The Better Business Bureau investigates thousands of scams every year, and this past year launched two websites to help consumers figure out which offers are real and which ones are possibly frauds:
BBB Smart Investing (www.bbb.org/smartinvesting), developed in partnership with the FINRA Investor Education Foundation, informs consumers about investment fraud, Ponzi schemes and risky investments, and helps them assess their risk, check out brokers, and avoid getting taken.
BBB Scam Stopper (www.bbb.org/scamstopper), developed in partnership with Western Union, educates consumers about the major types of scams and provides information on how to avoid them and how to report them.
The annual "Top Ten Scams" list is culled from a variety of sources. BBB gathers information on scams from consumers, some of whom have been victims of scams; from federal agencies; and from other reliable information sources.
It's hard to say which are the ‘biggest' scams, as far as the number of people affected or the amount of money stolen, because many go unreported or under-reported. Some of these scams have been around as long as BBB - 100 years - and some take advantage of brand new technologies. Our list is made up of the ones that seemed the most audacious, the most egregious. They hurt a lot of people, and it seems that scams are only getting more prevalent even as consumers are getting savvier.
Here are BBB's Top Ten Scams of 2012:
Scam of the Year: Newtown Charity Scams
Within hours of the horrific shooting at Sandy Hook Elementary School in Newtown, Connecticut, social media pages dedicated to the child victims began cropping up...and some of them were scams asking for money. The FBI has already arrested one woman for posing as the aunt of one of the children killed, and state and federal agencies are investigating other possible fraudulent and misleading solicitations. In response to these reports, BBB Wise Giving Alliance offered tips for donors to understand how and when to best support those dealing with such a tragic crisis. Although the number of people defrauded and the total dollars stolen is most likely low, the cynicism and sheer audacity of these scams merits our selecting it as the "Top Scam of 2012."
Top Overpayment/Fake Check Scam: Car Ads
The online ad says something like "Get Paid Just for Driving Around" - a prominent company is offering $400+ per week if you'll rive around with their logo all over your car. They send a check to you, which you are supposed to deposit in your account and then wire part of the payment to the graphic designer who will customize the ad for your vehicle. Whoops! A week later, the check bounces, the graphic designer is nowhere to be found, and you are out the money you wired. The Internet Complaint Center (www.ic3.gov) says they saw this one a lot in 2012.
Top Emergency Scam: Grandparents Scam
The "Grandparents Scam" has been around a while, but it's still so prevalent we need to mention it again: grandchild/niece/nephew/friend is traveling abroad and calls/texts/emails to say he or she has been mugged/arrested/hurt and needs money right away ("...and please don't tell mom and dad!"). Plus the FBI says that, thanks to social media, it's getting easier and easier for scammers to tell a more plausible story because they can use real facts from the supposed victim's life ("Remember that great camera I got for Christmas?" "I'm in France to visit my old college roommate."). Easy rule of thumb - before you wire money in an emergency, check with the supposed victim or their family members to make sure they really are traveling. Odds are they are safe at home.
Top Employment Scam: Mystery Shopping
If you love to shop, working as a secret shopper may sound like an ideal way to supplement your income. But scammers have figured that out, too, and many job offers are nothing more than a variation on the Overpayment/Fake Check Scam (above). Sometimes they even tell you that evaluating the wire service company is part of the job, which is why you need to send back part of the money. The Mystery Shopping Providers Association says it's not the practice of their members to pre-pay shoppers, but if you have your heart set on this type of job, you can find a legitimate gig through their website at www.mysteryshop.org.
Top Advance Fee/Prepayment Scam: Nonexistent Loans
Loan scams continued to fester in 2012. It seems for every legitimate lender out there, there is a scammer waiting to prey on people in desperate situations. Most of the scams advertise online and promise things like no credit check or easy repayment terms. Then the hook: you have to make the first payment upfront, you have to buy an "insurance policy," or there is some other kind of fee that you have to pay first to "secure" the loan. This year, we heard a new, aggressive twist on loan scams: consumers who were threatened with lawsuits and law enforcement action if they didn't "pay back" loans they said they had never even taken out in the first place. Some got calls at their workplace, even to relatives. The embarrassment of being thought of as a delinquent caused some victims to pay even when they knew they didn't owe the money.
Top Phishing Scam: President Obama Will Pay Your Utility Bills
Of all the politically-related scams, this one seemed to be the most prevalent. At the peak of summer with utility costs soaring, consumers got emails, letters and even door-to-door solicitations about a "new government program" to pay your utility bills. Hey, the president wants to get re-elected, right? Maybe he's just trying to win votes. Victims "registered" with an official-looking website and provided everything scammers needed for identity theft purposes, including bank account information.
Top Sweepstakes/Lottery Scam: Jamaican Phone Lottery
This is an old one that flared up again this year. We consider it flattering (in a weird way) that BBB is such a trusted brand that we "star" in so many scams! In this one, the calls come from Jamaica (area code 876) but the person claims to represent BBB (or FBI, or other trusted group). Great news: you've won a terrific prize (typical haul: $2 million and Mercedes Benz) but you have to pay a fee in order to collect your winnings. There are lots of variations on this; sometimes it's a government grant. Best just to hang up and then file a phone fraud report with the appropriate government agency (see below).
Top Identity Theft Scam: Fake Facebook Tweets
Two top social media sites were exploited in one of this year's top scams. You get a Direct Message from a friend on Twitter with something about a video of you on Facebook ("ROFL they was taping you" or "What RU doing in this FB vid?" are typical tweets). In a panic, you click on the link to see what the embarrassing video could possibly be, and you get an error message that says you need to update Flash or other video player. But the file isn't a new version of Flash; it's a virus or malware that can steal confidential information from your computer or smart phone. Twitter recommends reporting such spam, resetting your password and revoking connections to third-party applications.
Top Home Improvement Scam: Sandy "Storm Chasers"
BBB spends a lot of time investigating and reporting on home improvement scams, but this year we saw an unusual amount of "storm chaser" activity following Super Storm Sandy. Tree removal, roofing, general home repairs - some were legitimate contractors who came from other areas for the volume of work available; others were unlicensed, uninsured and ill-prepared for the work; while some were even out-and-out scam artists who took the money and never did the work. In an emergency, it's tempting to skip reference checking, but that's never a good idea. BBB has tens of thousands of Accredited Businesses in the home contracting field who are committed to upholding our mission of trust. Next time you need home repairs, find a contractor at www.bbb.org/search.
Top Sales/Rental Scam: Real Stars, Fake Goods
Sports memorabilia and phony tickets always make the list of top counterfeit goods. From the Super Bowl to the World Series, counterfeiters manage to have their hands in your pocket all year long. With the London Olympics added to the mix, it appears that 2012 was a good year for sports fakes. Some scammers were selling cheap knock-offs in front of stadiums. Others set up websites that just stole your money and never had any goods to begin with. Counterfeit goods are not only a rip-off for you because the merchandise is usually shoddy, but they are also a rip-off for the teams, athletes, designers and artists who create, license and sell the real thing. Buy directly from team stores and websites, or from legitimate retailers. You'll pay a little more, but it will be the real deal. Remember, if a deal sounds too good to be true, it probably is.