Scam alert: Be aware of varied ways con artists will try to gain your trust, steal your money

Hank Hayes • Apr 7, 2013 at 5:43 AM

The text message hitting mobile phones throughout the region last weekend included a call to action.

It began with: “Eastman C U Alerts: Your debit-card starting with (a six-digit number) is DEACTIVATED.”

And a scam was ignited.

Some Eastman Credit Union members who called what appeared to be a local number disclosed their account information.

While they slept, the scammer used that information to ransack their checking accounts from remote automatic teller machines.

Those who fell for the scam, according to the Tennessee Department of Commerce and Insurance (TDCI), did not recognize the three telltale signs of a scam.

Those signs are: An appeal to emotion, pressure to make a quick, uninformed decision, and a request to provide personal financial information.

Besides text messages, scammers use all types of different methods.

The Tennessee Division of Consumer Affairs (TDCA), a division of the Department of Commerce and Insurance, fielded almost 42,000 fraud complaints during the 2011-12 fiscal year.

Older scams include investment fraud where an old saying applies: If it sounds too good to be true, it usually is.

The Tennessee Securities Division (TSD) says that in investment fraud, the message is always the same — you’ll get rich quick, you’ll receive high returns with low risk and you should invest right now.

TSD describes three types of investment scams: So-call “affinity” fraud where con artists target an identifiable group based on race or religion; Ponzi schemes, or false investment opportunities where the promoter uses money from new investors to pay interest and principal redemptions to existing investors; and promissory notes in which the issuer promises to pay the investor back at a specified date in the future with a specified rate of interest.

In dealing with investment schemes, TSD recommends consumers should ask themselves three questions: Is the person offering the investment registered with government? Is the security or investment product registered? Did you receive a written prospectus or disclosure document summarizing the investment?

Aside from investments, one of the biggest forms of fraud is identity theft, which consumers can fight by monitoring and reviewing their credit report, according to TDCA.

“If you don’t check your credit report, it could be months before the credit grantor, fed up with nonpayment, turns the account over to a collector who tracks you down and demands payment for a loan you’ve never heard of,” said a TDCA position paper.

Other so-called “red flags” of identity theft, TDCA said, includes mistakes on bank statements; mistakes on explanations of medical benefits; bills for products or services you never received; calls from debt collectors about debts not belonging to you; a notice from the Internal Revenue Service that someone used your Social Security number; unwarranted collection notices on your credit report; and businesses turning down your checks.

Telemarketing scams are similar to identity theft because bank account, credit card or Social Security numbers are involved.

TDCA advises consumers to beware of telemarketing offers to help you recover money you may have lost previously.

Fraudulent telemarketers also run scams with prize and sweepstakes offers, travel packages, foreign lotteries and expiring car warranties, according to TDCA.

One new area for fraudulent telemarketers is offering fake health insurance as the requirement to have health insurance kicks in with the federal health care reform law taking effect next year.

TDCA says consumers should look out for unlicensed companies looking to collect premiums for bogus policies with no intention of paying claims.

Such unlicensed companies might offer policies at costs significantly lower than licensed and legitimate insurance companies, according to TDCA.

“Companies that are not licensed by the state to sell insurance might lead consumers to think they are operating legitimately, all while attempting to evade state insurance regulations,” said TDCA Commissioner Julie Mix McPeak. “A company selling a health discount plan, for example, might call its product insurance when it is neither regulated nor insurance.”

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