You get an official looking letter that says that you have won the $50,000 sweepstakes. There may even be a realistic check from a real company and drawn on a real bank. There is a catch. Before you can claim your award or cash the check, you have to pay 15% Federal income taxes on the award before they can release the prize or you can cash the check.
You are asked for your checking account and routing numbers or credit card number to pay the taxes. Sometimes, to make it easier for you, someone will even come out to the house to pick up a check for the taxes.
But you do not remember entering any contest or sweepstakes. If this happens to you, do not fall for it. This is just one of many financial scams from which people have been duped into giving up substantial sums of money. What usually happens is funds are withdrawn from your account, your check is cashed or a credit charge is made and then you receive nothing. The realistic check is a fake.
In these tough economic times, there has been an increase in the number and frequency of these scams. In today’s column, we will cover a few more of these and how they usually work so that you can become aware of them and don’t become a victim.
Nigerian email money transfer scam.
You get an email from some public official, usually from Nigeria, who states they have to transfer millions of dollars over to the United States but they do not have a United States bank account. They need your bank account and routing numbers so that they can transfer money in and out through your account so that they have a proper paper trail for the funds. Your fee for just allowing them to use your bank account will be $10,000 or more.
This is one of the older scams that has been going on for years. It doesn’t seem to be letting up because I regularly receive these emails. If you do, just ignore and delete them. What typically happens is once the email sender gets your bank account information, they clear the funds out of your accounts, never to be seen again.
You pay shipping and handling to receive prize.
Another scam is another very official looking notice from some sweepstakes or contest saying that you have won some prize, such as a gas grill or a two person motor boat. All you have to do is cover shipping and handling costs, often in the hundreds and sometimes in the thousands of dollars. Just dial the 800 number and provide them with your credit card number or bank information and you will get this wonderful prize.
I saw one case in which someone paid $350 shipping and handling for a two person motor boat that ended up being a small inflatable raft with an electric trolling motor that could have been purchased online for about $150. At least he received something. Often times after the payment of the shipping and handling charges, you receive nothing.
Pay $60 for a copy of your deed.
Another scheme that is making the rounds right now is an official looking letter saying you should to have a certified copy of your deed to your home for your records and they can do it for you for $60.
Firstly, there are few reasons you would ever need a certified copy of your deed. And secondly, you can get a certified copy of your deed from your county register of deeds office for $1 per page for copies and $1 for the certification. For a one page deed, this is a $58 profit on a $60 sale. Not bad, for them. Save yourself the trouble. Save yourself the money. If you really want a certified copy of your deed, do it yourself, pay $2 and be done with it.
A check with subscription.
For the last few years, several times a year, I have received checks in the mail for not huge amounts, typically less than $50. However, on the back of the check where it is to be endorsed, there is tiny, tiny print that I am signing up for a subscription to a credit monitoring service, magazines or some other service.
If you receive one of these, don’t sign the back of the check unless you know what it says. Read very carefully any check that has writing above the endorsement on the back of the check.
Under the Uniform Commercial Code, if you endorse a check with any agreement or restrictions above the endorsement, you are agreeing to that contract. That contract is legally enforceable against you. So if you sign the $20 check and put it in your bank account, you may find that you are legally being billed $25 a month for credit watch services or you have just subscribed to 5 years of subscriptions to Skateboarder’s World or Rolling Stone for $340.
Email bank scam.
Be wary of any email from a bank or other financial institution asking for any personal information. It probably is an attempt to obtain access to your financial accounts or credit cards. I have received a number of these over the last couple of years. They look real official with all the appropriate logos and font style. They may not ask you for you personal information directly. They may redirect you to a false financial institution website which solicits personal information. Do not provide the requested information or it may cost you.
Be on the watch for these and other similar scams. These are just a few that I have seen over the last couple of years. I am sure there are a lot more scams out there. If you keep vigilant and watchful, you will not fall victim to these schemes.
By: Matthew M. Wallace, CPA, JD
Published edited October 9, 2011 in The Times Herald newspaper, Port Huron, Michigan as: If it sounds too good to be true…Heed mother’s advice when it comes to scams