How to Avoid the New Year's Top Scams

Critics and pundits have already had their say about the Top (and Bottom) Tens and Twenties of 2010 --movies, intriguing people, restaurants, books, songs, TV shows, political moves and so on. All of it is now old news. But lists of 2010's top scams are worth hanging onto since none of them is likely to disappear in 2011. Some are novel, but most are golden oldies -- time-tested rip-offs with a new twist that cruelly capitalizes on people's current financial distress.

Big kahuna among the list-makers is the Better Business Bureau, But ConsumerAffairs.com and the National Consumers League also have their picks. So here are scams that most bedeviled consumers in 2010 and, which, if we're not alert, are likely to rip us off in 2011 -- if we don't take steps to avoid them:

1. Job schemes. In the past, phony placement companies would ask the unemployed for a fee paid in advance to get them considered for a job -- one that never materializes. That scam continues, but now, according to the BBB, some placement companies are really in the business of identity theft, asking for personal info, like social security numbers, bank account numbers and so on, supposedly to help you get a job. Instead, they help themselves to your money. To avoid: Know that legitimate placement agencies impose fees after you get the job; usually the new employer pays them.
2. Debt relief and settlement services. The rip-off is the upfront fee you pay to have the company negotiate with lenders -- which usually doesn't happen; so not only are you out the fee, but your debts have accumulated more interest and penalties. To avoid: Locate a legitimate nonprofit counseling agency via the National Foundation for Credit Counseling, which has been around for decades and charges modest fees, and sometimes nothing. If you are truly under water, visit a bankruptcy attorney.
3. Crooked foreclosure help. Like debt relief schemes, so-called foreclosure companies offer to get your mortgage modified -- after you send them a walloping fee. No modifications occur, homeowners fall further behind and go deeper in debt. According to ConsumerAffairs.com, the Indiana Attorney General alone filed 34 lawsuits against such companies. Similar firms pledge to modify auto loans with the same non-result. To avoid: Get foreclosure avoidance counseling from groups approved by the U.S. Department of Housing and Urban Development.
4. Work-at-home rip-offs. Tantalizing to stay-at-home moms, the unemployed and the disabled, these scams promise big money for assembling products at home, establishing an on-line business and/or mystery shopping. The problem: Victims wind up investing hundreds of dollars, often incur unreimbursed expenses, work long hours and earn little if anything. To avoid: Get a book on the home business you would like to start. It will describe the risks and potential, and if you decide not to go ahead, you'll only be out $14.95.
5. Time-share resellers. What better way to pare the budget than by dumping that costly time-share you bought back when times were better. According to the BBB, the National Consumers League and ConsumerAffairs.com, deceptive resellers charge several thousand dollars to list the property; after you pay, you never hear from them again. Complaints about the fraud have increased 40 percent this year. To avoid: Advertise your time-share on Craigslist, but check out #13 below to avoid another scam.
6. Bogus charities. They claim to give to needy youngsters or veterans, but in fact little of what they collect goes to charity. To avoid: Before pledging, go to CharityNavigator.org and type in the organization's name. You'll be able to see what percentage of revenues go to program activities and how much to managers' perks.
7. "Free" trial offers. Just sign up and you get a free diet supplement or some other goody. But to get the goody, you have to supply your credit card number. Eons may pass before you realize that you've been billed every month since for something you decided you didn't like just because you failed to say 'no.' To avoid: Provide credit card information only when you are purchasing an item -- and don't accept a free trial of an extra after making a purchase; the company already has your credit card number and may bill you in perpetuity.
8. Wandering contractors. Door-to-door roofers and other itinerant home improvement outfits have been scamming homeowners since the Dark Ages. They take your money and then fail to do the work -- or do a subpar job. To avoid: Look in the Yellow Pages for contractors, get estimates from at least three, check references and pay no more than a third of the total bill upfront.
9. Lousy gold deals. The value of gold surged last year, and strapped consumers did everything they could to unload old rings and necklaces. But New Jersey found that 49 businesses were short-weighting the gold while Massachusetts authorities found wide variance in the amounts companies paid for the same items. To avoid: Ask a jeweler the carat of the metal and the weight in pennyweights or troy ounces. An online calculator can help you figure out the value based on the price of gold that day. Call other jewelers to see what they would pay. A fair deal would give you 85 percent of the value.
10. You-may-already-be-a-winner scams. The target, often an elderly person, receives a phone call or letter announcing that he's won millions from a foreign lottery, Publishers Clearinghouse or Reader's Digest. To get the money, however, he has to wire hundreds or even thousands of dollars to cover a phony fee or taxes. No prize ever materializes. To avoid: Ignore calls or letters demanding a fee in exchange for a lottery or sweepstakes prize. If you think an elderly relative might be susceptible, monitor her mail.
11. Identity theft. You may already know about phishing (which sends you an email leading to a replica of a bank website, where you provide your SSN and account numbers), but now there's vishing (same deal only with Internet based telephones) and smishing (use of texting and cell calls to again lead you to a phony site where you tell all). The messages suggest that something is amiss with your bank account, and you must immediately contact by pressing a number or clicking on a url. When you get there, an automated system elicits the info, and so long identity. To avoid: If you get a message from your bank that something is wrong with your account, don't click through or use the automated response system. Call your bank directly to find out if the problem is real.
12. Advance fee loans. All you have to do to get a loan? Just send in $1,000 or more. Once you do, you never hear from the company again. To avoid: Use the lowest-rate credit card you can get to finance your debts. If all your cards are maxxed out, fuhgeddaboudit. You shouldn't be borrowing at all.
13. Fishy overpayments. The targets are usually landlords or small business owners who advertise rooms for rent or goods and services in classified ads or on Craigslist. A would-be renter or buyer sends a check that's an overpayment and asks for the victim to wire the extra amount back. Later, the check bounces. To avoid: Be suspicious of anyone overpaying; don't send back any money until the check clears your bank.
14. Ponzi schemes. After Bernie Madoff, you'd think that people would be immune to investment promoters promising pie-in-the-sky returns. But prosecutors were kept busy all last year by scammers who stole investors' money. To avoid: Keep your investments in a dull, old mutual fund. To paraphrase Will Rogers, you may not get much return on your money, but you will be certain about getting return of your money.