Financial Scams to Watch For

Another negative of the current recession: scams are on the rise. As Americans look for ways to pay the bills, more a losing money to the unscrupulous. Stephanie AuWerter, Contributing Editor for SmartMoney.com, offers some tips on what to look out for.

The first one to look out for is work from home scams. These are really proliferating these days. Obviously there are some legitimate work from home jobs. But if you're thinking about medical billing, craft assembly, and envelope stuffing, look out. Lots of times you're charged an upfront fee for training or for access to a database, none of which are helpful. And often times the only way to make money is to bring in other "recruits." So if it sounds too good to be true, it probably is. Really do your research before you pay to start a new job.

Another popular scam to look out for is offers of credit repair. If your credit is a mess, time and time alone is what's going to fix that. There are no easy fixes and anyone who tells you otherwise is probably looking to rip you off and will probably leave your credit score worse off than you started. The best way to repair your credit is to take on debt and handle it responsibly. You can also try reaching out to your lenders directly to see if they will remove some of your bad marks. They are under no obligation to help you, but it's worth a shot.

Foreclosure rescue scams are truly shameless. Some crooks sift through the public foreclosure notices and then reach out to the troubled homeowners, offering assistance. Others simply advertise their services. Then they tell you they can save your home if you make your mortgage payments to them or pay them a fee. Or worse yet, they have you sign papers over to them that you think are signing you up for their services, but really you've just signed over your home. Before you even consider anything along these lines, reach out to the Federal Trade Commission.

Online auction rip-offs are also on the rise. This is one that sellers often fall prey to: the fake check scam. Here, a buyer sends you a check for more than the agreed to price and then asks you to refund the difference. The problem? The check is fake, and by the time it bounces, the buyer has already disappeared with your money. To protect try to have the buyer pay with PayPal. If you aren't set up for that, just don't cash any checks that aren't for the correct amount.

And finally, look out for "the letter from Nigeria." This scam is as old as the hills and yet people fall for it again and again. You get an email from some "important person" in some far away and troubled country. They explain that they have a fortune and if you help them transfer it overseas, you'll be handsomely rewarded. So you either give this person your bank account number or you set up an account and put in your own money for transaction fees, bribes and so on and the crook drains the account. Bottom line: don't respond to emails from wealthy strangers.

For more tips on scams and other financial advice, please visit SmartMoney.com.
by Stephanie AuWerter and Jenn Eaker
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