One rip off is called "smishing." "Phishing" is when you get an e-mail from a supposedly trustworthy source, such as your bank or PayPal, claiming a problem with your account and asking for your user name and password. When you respond, your information is stolen and your account is siphoned. "Smishing" is the latest twist on that scam-instead of getting an e-mail, you get a text message. You're told to call a toll-free number, which is answered by a bogus interactive voiceresponse system that tries to fool you into providing your account number and password. If you belong to a credit union, be especially wary-members are targets because often the call-back number has a local area code, not an 800 number, which makes victims less likely to suspect a hoax.
If you get a text alert about an account, don't respond before you verify that it's legitimate. You can do a Google search on the number to see whether it matches your financial institution. Even better, call the customer-service number at your bank or other service provider to give any needed information to a representative.
Look out for teeny, tiny charges. Thieves get hold of your credit or debit card number and make very small charges of 20 cents to $10. The charges appear on your bill with an innocuous sounding corporate name, and a toll-free number may appear next to the charge. But when you call the number, it's either disconnected or you're instructed to leave a message and your call is never returned. The scam was successful because most consumers either didn't notice the charges or didn't bother to correct them because the amounts were so small. In all, the crime ring racked up more than $10 million in bogus charges, the FTC estimates.
Prevent it by scrutinizing every item on your bill every month, and question those you don't recognize. If you think a charge is fraudulent, notify your card company as soon as possible but no later than 60 days after the charge appears. By law, the card company must remove the disputed amount from your account while it investigates. Worst case, by law you're liable for only the first $50 on a credit card. In most cases, Visa and MasterCard will cover the full amount. Debit cards offer fewer protections: You must report the problem two days after you notice it. If you don't, you could be liable for the first $500 in fraudulent charges. If you wait more than 60 days after your statement is mailed, you could lose all the money in your account.
Skimmers, devices that thieves attach to ATMs or gas pumps to steal your debit account number and password, have been around for years-and they're not going away. They're getting even more sophisticated. The devices are placed at the mouth of the card-acceptance slot and record the data off of the magnetic strip on the back of your ATM card when you slide it into the machine. Crooks will usually plant a second device, such as a hidden camera or a transparent plastic PIN pad overlay, that's used to record your PIN when you type it in. In the early days of skimming, the thief had to return to the ATM or gas pump to retrieve the apparatus. But now, wireless technology enables the devices to be rigged to send account information via text message to the thief's cell phone.
Prevent it by using credit cards and avoid using non-bank ATMs. Those machines are generally located in areas that are less secure, making it easier for thieves to tamper with them. And check the card slot: If there's a plastic strip or plastic film sticking out, or anything glued to the card reader, go elsewhere. If your card is stuck inside the card slot, do not leave the machine. Use your cell phone to call your bank branch or the 24-hour service number to report the problem.
Stripped gift cards are another sneaky scam. Thieves look for gift cards that are displayed on grab-and-go racks, such as in grocery and department stores. They use a handheld scanner-which you can buy online for just a few hundred dollars-to read the code behind the magnetic or scratch-off strip on the back of the card. That, combined with the card number on the front, gives them everything they need to steal the value of the card. Then, they put the card back on the rack. Later an unsuspecting buyer purchases the worthless gift card. Even if a card isn't preloaded, a thief can steal the card number and security code, then call the 800 number shown on the card every few days to check the balance. Once a shopper has purchased the card and loaded it with a dollar amount, the thief can spend it before the purchaser does.
Try to buy cards that are behind a customer-service desk. Inspect the card; if the magnetic or peel-off strip on the back isn't pristine, the card might have been tampered with. When buying a preloaded card, ask the cashier to scan it to make sure the full value is on it. If you're buying from a third-party gift-card site, look at the refund policy. And always hang on to the receipts. If something goes wrong, it can help you-or the gift recipient-get a refund.
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Sue Perry & Erika Wortham