnitude of Consumer Fraud
- According to the United States Postal Inspection Service, U.S. citizens lose over $120 million per year to the Foreign Lottery Scam.
- The Financial Crimes Unit of the Secret Service receives 100 telephone calls and 300-500 pieces of correspondence per day from victims and potential victims of the Nigerian Advance Fee Fraud.
- According to the FBI, the median dollar loss associated with the Nigerian Advance Fee Fraud scheme is over $5,000 per victim.
- According to the United States Postal Service, Nigerian Advance Fee Fraud costs Americans over $100 million per year.
- According to the U.S. Secret Service, telecommunication fraud losses total $1 billion per year.
- According to the FBI's Internet Crime Complaint Center, Internet fraud reached an all time high in 2006, costing victims $198.4 million.
- According to the FTC, Identity Theft, which may include some forms of phishing, fake check scams, foreign lottery scams, and advance fee fraud, costs Americans over $50 billion per year.
- In 2005, Customs and Border Protection agents at JFK airport seized 100,000 pieces of incoming mail suspected of containing foreign lottery solicitations. Upon examination, the mailings contained solicitations to enter the "El Gordo" lottery.
Top 10 Tips to Avoid Consumer Fraud
- Never disclose your credit card number, check routing information, or other banking information to telemarketers of other solicitors.
- Do not believe claims that you need to pay in order to "collect your winnings" from a contest or to obtain a line of credit.
- If you receive correspondence claiming that your financial institution, or account has been jeopardized, do not immediately disclose your account or other information. Contact the company at a telephone number or address that is listed in the telephone book, or that you know to be an accurate contact for the company.
- Be wary of solicitations asking you to wire money or send payment to a foreign country. It may be difficult for law enforcement officials to pursue lost funds outside of the jurisdiction of the United States.
- Do not send payment or wire money to a third party in response to a cashier's check or personal check "overpayment" in connection with your sale of a vehicle, product or service. Remember, just because the bank may make funds from a cashier's check available quickly does not mean the check is good. Financial institutions can take up to a week or longer to verify that a given cashier's check or personal check is legitimate.
- Never respond to correspondence regarding a foreign lottery. These lotteries are illegal!
- Do not open spam e-mail, or "click" on attachments, images, or links in e-mail messages, instant messages, or pop-up messages.
- When shopping on-line, always use a secure website (preferably one that offers encryption) or a well-known payment service. Do not disclose your pin numbers or other sensitive information in connection with a purchase unless you are absolutely positive that you are dealing with a reputable company.
- Don't be rushed. People often make poor decisions when they are hurried. Most victims of scams later realize that if they had taken their time and thought it through, they would not have agreed to disclose their information or send money to a given scam operator.
- f it sounds "too good to be true," it is.
Top 5 Consumer Scams
- Foreign Lottery/Cashier's Check Scam. In this scam, the victim is told they won a foreign lottery. They are typically sent a cashier's check in the amount of $2,000 - $5,000 as an advancement on their winnings. They are told to deposit the cashier's check into their bank account and then wire a portion of it to pay the taxes necessary to collect their winnings. the cashier's check, however, is a counterfeit check that appears so authentic that the bank teller allows the money to be deposited and the funds to be made available to the depositor. By the time the check is identified by the bank up to a week or more later as counterfeit, the consumer has already wired the money to a foreign country.
- Excess Cashier's Check/Purchase Scams. Another popular scam is for con artists to identify people who have items for sale on the Internet, such as boats, cars or snowmobiles, or who are renting out an apartment. The scam artist then agrees to purchase the item, sending the seller a counterfeit cashier's check in an amount in excess of the purchase price. The scam artist tells the seller simply to return the overage by personal check or wire transfer rather than having to get a new check issued. After the seller does so, the counterfeit check bounces, and the consumer's money is lost.
- Advance Fee Loan Scams. In an advanced fee loan scam, a scam artist purporting to be a legitimate company offers the consumer a loan at reasonable terms. The consumer is asked to pay a "deposit," typically representing about ten percent of the loan amount. Once the scam artist receives the "deposit," they are never heard from again.
- The "Nigerian" Scam. The "Nigerian" scam has been around for many years. In the typical scam, a victim is told that a Nigerian official needs to get money out of the country and offers to pay the victim a percentage for serving as intermediary. In the more modern variation of the scam, the scam artist poses as an American soldier who is serving in Iraq who is attempting to transfer money out of the country and offers to pay the victim to help facilitate the transaction.
- Phishing Scams. In this scam, the scam artist poses as a legitimate company with which the victim has a relationship in order to dupe the victim into supplying Social Security numbers, bank account numbers, and other information, which is then used to commit identity theft.
Tips to Avoid “Do-Not-Call” Scams
Many Minnesotans who want to get fewer telemarketing calls have signed up with the state "Do-Not-Call" list maintained by the Minnesota Department of Commerce.
Scam artists have taken advantage of the popularity of state "Do-Not-Call" lists to trick consumers into giving up personal information such as their social security, bank account, credit card or calling card numbers. These callers imply that they are a representative of the state "Do-Not-Call list, and need your personal information to verify or confirm that you want to be on the list, or that signing up on the list requires payment of a fee.
The Minnesota Attorney General's Office offers the following tips for consumers regarding Minnesota's "Do-Not-Call" list:
- Once you sign up for National Registries "Do-Not-Call" list, you do not need to confirm your personal information.
- You should never share your personal information with someone who calls you claiming to represent a "Do-Not-Call" list or registry or an organization to stop fraud.
- You will never receive an unsolicited call to be put on the National Registrie's no-call list; you must affirmatively contact the Federal Trade Commission to be placed on the list.
- You may put your name on the Federal Trade Commission's no-call list for free by calling 888-382-1222.
- Always keep your bank account, credit card and social security numbers to yourself unless you know exactly whom you're dealing with. Fraudulent companies can very quickly electronically debit your account.
- If you gave your bank account number to a fraudulent telemarketer, you can contact your bank to stop payment. If the payment has already been taken out, you can still ask your bank to credit your checking or savings account if you did not clearly authorize the debit.