Archive for the ‘Scam Alert’ Category

Capital One is a Capital Ofender

December 7, 2007

Fee harvesting is the latest ploy by credit card companies

People with damaged credit have a new bull’s-eye on their backs. The nation’s banks are doing mailings for MasterCards and Visas that are just awful. They’re offering cards with low credit limits of a few hundred dollars. The catch is that they charge fees to get the card that nearly equal the credit limit they’ve given you. This tactic has been called “fee harvesting” by the National Consumer Law Center. That’s because there’s a multitude of subtle fees that they load on. These can include an annual fee, a setup fee, a program fee and a participation fee. The New York Times reports that Capital One and CompuCredit are some of the worst offenders. Except for the annual fee, all of these other fees are completely bogus. You think they’re doing you a big favor by taking you on as a customer. But they eliminate all their risk by hitting you upfront with huge ridiculous fees. This practice is diabolical but pretty clever in a sad sort of way. So beware if you’re suddenly getting an offer for a card and nobody else has wanted you — it could be a fee harvesting ploy coming your way.


Citibank is at it Again

December 4, 2007

Citi/Macy’s issuing new CCs to 3.5 million inactive accounts

I’ve been hearing from people who say they’ve received a new unsolicited credit card in the mail. The complaints stem from Citibank buying Macy’s credit portfolio and mailing out MasterCards to some 3.5 million inactive accounts. This is outrageous, disgusting and it should be illegal. Citi is contributing to account and ID theft by its behavior. A report in The Boston Globe states that Citi says they’ve received positive feedback from customers about these new cards. Citi also goes on to claim that they informed customers about how to decline these new cards, and that there are no privacy or security issues of concern. Lies, lies and more lies. What’s really going on is that Macy’s now has created another credit line for people — also lowering your score, by the way — by reducing the aging on your credit accounts and issuing you a new major credit card when you might not have wanted one. So if you get one of these pieces of trash in the mail, cut it up. And if you do other business with Citi, don’t use their cards. This is the power the marketplace affords you to punish a company that has done the wrong thing.

Insurance Sales Fraud

November 28, 2007

Beware of bogus insurance salespeople

There are a lot of pseudo health insurance companies out there selling fake plans to employers and individuals. The Wall Street Journal reports that some 200,000 businesses have been taken in these kinds of rip-offs. Small businesses crushed by high premiums are very susceptible to the lure of cheaper health care. But when somebody gets sick, the insurance card comes back as a fake and all the bills go unpaid. This has been happening in state after state. Insurance is regulated by the states, not the feds, so the rip-off artists can just bounce around from state to state pulling their scams. What do you need to know to stay safe? First off, be wary if you get a pitch for a great deal with drastically lower premiums. But don’t let your skepticism stop there. Contact your state insurance department and ask if a prospective company is licensed to do business in your state. Make sure the name matches exactly because sometimes the rip-off artists will use a name that’s very similar to that of a legitimate business. Seniors also have to be especially careful of fake prescription plans. Once again, call your state insurance department to verify if a health insurance salesperson represents a legitimately licensed company. Preventative steps are the best medicine for your wallet.

Best Buy…Worst Buy

November 27, 2007

Electronics retailers ripping you off with backup discs

Best Buy and Circuit City have come up with a new way to rip off customers buying computers — and it has nothing to do with extended warranties. According to PC World, these retailers are now trying to get customers to pay for Windows recovery discs. The backup discs are rarely needed, but the retailers have found a way to boost profits by tapping into the “What if?” fear of consumers who may not know a lot about computers. It turns out that you can make these discs yourself or buy them from the manufacturer for half of what the stores charge you.

PC World got so fired up over the whole issue that they sent in secret shoppers to get the real scoop. The shoppers found that Circuit City pushed them hard to pay an extra $30 for the store-made recovery discs. But at Best Buy, 3 out of 5 stores outright told the shoppers that it’s not possible to make the backup discs yourself. Meanwhile, several of the top computer manufacturers say that their notebook models come with instructions and software for creating the recovery discs. Best Buy tried to explain its way out of the situation by telling PC World that it was all just a miscommunication between the secret shoppers and the sales associates. But you have to understand that electronics retailers have really had their profit margins crushed, so they’re desperate to push extra stuff on unwitting consumers. One last word on extended warranties on computers: Don’t get them! Computers develop so quickly that there’s no sense in insuring what may be obsolete in a year or two. When you’re shopping for a laptop, just make sure you get one that has at least one gig of RAM for the memory.

I Just Want a Job

November 26, 2007

Job seekers responding to classified ads or postings on internet job sites have become a favorite target for scammers. When approached with prospective employment these victims, they have found, are often much more vulnerable.The results can not only be financial loss, but possible criminal charges, and the legal expenses associated with defending against them. Ellen, of Elgin, Illinois, learned this the hard way.

Ellen had posted her resume on and was pleased when she was contacted by someone who said they were with a charity called Children in Crisis, which is a real organization based in London.

“I was told it was a clerical job, and that I would be doing data entry and processing payments,” she said.

In her conversations with “Mr. Davidson,” Ellen said she was asked if she had a bank account. That should have been her first tip off that she was being set up for the old fake check scam.

But when she told “Mr. Davidson” she did not have a bank account, she said he was undeterred. She would receive donations in travelers checks, she was told. She would take some of the checks for her pay, convert the rest to cash and wire that money to the organization.

“I got the travelers checks by UPS the next day and I went to Best Buy to buy my daughter something with what I thought to be my earnings,” Ellen said.

Unfortunately, when she paid with two $500 travelers checks, they were instantly spotted as counterfeit. The police were called and Ellen was read her rights and led away in handcuffs.

“I was arrested in the store in front of my seven-year-old daughter and husband,” Ellen said. “I spent the night in jail. My husband had to pay $1,100.00 bond and now I am charged with a class 3 felony.”

Scammers running counterfeit check schemes often prey on job seekers, making them believe they are working for a charitable organization. Since many of these scams are run from Africa, the scammers have some familiarity with the legitimate charities operating there and make use of their good name.

The Rainbows of Hope ministry has also been impersonated by scammers in the past. It has posted a notice on its Web site that it does not solicit donations and has no salaried staff.

The lesson for Ellen and other job seekers is to be wary of job offers from organizations located outside the country, especially for positions that require little work, offer generous pay, ask you to move large sums of money through a personal bank account.

Weight-Loss Schemes

November 2, 2007

The latest Federal Trade Commission statistical survey of fraud in the United States shows that 30.2 million adults — 13.5 percent of the adult population — were victims of fraud during the year studied.
More people — an estimated 4.8 million U.S. consumers — were victims of fraudulent weight-loss products than any of the other frauds covered by the survey.
Fraudulent foreign lottery offers and buyers club memberships tied for second place in the survey. Lottery scams occur when consumers are told they have won a foreign lottery that they had not entered. Victims supplied either personal information such as their bank account numbers or paid money to receive their “winnings.”
In the case of buyers clubs, victims are billed for a “membership” they had not agreed to buy. An estimated 3.2 million people were victims of these frauds during the period studied.
Fraudulent prize promotion schemes ranked fourth in the fraud survey, with an estimated 2.7 million victims reporting making a purchase, a payment, or attending a sales presentation to receive a prize that either was never delivered or was not what the consumer expected.
Work-at-home programs, in which the purchaser earned less than half of the income the seller had promised, ranked fifth among the fraudulent schemes covered by the survey. An estimated 2.4 million individuals fell victim to these schemes, and many purchased more than one fraudulent work-at-home program.
Twenty percent of blacks and 18 percent of Hispanics are estimated to have been victims, while the rate for non-Hispanic whites was 12 percent. In addition, the survey found that younger consumers, those who did not complete college, and those with high levels of debt were more likely to be victims of fraud.
Consumers between 65 and 74 years of age were 32 percent less likely to report having experienced fraud than those between 35 and 44.
The top 10 frauds listed in the report include:

1) Fraudulent Weight-Loss Products (4.8 million victims)
2) Foreign Lottery Scams (3.2 million victims)
3) Unauthorized Billing – Buyers Clubs (3.2 million victims)
4) Prize Promotions (2.7 million victims)
5) Work-at-Home Programs (2.4 million victims)
6) Credit Card Insurance (2.1 million victims)
7) Unauthorized Billing – Internet Services (1.8 million victims)
8) Advance-Fee Loans (1.7 million victims)
9) Credit Repair Scams (1.2 million victims)
10) Business Opportunities (.8 million victims)
Consumers also reported falling victim to other specific scams, including pyramid schemes. Print advertising — direct mail, including catalogs, newspaper and magazine advertising, and posters and flyers — was used to pitch fraudulent offers in 27 percent of reported incidents. The Internet, including Web sites, auction sites, and e-mail, was used to make 22 percent of the fraudulent pitches. Television or radio accounted for 21 percent of the pitches, and telemarketing accounted for nine percent.
The FTC offers these tips for consumers:

Know with whom you’re dealing: Do business only with companies that plainly provide their name, street address, and phone number.

Protect your personal information: Share credit card and other personal information only with companies you know and trust; never share it in email, regardless who is asking for it.

Take your time: Resist the urge to act now. Most any offer that’s good today will be good tomorrow, too.

Read the small print: Get all promises in writing and read all paperwork before paying any money or signing any contracts.

Free means free: Throw out any offer that says you have to pay to get a gift or for something that’s called “free.” If something is free or a gift, you shouldn’t have to pay for it.

Report fraud: If you think you’ve been a victim of fraud, report it. It’s one way to get even with a scam artist who cheated you. Complain online at or by phone at 1-877-FTC HELP.
“The FTC uses a one-two punch to fight fraud,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “Our enforcement program stops the most widespread and egregious practices, and our education program helps alert consumers to the tricks of the fraud trade. We encourage everyone to click on our Web site – — not only to find out how to recognize a scam, but also to report it. That’s the best way to help end rip-offs of all kinds.”

Impostor money market funds

November 2, 2007

Beware of impostor money market fund investments

There’s a lot of turmoil in the savings world — once considered the safest part of market — and much of it involves money market mutual funds. Money market funds are not federally insured, but have historically been designed to be a safe place to put your money and allow you easy access to it when needed. The way they work is that you buy them for a dollar per share and then earn on every dollar with the change in interest rates. They’re often sold by mutual fund companies and stockbrokers, and have proven to be a safe haven for three decades. Money market funds obey the “don’t break the buck” principle, which is like an unwritten law stating that they’ll always be a dollar per share.

Now there are news reports about similar investment opportunities that mimic money market funds but take on additional risks. Sentinel Management Group, for one, is sitting on nearly $1.6 billion in investments of this type and is not allowing people to get to their money. Other major players in the field have experienced a drop in value. For example, Yield Plus is down five-and-a-half percent. Keep in mind that a true money market fund couldn’t drop in value because it’s always a buck. So how do you know if you have one of these impostors? Beware if they have the word “plus” in their names. But Wall Street couldn’t be happier that a lot of people have these cousins of traditional money market funds. After all, investors are being socked with higher fees for these new investments that are supposedly safe. I want everyone to look at their money market funds statement and know what they own. If you’re in one of these fake money market funds, try putting your savings in CDs, a plain vanilla money market fund or a tax-free municipal bond. The latter works well for those in a high tax bracket who make more than $100,000 per year. Meanwhile, for everyone else who lives paycheck to paycheck, retailers like Wal-Mart have hit tough times because their customer base doesn’t have much expendable income. Looks like it might be tough holiday season for retailers.

It’s Just Lunch…It’s Just a Rip Off

October 27, 2007

A group of angry New York women have gone to court, seeking damage from It’s Just Lunch, the online dating service that charges fees of up to $1,500. The women charge that IJL is more interested in making money than matchmaking.The suit filed in U.S. District Court in Manhattan claims the lunchtime setups weren’t quite what the women had in mind. “They lie every step of the way,” plaintiff lawyer John Balestriere told ABC News. “They lie to sign up the client. They lie in the initial interview and they lie about the prospective dates.”

The suit charges that clients are routinely misled about their blind dates’ marital and employment status as well as “criminal background, age, health status, physical appearance, religious convictions, politicians and recreational interests.”

It’s Just Lunch has about 100 franchises around the country. Its Web site boasts that it has 30,000 current clients worldwide. It reported $35 million in sales for the 2005 fiscal year.

Marcia Horowitz, a spokesperson for It’s Just Lunch, defended the company.

“We have been in business for 16 years and in that time we have arranged millions of meetings that resulted in thousands of marriages,” she said in a statement. “Our success is based largely on word of mouth and we wouldn’t be successful without having a vocal majority of satisfied members. The allegations in the lawsuit are completely without merit and we will defend vigorously against them.”

In court papers, Balestriere cites complaints filed with, including one from a woman who complained that she specifically requested no Republicans or “religious types,” but her first two dates were with a Catholic Republican and a Seventh-day Adventist.

Another said a date with an art dealer turned out to be a guy who worked for a freight company. A landscaping executive turned out to be a man who mowed lawns, according to court records. Another woman said the blind date she met in a bar for an introductory drink turned out to be an alcoholic. Yet another said her setup was still legally married, a fact she said she was not made aware of by the company.

The complaints cited in the lawsuit mirror those filed by’s readers.

“The dates were as random as my dart-throwing after a glass of wine,” said a California woman. “Toward the end of my contract, I was set up with a man who admitted to being 75 – IJL told me he was 58.”

In July, It’s Just Lunch International and its three New York State franchises settled a complaint that accused the company of exceeding the limit a consumer can be charged for social referral services. The company agreed to pay fines and costs to the state and reform its business practices.

Amazon Shmamazon

October 17, 2007

Counterfeit goods infiltrating the high-end electronics market.

People generally know that if you shop online marketplaces you run the risk of buying counterfeit goods — especially if you’re shopping for designer clothes. But there’s been a lot of counterfeiting going on in the high-end electronics world. Amazon is actually damaging its good name with its Amazon Marketplace, which features independent sellers who you must contact directly to resolve any issues. David Colker, a Los Angeles Times staff writer, recently went to the Amazon Marketplace to buy expensive headphones. When he got the goods, they looked like the real thing. The only problem was the terrible sound quality. Colker eventually determined he’d bought a knockoff. You’ve been warned people about fakes infiltrating the high-end electronics market. With electronics, the discounts are not so huge that you’d automatically know what you’re buying is counterfeit. Stick to established retailers whether you’re buying online or in-person and always pay attention to the return policy. Sam’s Club has a policy of unlimited right to return electronics — there’s no time limit or expiration date ever. This has been such a problem that recently Tiffany & Co. bought a lot of its goods on eBay to verify if they were real. It turned out that every last item advertised as the genuine thing turned out to be a fake.

“The Weight Loss Cure They Don’t Want You to Know About”

October 10, 2007

Marketers of Kevin Trudeau’s book, “The Weight Loss Cure They Don’t Want You to Know About,” stand accused of misrepresenting the book’s contents in their infomercial.

The ad claims that the weight-loss plan outlined in the book is easy to do, can be done at home, and ultimately allows readers to eat whatever they want.

However, when consumers purchase the book, the Federal Trade Commission charges, they find it describes a complex, grueling plan that requires severe dieting, daily injections of a prescription drug that consumers cannot easily obtain, and lifelong dietary restrictions.

Last month, the FTC sued Trudeau, charging him with violating a court order that settled previous allegations that he misled consumers. In 2004 the FTC charged Trudeau in connection with a series of TV infomercials promoting the book.

The widely disseminated infomercial at issue in the latest suit describes the weight-loss plan set forth in the book, stating, “It’s easy to do, you can do it at home” and that “when you’re done with the protocol, eat whatever you want and you don’t gain the weight back.”

According to the FTC, when consumers buy and read the book, they find that it actually describes a complicated system involving daily injections, specialized cleanses and supplements, and severe food restrictions, and includes a “fourth phase” of the protocol that requires dietary restrictions and never ends.

Consumers complain

Many consumers have made that discovery on their own. Roger of Wichita complained that he found “nothing helpful in the books.” He said Trudeau “wanted you to take injections that aren’t even available in the U.S.”

“I bought the stupid book … There are 60 strongly advised recommendations you have to do, including things like getting 15 colonics from a licensed colon therapist,” said Loey of La Vergne, Tenn., in a complaint to ConsumerAffairs.Com. “I have talked to someone who gets colonics and she said it is $150 per colonic.”

“He also recommends 3 or 4 Thai massages in a week. Who has that kind of money or time!! He recommends avoiding florescent light – HOW? He claims he did this without exercise, then he recommends walking daily for one hour outdoors,” she complained.

The Commission filed the complaint against Direct Marketing Concepts, Inc., ITV Direct, Inc., and the two individuals who jointly control the two corporations, Donald Barrett and Robert Maihos.

It contends that the marketers deceptively claimed that the book establishes a weight-loss protocol that is “easy” to follow and that once the protocol ends, consumers can eat what they want without regaining weight.

The Commission sued the same four defendants in 2004, alleging that they made deceptive advertising claims for two dietary supplements and billed consumers’ credit cards without authorization.