Private Bank Minnesota

FDIC Scam Update: 
When the Economy Cools Down, Financial Scams Heat Up
Protect yourself from con artists preying on distressed homeowners and others facing difficulties

The economy may be slow, but for thieves prowling for victims, business is always brisk. "Crooks are taking advantage of the difficult economy, including tighter credit and higher unemployment, to trick people into accepting fraudulent and deceptive offers that seem beneficial on the surface but actually could cost a lot of money or result in identity theft," said Michael Benardo, manager of the FDIC's Financial Crimes Section.

Here are some common schemes being reported, followed by tips for protecting yourself.

Forclosure and Mortgage Rescue Schemes
Companies pose as foreclosure specialists "promise miracles," such as falsely claiming they can save a home from foreclosure by lowering the loan balance, interest rate and monthly payments, and "all for a large upfront fee." If you or someone you know is in this situation, you do not need to spend thousands of dollars to get help.

“Guaranteed” Loan Approvals
In some cases, con artists claim they can "guarantee" loan approvals to people with credit problems in exchange for a big upfront fee. Of course, after collecting the nonrefundable fee, the loan falls through. 

Work-at-Home Scams
Thieves prey on people who have lost their jobs or need extra cash by sending unsolicited e-mails and running advertisements on the Internet and in newspapers. The ads offer flexible, easy part-time jobs working at home and involve a lot of pay for doing very little, such as processing payments or shipping items. These offers may seem especially attractive if you've just lost your job.

“Mystery Shopper” Scams
It's common for businesses and consulting firms to pay consumers to visit and shop at their retail locations or dine at their restaurant and then submit confidential reports about the experience. These part-time workers are known as "mystery shoppers" and "secret shoppers." But fraud artists are cashing in by setting up fake mystery-shopping programs that look very real, including job applications (requesting Social Security numbers) and professional-looking websites, and then convincing new recruits to wire money using funds from their own checking account.

Fraudulent E-Mails, Calls And Faxes
Crooks pretend they are from a financial institution in the news (perhaps one that has acquired a failed institution) or a government agency (such as the FDIC) asking for consumers to supply personal information, such as account and Social Security numbers or passwords. Don't fall for this trick.

False or Misleading Sales of Certificates of Deposit (Cds)
Bank CDs issued by FDIC-insured institutions have long been considered to be among the safest financial investments available because of the deposit insurance protection. However, with the slow economy resulting in relatively low interest rates on insured CDs, savers looking for high yields may be tempted by Internet or newspaper advertisements offering unusually high returns. While most advertising for CDs is accurate and legitimate, beware that some may be misleading or even untrue.

Cross-Border Fraud
Cross-border fraud is a growing and serious problem. Minnesota is working closely with Canadian and British authorities to shut down cross-border crimes.  With the Internet and cell phones, it is easy for victims to be targeted from anywhere in the world. The most common cross-border frauds involve phony prize promotions, foreign lottery schemes, avance-fee loans, travel offer scams, and unnecessary credit card loss "protection."

Foreign Lottery Fraud
Playing a foreign lottery through the mail will pretty much guarantee that you will lose. Once you play, you'll be put on a list and you can count on receiving more "chances" to play and lose.

Sweepstakes and Prize Scams
Every day, Minnesota consumers receive sweepstakes promotions by phone, over the Internet or in the mail. If you have to pay to play or pay to receive your "winnings," the promotion is a scam.

“Grandparents” Scams
Con artists are now trying to bilk seniors by pretending to be their grandchildren — abroad, in trouble, and in need of cash, according to the Minnesota Department of Public Safety (DPS) Alcohol and Gambling Enforcement Division (AGED).  AGED warns Minnesota grandparents to exercise caution if they receive phone calls from “grandchildren” requesting money for an urgent situation.

FDIC’s Top Tips to Protect Yourself From Financial Scams and Rip-offs

  • Be wary of requests to "update" or "confirm" personal information, such as your Social Security numbers and bank account and credit card numbers (including security codes), in response to an advertisement or an unsolicited call, text message or e-mail.

  • Be extremely skeptical of any unsolicited offer that requires you to send a payment or provide bank account or other personal information before receiving anything in return.

  • Take the time to thoroughly research the people or organizations offering a job, loan, deposit, investment or other "opportunity" involving your money or personal information.

  • Walk away from any offer from a stranger that would involve a large deposit into your account and instructions to wire any of that money back, perhaps to someone in another country.

  • In general, assume that any offer that sounds unrealistic or otherwise "too good to be true,” especially one from a stranger or an unfamiliar company.  It is probably a fraud.

To learn more about common financial frauds and how to protect yourself:

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