Separating a scam from a legitimate offer can be a difficult task. Stephanie AuWerter, Editor of SmartMoney.com, has some tips for avoiding the most common scams.
Most scams today are delived via email. "People fall for these scams all the time, so you really need to be aware of them so you don't become a victim," says AuWerter.
One of the most common scams is known as the "Letter from Nigeria". "Here you get an email from somebody in some troubled country," says AuWerter. "They explain that they are a very important person, they have a fortune that they're willing to share with you if you help them move their money overseas." In most scams of this type, you give the scammer access to your bank account or you set up another account that you fund with your own money. Once there is money in the account and the scammers have all the info they need, they take your money and run.
Another common scam is the "Sweepstakes Scam". You're usually notified that you've won a sweepstakes or a lottery, but you don't ever remember entering it. In order to claim your prize, you're required to pay an up-front fee, but the prize never follows.
Other types of scams work because they appeal to people who want to work from home or start their own business. This comes into play with "Work from Home" scams or "Stuffing Envelope" scams. "In this case, you'll be paying a big, up-front fee for something like medical billing," says AuWerter. "Then, you get access to a list of contacts, but it turns out that the list is full of fake names."
Some work-from-home offers are legit, however. How can you tell the difference between a scam and a real operation? AuWerter suggests checking with your state Attorney General's office. "Don't just sign up," says AuWerter. "Do some research."
Also, beware of "Vishing". "This is the newest twist on fishing, which is the fake websites that look like companies you do business with," says AuWerter. In this scam, you'll be contacted via email or the phone saying there is fraudulent activity on your account. The message gives you a secondary 800 number to call to straighten things out, but when you call and enter your account information, the scammers steal it instead. "Check with your credit card itself - the number on the back - or with the billing statement to make sure that number is correct," says AuWerter.
Other scams take place at online auctions. "You'll get a check for an item that you're selling that's double or triple the amount that you guys have negotiated," says AuWerter. Chances are, the check is fake, so don't cash it. "Report it to the FTC," says AuWerter.
For more information on avoiding scams, as well as other personal financial advice, click here the SmartMoney.com website.
By Erin Petrun
Copyright 2007 CBS. All rights reserved.