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Become a Critical ConsumerIsn't this true that we usually ignore valuable health-related warnings regarding smoking, cholesterol, AIDS and condom, and even pollution from legitimate sources such as the Surgeon General and at the same time we blindly approve and accept advice from illegitimate authorities; these are actors who claim to be Doctors, Mortgage Brokers, Real Estate Brokers, Lawyers, even Scientist and Pharmaceutical researchers. Some of these actors even begin their appeal on TV by admitting that "I'm not a doctor but I play one on TV." Why do we fall for such dupery? Gullibility? For the past thirty years, I have witnessed unscrupulous Marketers that have fooled and capitalized on consumer gullibility by trappings of the authority, fabricated or fake comparisons, bogus testimonials, and other illegitimate persuasive tactics. This carries significant costs - gullibility produces poor decisions and fears of being gullible create missed opportunities. How to tell the Truth from FalseDetermining what constitutes honest versus deceptive is not easy for the Internet consumers. People lack the experience or expertise to know weather a product meets the advertiser's claim. Our goal in this web site is to educate, advise, and guide our visitors to resist advertisers or ads that contain illegitimate authority, false or even dubious comparisons and obviously phony testimonials. Before you buy for the keyword you have chosen, click on the AliveChat box below and take advantage of a free live chat. |
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If you have a keyword that you like us to monitor, please let us know. eMail: info@liveinfospace.com Cases of Fraud: Mortgage Fraud ; Health and Hemorrhoids |
| March 15, 2005 |
Here’s a job opportunity: Work for an international charity that helps children suffering from the long-term medical and financial aftereffects of the 1986 Chernobyl nuclear disaster. If you can forward cash donations to someone in another country after skimming 7 percent off the top for yourself, this job could be yours.
Not only is that job – which was posted on smaller job sites and a variety of Internet forums – illegal, but the folks behind the ad were not actually affiliated with the legitimate charity, according to officials at the Chernobyl Children’s Project. Ads soliciting job candidates for the fake organization are still popping up on a variety of Web forums asking applicants to e-mail jennie@childdream.org. To further complicate matters, the phony charity replicated the legitimate outfit’s Web pages to give the appearance of authenticity to job seekers.
“When you’re doing business on the Internet, you make sure you do everything you can to have full disclosure,” said Kathy Ryan, executive director of Chernobyl Children's Project. “This type of thing takes away from that.”
The Chernobyl Children’s Project said it has contacted the New York State Attorney General’s office and the FBI. An e-mail sent by Consumer Reports WebWatch to the site branded a fraud by the real charity did not get an immediate response.
Sophisticated Scams Lure Eager Job Seekers
It has never been easier to look for a job than on your PC in the privacy of your own home. Advertisements for jobs real and fake also have a broader forum with the Web, which provides a new opportunity for people looking to take advantage of those seeking work.
Over the past year and a half, jobs scams have “mushroomed,” said Pam Dixon, executive director of the World Privacy Forum and author of the 2004 report, “A Year in the Life of an Online Job Scam.” Not only have the scams found a new forum, she said, they are no longer run by amateurs hoping to squeeze a quick buck from unsuspecting dupes.
Dixon described one variation of an online employment ad scheme: An applicant responds to a phony ad, often in the accounting or finance field, and later the scammer usually conducts an interview by e-mail. Eventually, the potential victim is asked for bank account information, supposedly to set up direct deposit of paychecks. The scammer then steals money from the applicant’s account and transfers it to another account to buy items from online merchants, while another victim receives some of the transferred funds and wires the rest overseas. By making that transfer, “employees” are forwarding stolen money and participating in theft.
One job hunter was arrested last year after she was found to have used her bank account as a conduit for taking payment for fictitious merchandise sold in online auctions and sending the money out of the country, Dixon said. The charges were later dropped against the employee, who said she did not know the transactions were illegal.
“Really smart people get sucked into these [scams],” Dixon said. “It’s real hard to convince someone who has been out of work for a year that this bee with a honey pot might have a stinger at the end.”
Detecting Red Flags
While the red flags of a scam may seem clear to an objective observer from a distance – such as giving out personal bank information or sending a scanned image of your driver’s license – it isn’t quite so obvious for many job-seekers, particularly those who have been looking without luck for a long time. Scammers also are more sophisticated than ever before.
"There are some [scammers] that do mirror actual, legitimate [companies] so closely there will literally be one digit different in a phone number or zip code,” said Michele Pearl, a Monster.com vice president who leads that site’s anti-fraud efforts.
Scammers have gotten increasingly more sophisticated over the past year, Pearl said. Between 10 and 100 scam postings are attempted in any given week on Monster, she said, with about 10 percent of those making it online before ultimately being discovered and removed. The scam ads, which often ask if job seekers have PayPal accounts or seek bank account information, are often imitated by others if they make it past Monster’s filters, Pearl said.
At Monster, Pearl said the company forwards scams it catches to the FBI and the Internet Crime Complaint Center, but she doesn’t know of any fraudsters that have been prosecuted. Most of the perpetrators live overseas, she was told, often in Eastern European nations unwilling to cooperate in these white-collar investigations.
While some of the most popular job sites have gotten more aggressive in trying to filter the crooked ads from the straight ones, the volume alone – ads come in by the tens of thousands – can pose a problem in catching them. (See Sidebar: ‘Business Opportunities’ vs. Job Ads.)
Posted job scams are just part of the problem. The other – one that Dixon finds particularly problematic – is workers at companies with legitimate access to their sites’ online résumé bank pilfering posted personal data and selling it to identity thieves.
Employment-related fraud accounted for 13 percent of all reported cases of identity theft in 2004, according to the U.S. Federal Trade Commission, making it one of the most common forms of identity theft.
To avoid personal information falling into the wrong hands, consumers should post résumés anonymously. And, Dixon suggests, job sites should continue to improve their attack on fraudulent ads and, ultimately, retain their credibility.
"Once the job seekers’ trust in these sites is gone, it won’t come back,” she said.
Sidebar: 'Business Opportunities' vs. Job Ads
An entire class of potentially fraudulent business opportunities is banned on some sites, such as Yahoo’s HotJobs.com. Business opportunities, which typically suggest a range of potential earnings from $1,000 to $10,000 a month, generally require up-front payment to buy into a “system.” (See the Consumer Reports Web Watch report, “Get Paid to Read This Column! Beware Big Promises by Online ‘Work-at-Home’ Schemes.”)
With more than 14,000 complaints lodged, work-at-home and business opportunity offers placed among the top 10 categories in the federal government’s Consumer Sentinel and Identity Theft Data Clearinghouse 2004 fraud trends report.
Paying up front for any job opportunity should always raise a red flag. But such ads are easily found. “Tired of working career-track bookkeeper, financial controller, or accounting technician jobs? Sick of sitting in your cubicle, staring at a computer screen all day and hating the view? Think about this - If you found a way to add $1,000 to your income every month by working a few extra hours part time each week, would you do what it took to make it happen?” reads an ad posted on CareerBuilder.com on Feb. 17.
[Disclosure: CareerBuilder is owned by newspaper companies Knight Ridder, Gannett and the Tribune Company. Knight Ridder owns the Philadelphia Inquirer, the newspaper for which this writer is an employee. The Knight Foundation funds Consumer Reports WebWatch.]
When appearing on Monster, these ads typically bear a disclaimer noting they are business opportunities, not job postings. CareerBuilder runs a standard disclaimer beneath each job listing warning against the dangers of giving out personal information, but the site does not have a specific warning regarding business opportunities.
Monster has placed limits on business opportunities that can be advertised and requires the following: Conspicuous disclosure of the cost of participating in business opportunities; contact information for purchasers; and unconditional refunds for unhappy participants.
“Because we've become more and more stringent on our rules, we've seen a drastic decrease in job postings in this area,” said Michelle Pearl, a Monster.com vice president who leads that site’s anti-fraud efforts.
Sidebar: Tips for Safe Online Job Seeking
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Mitch Lipka is a staff writer for The Philadelphia Inquirer. Before joining the Inquirer he was a consumer writer/columnist for the South Florida Sun-Sentinel in Fort Lauderdale. Previously, he worked for Gannett Newspapers in Westchester County, N.Y., the former Anchorage Times and several other papers around the country. He has appeared on CNN, The Learning Channel and other broadcast outlets. He has written extensively on consumer product safety and scams.
| August 15, 2005 |
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A “banker” recently e-mailed Consumer Reports WebWatch asking for our help in claiming a deceased man’s bank account:
“I am Mr. Pui Cheung, Director of Operations of Hang Seng Bank Ltd… we discovered…that Mr. Richard Nault died from an automobile accident. On further investigation, I found out that he died without making a WILL, and all attempts to trace his next of kin was fruitless. … No one will ever come forward to claim it (his $30 million account). According to Laws of Hong Kong, at the expiration of 5(five) years, the money will revert to the ownership of the Hong Kong Government if nobody applies to claim the fund.”
The pitch had a familiar ring to it. In this spin on the old Nigerian letter scam, the purported banker – or, in some cases, attorney or individual – writes about desperately trying to reach next of kin to dispense a fortune. Finding no relatives, the e-mailer suggests you pretend to be family and split the fortune with him.
This scam hooked Stanley El of Woodbury, N.J., who responded to an e-mail supposedly from a Nigerian prince who said he needed a trustee to help him collect his inheritance. El, a business and personal development specialist who has published articles in some African publications and had relatives who worked on the continent, said the message seemed plausible to him.
Following an exchange of e-mails and phone calls, El said he spent $5,000 to fly to Spain to sign documents that supposedly would make him the trustee. He was offered a prince’s sum for his part, but El said he participated because he genuinely believed he could help. He had no idea he was participating in a scam.
The scammers sent a phony $50,000 check to El’s bank account, which cleared. El never got any of it, because the fraudsters quickly withdrew the cash before the bank realized the check was a fake. The bank then sued El. Although a judge determined that El should share the loss with the bank, he said a year later he hadn’t been asked to pay up.
Old Favorite Keeps Reinventing Itself
Nigerian letter fraud continues to rank high among online crimes, including the amount of money lost per incident – a median of about $3,000 per victim, according to the FBI’s Internet Fraud Complaint Center. About 8 percent of all complaints logged by the National Consumer League’s Internet Fraud Watch stem from the Nigerian letter scam, which has grown with the proliferation of e-mail.
Experts suggest the staying power of the 25-year-old scam – also known as “419 fraud” for its place in the Nigerian criminal code, and “advance fee fraud” – is related to the innumerable variants that can be developed, as WebWatch explored in an investigation last year. [See “The Check’s in the Mail” http://www.consumerwebwatch.org/dynamic/fraud-investigation-checks-in-mail.cfm]
In addition to the version outlined above involving so-called unclaimed wills, consumers should be wary of:
New Zealand’s Consumer Affairs Ministry lists more than 100 version of the scam on its official Web site. Nigeria’s Economic and Financial Crimes Commission, formed in recent years to prosecute 419 fraud offenders, also lists popular variations of the scam (http://www.efccnigeria.org/).
Prosecution Difficult
Another frustrating aspect to this type of fraud is thieves are rarely prosecuted. Nigerian authorities have taken a recent stab at cracking down on some of the top players in what has been said to be among the biggest industries in that country. Although there have been numerous arrests, none of the wealthy kingpins – some of whom are said to enjoy celebrity status there – have been convicted.
In the U.S., there have been a handful of successful prosecutions, with most resulting in sentences of probation or time served. Few victims of these scams have gone public.
“The nature of the crime makes it very difficult for many local law enforcement agencies to successfully investigate and prosecute,” says John Kane, research manager at the National White Collar Crime Center.
A consumer’s best line of defense? Common sense.
The U.S. Federal Trade Commission, in its bulletin “The ‘Nigerian’ Scam: Costly Compassion,” offers these words of wisdom that cut to the quick:
“If you're tempted to respond to an offer...stop and ask yourself two important questions: Why would a perfect stranger pick you — also a perfect stranger — to share a fortune with, and why would you share your personal or business information, including your bank account numbers or your company letterhead, with someone you don't know?”
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Mitch Lipka is a staff writer for The Philadelphia Inquirer. Before joining the Inquirer he was a consumer writer/columnist for the South Florida Sun-Sentinel in Fort Lauderdale. Previously, he worked for Gannett Newspapers in Westchester County, N.Y., the former Anchorage Times and several other papers around the country. He has appeared on CNN, The Learning Channel and other broadcast outlets. He has written extensively on consumer product safety and scams.
| October 26, 2004 |
Sean Pearcy was feeling lucky. Very lucky.
On Oct. 1, the Bismarck, N.D., resident received an e-mail from "Lucky 7 Lottery" announcing he’d won a $2.7 million jackpot. The message included a flurry of instructions. "In order to avoid unnecessary delays" in collecting his winnings, it said, Pearcy should promptly e-mail a lottery official named David Thomas with the 16-digit "reference number" he had received.
Pearcy was skeptical but thought he had nothing to lose – even as the steps required to claim his prospective winnings grew more complex. "To qualify for your prize money," came the response from Thomas, "you are expected to fill our prize winning claims form B0-7 via this link." That Web link led to an online questionnaire that asked Pearcy for his home address, phone number and employment information. It even included a box to check if he wished to give a press conference.
Although he did not yet realize it, Pearcy was being drawn into an increasingly common scheme in which international fraudsters use e-mail, in conjunction with letters and phone calls, to convince victims they’ve won an overseas lottery. The scammers’ goal, law enforcement officials say, is to trick consumers into sharing bank-account numbers or paying up-front fees to claim winnings that never materialize.
"A lot of the lottery scams emanate from Vancouver and Montreal," says Charles Harwood, director of the Federal Trade Commission's Seattle office, which has traced many scams to Canada – a relative haven for suspects because of extradition laws. [See Sidebar: Why Canada?]
Gaming the Victim
Harwood says the more skillful con artists rarely come right out and ask their victims for sensitive information. Instead, like "Nigerian" or "419" scammers, they often draw consumers into a web of fake red tape that looks official and leaves heads spinning.
Sean Pearcy’s case illustrates how many of these schemes unfold. A few days after filling out his online "claim form," Pearcy received several more e-mail communications from an ever-larger, and ever more foreign-sounding, cast of characters – "Mr. Ndoulou Granger" in South Africa, "Ms. Blanc Fernandez" in Monaco – each asking him to verify some bit of information.
Finally, on Oct. 14, Pearcy received a message letter from the "Unie De Banque Monaco," titled "PAYMENT ORDER ENDORSEMENT NO TZ72201049." All he had to do, he was now advised, was get the transaction notarized. Since this was a foreign lottery, he now learned, the officials had taken the liberty of hiring "Barrister Petts Richard and Associates" in South Africa on his behalf. They had even attached a copy of an official-looking, graphics-laden electronic letter asking the firm to disburse the funds.
Pearcy was given an overseas number to call Richard in Johannesburg, but when Pearcy dialed, he noted the phone number was short one digit. On Oct. 19, Pearcy received an e-mail from Richard asking for scanned copies of his driver's license or passport – and a check for $2,170 as a "legal and administrative cost."
Fortunately, Pearcy had already used www.whois.org, a public online database, to see who owned the Web name of the lottery company lucky-7lotto.net. That record gave him a Winnetaka, Calif., address, phone number, and the end of his high hopes.
“I called the number, and a woman just answered, 'Yeah?'" Pearcy says. "That 'yeah' kind of threw me right there. And then she wouldn’t tell me anything.”
Spam, Phone and Snail Mail
Harwood says fraudsters will usually ask recipients, like Pearcy, to wire money – from small fees of $25 to larger payments of several thousand dollars – via Western Union to cover taxes, a "release fee" or vague "legal costs." There’s the additional danger of identity theft: Many persuade consumers to share personal information, such as Social Security numbers, which can be used to open credit-card accounts in the victim’s name.
Unlike Pearcy, some victims have fallen hard – as was the case last May with an Indiana University student who sent $18,804 in multiple payments after he received a winning notification from a "Euro America" sweepstakes. Another victim, an elderly woman in Lodi, Calif., actually received what turned out to be a bogus winnings check. Believing the check was real, she mailed back more than $250,000 from her savings to pay the “taxes” before realizing her colossal mistake.
And the lottery scams are increasingly finding victims through combinations of phone calls, e-mail and regular mail. In 2002, the U.S. Postal Inspection Service received 13,034 complaints of Internet fraud with a mail tie-in. That figure rose to 18,534 complaints in 2003, and jumped 9% by May 2004.
The advent of online phone directories and sales of e-mail lists among spammers have made the problem common across the country, even in rural areas such as Bond County, Ill. On Oct. 12, two Bond County residents received winning award notices – each for $615,810 – from differently named Spanish "lotteries."
James Stever, an investigator in the Bond County state attorney’s office, says he has received between four and seven similar scam complaints a week over the last two years.
"Most of these in our area want your bank account number," Stever says. "We’re a small county with eight to 12 banks. We tell them there’s no bank that would call you by the phone or [contact you via the] Internet wanting your account number, as they’ve already got it. We say, ‘If you have any question, call your bank or get a hold of the police.'"
The FTC has also issued a warning about a related lottery scam in which the con artists use the phone, direct mail and e-mail to pitch U.S. consumers opportunities to buy tickets in foreign lotteries – an industry that now rakes in $120 million a year. Even if the tickets are real, the transaction violates federal law, which makes cross-border sales or purchase of lottery tickets subject to a $1,000 fine and up to two years in prison.
"It’s illegal," says FTC spokeswoman Brenda Mack. “Even if somebody [in the U.S.] won a foreign lottery, they wouldn’t be able to claim it.”
Sidebar: Why Canada?
While the fake-lottery schemes predate the Internet, the rise of e-mail has allowed scam artists to operate from half a world away – including Spain, France, Australia, Eastern Europe and East Africa. But authorities say most U.S. online lottery scam activity originates in Canada, where scammers benefit from the common English language and easier access to U.S. phone information. This month, the Federal Trade Commission (FTC) recovered $1.2 million from 45 Canadian operations in Vancouver alone.
"There are organized crime elements to them," says the FTC’s Charles Harwood. “There’s a tendency to exchange ‘sucker lists’ and information between these ‘boiler rooms.’ You’ll see the same techniques."
Sidebar: Skip the Jackpot
The Federal Trade Commission (FTC) and the U.S. Postal Inspection Service offer several tips to avoid getting suckered by fake-lottery scams:
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Robertson Barrett, a media consultant and writer, was a founder and managing editor of TIME.com and ABCNEWS.com. He was also vice president and general manager of The FeedRoom, a nationwide broadband news network in partnership with NBC and Tribune, and of Channel One Interactive, the educational television network's new media division.
In October 2002, he wrote about spyware and Internet "washers"for Consumer Reports WebWatch.
| August 26, 2004 |
Robertson Barrett
Special to Consumer Reports WebWatch
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Jill Hufft wanted to buy a car at the lowest possible price, so last month, the Fresno, Calif., resident tried searching for deals on the Web. Almost immediately, Hufft came across CheapCarFinder.com, which promised striking discounts on all makes and models – "Up to 90% Off Book Value!" – if she didn’t mind buying a repossessed vehicle at auction.
"Every month, 1000s of cars become government & bank property through various seizure/surplus laws," the site explains. "Because of the constant influx of vehicles and the enormous expense to store them, the cars must be sold fast and cheap! Buy direct from the sources and save considerably! Bids on new and used repossessed and fleet vehicles start as low as $100!"
CheapCarFinder.com is one of dozens of "auction guide" sites that regularly advertise on search engines and Web directories. Unlike CarsDirect.com, eBay Motors and other online marketplaces for new and used vehicles, auction guide sites claim to offer consumers steep savings by directing them to government and private auctions of seized vehicles in the consumer’s home state.
But, as Hufft found, many of these sites fail to provide a corporate address, phone number and clear disclosures of what they do with personal and credit-card information – which conflict with e-commerce practices recommended by consumer organizations and the Federal Trade Commission (FTC).
For example, CheapCarFinder.com, allowed Hufft to search for available cars by ZIP code but asked her to pay a one-time $35 subscription fee with a credit card before seeing specifics about the cars or any information on how to buy them. The site lists its owner as the Airon Corporation, with a suite address in Miami, but gives no phone number or additional corporate details. "I really need a car at a low price," Hufft says. "But at the same time I can't afford to lose money to a scam."
Airon Corporation, in fact, has an "unsatisfactory" record with the Better Business Bureau (BBB) of Southeast Florida due to unanswered complaints. What's more, Consumer Reports WebWatch could not verify any of the seven personal testimonials listed on CheapCarFinder.com.
"I got my truck for less than 3 grand in outstanding condition, it was a very well maintained government owned vehicle," says "William Beeman of Manchester, NH," in one testimonial in which he claims he saved almost $14,000 on a Ford Expedition. "I'm in your debt for pointing me in the right direction! Thank you."
Like the six other names on CheapCarFinder.com's testimonials page, William Beeman was not listed in the White Pages as a resident of his alleged hometown. Moreover, his name and quotation appear word-for-word on car message boards of at least two unrelated Web sites (sysindia.com, webmaine.com), and his comments don't specifically mention CheapCarFinder.com as the service being praised. Airon Corporation did not return emails from Consumer Reports WebWatch asking company president Eric Gjerde to discuss the company's record and site testimonials.
Promises at a Premium
Steve Baker, director of the FTC's Midwest Region, says the commission discovered numerous online auction guide sites in recent years that had serious lapses in acceptable online sales practices – including obtaining consumers' credit-card information under false pretenses, such as claiming they needed it to verify an order. Or the guides faked orders: "In phone sales they’d say, 'Can I throw in a guide to government-foreclosed homes?'" Baker says. "The customers thought it was free, but they were charged for it."
But the FTC and BBB agencies say the more widespread problem for consumers is fraudulent or deceptive marketing by auction guide companies – a trend since 2001 that has caused both organizations to issue warnings and take legal action.
"We have sued several of them," Baker says. "The idea has been that the government gets these cars from drug lords, and these folks advertise and say 'We know where these cars are, and you can get them for next to nothing, and we'll sell you a guide telling you where the auctions are.' In some cases, they said they knew of close-by auctions and they didn’t. One auctioneer called us and said, 'I'm getting calls every day from people who want these "drug lord" cars, but I don’t sell them.' But his name was in the guides."
Consumers need to be aware of a final, related issue: Auction guide sites, like CheapCarFinder.com, don't make it clear that much or most of their information is available free elsewhere. Samantha Donaldson, a consumer education specialist with the federal General Services Administration (GSA), which conducts many of the government’s seized property auctions, says the agency offers extensive listings of its auctions at FirstGov.gov (www.firstgov.gov), the U.S. government's official Web portal, as well as on other sites and in newspaper announcements. (For more information, see sidebar.)
Some prominent auction guide sellers argue consumers are in fact getting a crucial service when they plunk down a monthly fee.
"All auctions aren’t controlled by a single federal source – there are state, county and police," says Bill Keck, CEO of PoliceAuctions.com, a major auction guide with a positive BBB record based in California. "There are literally thousands of government entities that control these. We actually make the phone calls to some of the smaller state and local auctions that don't have the wherewithal to list themselves on the Web."
A major auctioneer disagreed. Roger Ernst, whose namesake company runs California's largest auction of seized vehicles, says most government property ends up at a few big auctions that consumers can easily find without paying for guides. On the West Coast, for example, Ernst says most auction listings can be found on his site and that of his only major rival, Nationwide Auction Systems. "Most of the rest of what you'll get [from pay auction guides] are little guys who have police-seized goods, but very few cars. They say 'cars,' but one definition of 'cars' is two."
Whether consumers pay for the auction guides, can they expect to get a $200 SUV?
Only in rare circumstances, according to Keck and several other auction guide sellers interviewed by Consumer Reports WebWatch. Instead, agencies that seize vehicles, such as the U.S. Customs Service, say consumers usually pay at least wholesale prices by the time bidding ends.
Similarly, the GSA's Donaldson says her agency, which manages the auctions of federal surplus vehicles, takes pains to manage bidders' expectations: "There are no giveaways. GSA expects to receive a fair market price."
If you want to buy an auction guide, the FTC recommends that you:
Sidebar: Get It For Free
Before paying a subscription fee to an auction guide company, the Federal Trade Commission recommends bargain-hunters consult several resources for free (or cheaper) auto listings:
- Government auction programs. These opportunities are sometimes advertised on radio and television.
- Classifieds or business sections of newspapers. The dailies and trade papers like Commerce Business Daily often publish information about upcoming sales.
- Local libraries or chambers of commerce. These sources may maintain auction guide subscriptions.
- The General Services Administration (GSA). The GSA, a federal agency, offers free listings of upcoming GSA Fleet Auctions online at http://www.autoauctions.gsa.gov.
- The Federal Citizen Information Center (FCIC). The FCIC, a branch of the U.S. GSA's Office of Citizen Services and Communications, has several free or low-cost federal publications available online (www.pueblo.gsa.gov). See the FCIC's Guide to Federal Government Sales (http://www.pueblo.gsa.gov/cic_text/fed_prog/fedsales
/fedsales.htm) for practical consumer tips about federal government sales programs.
- FirstGov.gov. The U.S. government's official Web portal contains information about government auto auctions. From the homepage, click on "Shop Government Auctions," which connects users to the "Shopping and Auctions" page (http://www.firstgov.gov/shopping/shopping.shtml).
- Other government sites. See the Web sites of federal agencies that seize and sell vehicles:
Government auction guides are also available free of charge on Web sites of many state and local law enforcement agencies.
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Robertson Barrett, a media consultant and writer, was a founder and managing editor of TIME.com and ABCNEWS.com. He was also vice president and general manager of The FeedRoom, a nationwide broadband news network in partnership with NBC and Tribune, and of Channel One Interactive, the educational television network's new media division.
He writes a biweekly column on scams and schemes online ans has written about spyware and Internet "washers" for Consumer Reports WebWatch.
| June 28, 2004 |
Robertson Barrett
Special to Consumer Reports WebWatch
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Ann Starnes of El Paso, Texas, wasn't in the market for a mortgage. But in late May, she found a tempting offer from a company called Lendbridge in her e-mail queue, and she started giving it some serious thought.
"Ever since we unveiled our new lending program, every property owner in town is jumping on board," read the message. "Bad payment history is OK. With our new plan, we view you as more than just a FICO score"– a reference to the rating many financial institutions use in deciding whether to make loans to consumers.
The mortgage rates that Lendbridge advertised were spectacular – as low as 3.46 percent. All Starnes had to do to apply was visit a Web site and type in answers to a few questions about her home and her desired loan. Then, Lendbridge promised, within 48 hours, "We'll search our network to match you with the best lender in your area based on your credit situation and financial needs."
But before filling out the form, Starnes wisely tried to confirm some basic company information on the Lendbridge site, and it didn’t check out. According to MapQuest.com, Lendbridge's Austin address didn't exist. And its 800 number yielded a generic answering machine message. "I would be suspicious about any site that wants your information, and yet is giving you incorrect information," she says.
A Consumer Reports WebWatch review of Lendbridge found more reasons to be wary. The Web address in the e-mail Starnes received was not www.lendbridge.com – a dead url that doesn't lead to any site – but a more complicated link (www.crinumlily.us/lendbridgemedium_rt). That address and www.lendbridge.com are both registered to "Steve Goudreault" of "American Loan Rate" in Reno, Nev. Phone messages left at a number listed with the Internet registration were not returned.
Tell Us About Yourself …
Online banking experts say unsolicited e-mail offers like the one Starnes received are exploiting the popularity of major online mortgage sites such as LendingTree and E-Loan, which offer would-be borrowers the chance to comparison-shop for low rates among many lending institutions.
" These are a lot like traditional 'phishing' scams that use similar names to trick the recipient into giving up personal information, for fraudulent purposes," says Mary Beth Guard, executive editor of BankersOnline.com, a discussion site that offers consumers advice from bankers. "They are often selling your information to lenders, and it could end up anywhere."
That's exactly what happened in December, when the U.S. Federal Trade Commission (FTC) halted a scam run by 30 Minute Mortgage Inc., an Internet operation that e-mailed spam offers for "3.95% 30 Year Mortgages"– despite the fact that 30 Minute Mortgage was not a lending institution at all. But the FTC says the outfit did manage to get thousands of consumers to fill out applications listing their Social Security numbers, income and assets, then secretly sold the information to third parties.
"We're very concerned about consumers providing their personal information online and then discovering that it's being used for a different purpose," says Amanda Quester of the FTC’s Bureau of Consumer Protection, which has stepped up investigations of mortgage fraud online. (This month alone, the FTC charged PWR Processing, a group of Colorado mortgage brokers, and Chase Financial Funding, a California broker, with advertising illegal or nonexistent mortgage deals via the Internet.)
But even if ill-gotten information ends up in the hands of legitimate brokers, there can still be serious consequences for the consumer. In the worst cases, say critics, eager loan officers run credit inquiries before they contact consumers – a burst of activity that usually looks suspicious to credit bureaus and may cause them to lower credit scores.
William Tygart, an Allyn, Wash., mortgage broker, says he encountered just such a nightmare scenario last fall, when a borrower forfeited a high FICO score of 710 after venturing online: "After he filled out the applications, he was contacted by numerous mortgage brokers that had offers for him. The offers stopped coming, and the borrower found out that he had dropped to a 520 credit score because of 103 inquiries within two months. Now this gentleman cannot get the rate that he deserves."
Fear of multiple credit checks has also dogged established online loan sites like E-Loan and LendingTree, whose large roster of lenders is no less credit-history conscious. But both companies allow consumers to defer credit checks until they decide to move ahead with a particular lender, allowing them to limit the overall number of checks.
"The best thing consumers can do is keep track of how many people you are working with," says Mindy Neubauer, a LendingTree spokeswoman.
Finding an Online Lender
Because the Internet offers the advantage of comparison-shopping to find the lowest mortgage, some advocates recommend tempering the risks with a dose of offline detective work.
"The two mortgages I've gotten, I applied for and was approved for online," says Guard. "But you have to exercise caution and be very sure of what you're getting into."
To do that, Guard recommends following these steps:
Sidebar: Useful Tips and Resources
The FTC encourages consumers to make sure their transactions -- online and off -- are secure and that their personal information is protected. Tips to help consumers manage their personal information wisely and to help minimize its misuse are provided at
http://www.ftc.gov/bcp/conline/pubs/alerts/privtipsalrt.htm.
The FTC recommends consumers:
For more information:
http://www.ftc.gov/bcp/conline/pubs/online/cybrsmrt.htm
If you’re shopping for a mortgage, consult this consumer tip sheet, also from the FTC: http://www.ftc.gov/bcp/conline/pubs/homes/bestmorg.htm.
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Robertson Barrett, a media consultant and writer, was a founder and managing editor of TIME.com and ABCNEWS.com. He was also vice president and general manager of The FeedRoom, a nationwide broadband news network in partnership with NBC and Tribune, and of Channel One Interactive, the educational television network's new media division.
He writes a biweekly column on scams and schemes online ans has written about spyware and Internet "washers" for Consumer Reports WebWatch.
| May 25, 2004 |
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While surfing the Web last month, Gilbert Hernandez of Mission Viejo, Calif., came across realcashprograms.com – a site promising a smorgasbord of moneymaking opportunities.
"Earn $1,000s Monthly! Be your OWN boss!" read a headline. The eight "top" programs advertised seemed lucrative indeed. For $79, the site said, Hernandez could fill out online marketing surveys for $75 a pop. He could make $800,000 in government grants, $3,200 a month driving ad-bearing cars, and $4,000 a day to watch TV, the site promised.
Or, for a $99.95 "group buy," he could have all eight programs plus two "bonus programs"– one to buy homes with no money down and the other to start an online auction business. Though tempted, Hernandez wondered if all this could really be true.
So Consumer Reports WebWatch took the plunge for him. As with many similar claims on televised infomercials, it soon became clear that the only certain cash was the up-front fee.
We noticed a red flag immediately: While realcashprograms.com asks for credit-card numbers, the site provides no phone number, physical address or other company information. The actual transaction was handled through Click Bank (www.clickbank.com), a Boise, Idaho-based e-commerce company that has a satisfactory rating with the Better Business Bureau. But a Click Bank spokesman would not provide Consumer Reports WebWatch with corporate information on realcashprograms.com. Whois.org – a tool few Web users know to use for site background information – listed only a post-office box for "Money Making Secret" in Swanton, Vt., and an 800 number and Hotmail address that did not respond to inquiries about realcashprograms.com.
But we did get something for our money. A minute after we completed the transaction (our credit card was promptly billed $99.95), we received an e-mail from realcashprograms.com with passwords to Web sites for the eight promised programs.
Working Hard for the Money
Now we were ready to start making our investment back. We tested the four programs that seemed to offer us the most money for the time invested. Here’s what we found:
Promise: Get paid $75 per online survey ("guaranteed pay for each survey you fill out").
Reality: Receive a list of 362 public Web sites realcashprograms.com describes as willing to compensate users for taking online surveys – in many cases, in non-monetary rewards such as discount coupons or prizes. Dozens of these sites, such as a music site called garageband.com, simply offer users a chance to sign up for a contest. Others, such as focusline.com, say they will pay $25-$45 per survey within 8 weeks but had no company address.
Users have to register (sometimes with personal information such as Social Security and phone numbers) and then wait for survey invitations. Privacy policies existed on nearly all sites, but in almost every case they were brief and unclear about exactly what might happen to our personal information.
Twenty-two days after signing up for 15 survey sites, we were still awaiting a single survey invitation.
Promise: Get paid $95 an hour to shop. ("Mystery Shoppers needed!")
Reality: Realcashprograms.com provides a list of about 140 sites where visitors complete online applications to be a "mystery shopper" on call to buy items at bricks-and-mortar stores and file a report within 24-48 hours on retailers’ service.
These "shopper" sites say they will pay shoppers a $25 stipend and reimburse them for purchased items, all within several weeks. Job availability may make it difficult for career shoppers to pay the rent, however. In the entire state of California, for example, one listed agency, questforbest.com, had only two openings – for "restaurant shoppers" in the small suburban towns of Elk Grove and Goleta.
Promise: Get paid $3,200 a month to drive a new car bearing an advertisement.
Reality: The site provides a list of businesses promising to pay up to $150-$400 a month to car owners willing to drive daily with “auto wraps,” advertisements printed on vinyl, glued snugly to their chassis. One of these sites, autowraps.com, says drivers could receive $100-$3,200 a month. But the site explains applicants’ names merely go on a list of people who might be called, and invitations at the high end of this scale are rare: "Each year our program continues to grow and your chances continue to increase. The odds of being selected are definitely better than winning the lottery!!"
Promise: Earn up to $4,000 a day watching TV shows.
Reality: While the other realcashprograms.com offerings were largely repackaged information, the authors are more inventive here. Rather than merely sit back and channel-surf for cash, we are advised to consider a number of entrepreneurial challenges to make the $4,000 windfall – but are not provided assistance in pursuing these ventures.
Realcashprograms.com suggests we start by watching home-shopping channels: "You can buy the merchandise and resell it at a profit." We might also become a "television ad representative," it says, and "swing some of the infomercial advertisers to your own media outlets." Or, the site suggests we call TV-watching friends and "start a local ratings service" to compete with ratings behemoth Nielsen.
When Is Marketing on the Level?
"Work-at-home" packages like realcashprograms.com’s have understandably frustrated buyers who expect to make easy money. In 2003, the U.S. Federal Trade Commission (http://www.consumer.gov/sentinel/trends) received more than 3,300 complaints alleging fraud by purveyors of Internet-based work-at-home and similar business opportunities, about 250 more than in 2002. Similarly, the nonprofit National Fraud Information Center (fraud.org) received a small but vocal number of complaints about online "kits sold on false promises of big profits from working at home"– about 750 calls, double the number for 2002.
Dr. Stephen Barrett, a consumer advocate who has written widely on Internet fraud, says most of these programs are legal because they avoid making technically false statements even as they promise rosy scenarios. Consumers should be skeptical of "companies that focus on selling you an opportunity instead of a product," he says. "There is no work-at-home scheme where you pay that is not misleading."
Realcashprograms.com does say, in prominent type, it will refund our money if we earn nothing in 90 days. So, with no income after 10 days of using the site, we inquired via the only contact given (FastMoneyCash@aol.com) about what it would take to actually get our $99.95 back.
Within a few days, we received an automated response from "Jerry," a customer service representative. Even though we had not indicated the date we purchased the realcashprograms.com package, he said we would have to wait until the full 90 days had passed and then inquire again.
But we weren't left entirely empty-handed. "To make you even more satisfied," Jerry added, "we will give you 8 more FREE Programs!" And indeed, we received eight more links and passwords (including "Get Paid To Answer Your Phone," "House Sitting Jobs," and "FREE Healthcare") to try on a new frontier, dreamjobsathome.com.
Sidebar: Look Before You Leap Into an Online Business Venture
The U.S. Federal Trade Commission offers the following tips for consumers considering an Internet-related business opportunity:
Report fraudulent business activities to the state attorney general’s office in the state in which you live (a list can be found here: http://www.naag.org/ag/full_ag_table.php) or file an online complaint with the FTC (www.ftc.gov).
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