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Scams and Fraud

Fraud volume has increased dramatically over the past few years and has been aided greatly by technology.  There is simply so much to learn about the new “online marketplace” that nearly everyone regardless of technical know how feels they are struggling to catch up.  And the perpetrators of new scams are loving all the confusion.  With this in mind, OECU decided to introduce a new member education section on fraud with the hopes that a little shared information might just ruin a scammers day!

Common Financial Scams

Secret Shopper Scam

This is by far the current flavor of choice for many con artists.  A lot of times this scam starts innocently enough on the part of the victim.  You’re looking for a part time job through an online job search website and you agree to have information sent to you about possible jobs.  You receive an e-mail or letter offering you a position as a secret shopper. You check into it and receive detailed instructions on how you will be paid, when you will receive your assignments, what you should report about the business you shop, etc.  With all the detail put into it, this seems legit.  How it works: You receive a large cashier’s check or money order for your first assignment and a letter stating what businesses you are to visit and how much you should spend.  The letter states that you must cash the check immediately and begin shopping those businesses.  One of the businesses is Western Union where you are to send a large amount to another secret shopper so he can do his assignment.  You complete your assignment and find out later that the check they sent you was returned to your financial institution.  Only now do you realize that all that stuff they asked you to buy at other businesses and all that information you collected about your experience was just to hide the fact that you sent thousands of dollars to some guy you don’t know through Western Union and there is no way to get it back.  What’s more is that your financial institution tells you that you are ultimately responsible for any check you deposit and it wants to know how you intend to pay back the now negative balance in your account.  How to protect yourself:  When doing business with anyone that you don’t know very well, it is adviseable to treat any check they give you as just what it really is – a promise to pay.  Even cashier’s checks and postal money orders are worthless if they are counterfeit.  Ask yourself “Do I really want to use my good name to send real money to someone I don’t know based on their promise that everything will be okay?”

Foreign Lottery Scam

By mail or e-mail you are contacted by what appears to be the lottery commission of a foreign country (Canada or the U.K. perhaps).  The letter states that these funds are taxable upfront or that an insurance bond has to be purchased before the funds can be sent to you.  The amount they say you will be receiving is so much more than the amount you have to pay upfront to receive the funds. In your excitement to spend the money you’ve been promised, you quickly rush to Western Union or even send cash directly to the perpetrators.  If you are lucky you never hear from them again.  Or they might keep sending you requests for more money stating that they miscalculated the taxes or that the winnings were higher now so the taxes increased.  Either way you never see a dime. How to protect yourself: Keep in mind that it is first illegal to participate in a foreign lottery so you would not be very likely to receive a letter from them.  Secondly, you have to have bought a ticket to even have a chance at winning.  If you don’t remember doing that, you didn’t win. And last, any legitimate lottery would not ask you to pay any money upfront and even when they do withhold for taxes, the funds would be taken out of what they send you.  If you have to pay anything to get the winnings, it should be a good clue that something isn’t right.

Overpayment Scam

When selling a large dollar item on an online classifieds website, you strike up a conversation with someone who says they want to buy your item and they are sending you a check.  Right before you get the check in the mail, the man lets you know that he accidentally sent too much.  He suggests that the simplest way to handle it is for you to deposit the check and just send him the difference at the same time that you send the item.  You agree and send the money.  A week later, you are notified that the check he sent you was no good.  Now you are out the item you sold and the money you sent him to make up the “overpayment”.  How to protect yourself:  If possible, only deal locally and only in cash so that you can meet face to face in a very public area and know that the money you get is good.  Inspect cash carefully for signs of counterfeiting.  And remember, dealing in classifieds will always carry some level of risk.  It is important to know the all the risks before you decide to meet.

Investment Scam

You are contacted by someone that states they have an amazing investment opportunity which yields an unfeasibly high return and absolutely no risk to the investor.  You may even meet several times with the con artist at “business luncheons” or the investment property location. Current economic news is incorporated into the scam to give it more legitimacy.  This is one of the oldest scams out there but with interest rates and dividends on retirement accounts so low, people are being taken by this more often these days.  How to protect yourself:  Remember the old saying “If it’s too good to be true, it probably is.”  Don’t be afraid to walk away from an “opportunity” when your hard earned money is on the line.  Be wary of pressure to act now.  Give yourself time to do some research.  If it’s worth putting your money into, it’s worth a second look.

Stranded Relative Scam

A family member is on vacation somewhere in Europe and while they are away, you receive a message from someone claiming that he has been hurt, he’s unconscious, and needs money to pay for an operation.  You’re told that if you don’t act quickly, he won’t get the treatment he needs in time.  The letter states things about the relative that only family would know. So you rush down to Western Union to send thousands of dollars to save your relative’s life.  Now you really have the attention of the con artist.  You now start getting phone calls and messages stating that more money is needed to pay for a place for the relative to stay during his convalescence and home health care and then to send him back to the States when he’s better.   All the while, your relative is actually enjoying his vacation with no idea that you are being taken advantage of on his behalf.  How to protect yourself: Social media like Twitter and Facebook have brought distant friends and relatives a lot closer but they also make it easier for con artists to gather enough information to seem credible.  Keep this in mind when posting to social media or when responding to letters for help from people you know.


Phishing and Pretexting – Fraudulent e-mails, internet pop ups, texts, or phone calls that request information while claiming to be the victim’s financial institution or law enforcement.  The message states that dire consequences may occur if the information is not obtained.  Sometimes the message even threatens prosecution if the victim does not comply.  A legitimate looking website is often used to collect the data.  The information is then used to help commit identity theft or account takeover.

Skimming – Devices can be attached to ATM machines that record account information from member’s cards.  The devices are made to look like they belong on the machine and are difficult to spot.  Sometimes they interfere completely with the operation of the ATM machine by storing the card information but not completing the transaction.  A message is displayed saying that the machine has had an error and is not usable.  The victim believes this and consequently goes on to the next ATM without ever reporting the incident or shutting down their card.  Other devices don’t interfere with the operation of the ATM but rather collect data from the card as it is being swiped through the machine.  A good practice is to look around the ATM for wires, tape, or anything that doesn’t seem to go with the design of the machine before sliding your card.

Vishing – Also referred to as Caller ID Spoofing, this type of fraud involves the use of voice-over-IP (VOIP) technology that allows crooks to create the company name  that appears on your caller ID when they call.  Many people will immediately assume they are truly talking with someone at the IRS if their caller ID reads “IRS” and may be more easily persuaded to give up account or personal information to the person who called them.

Spyware and Malware – Software that has malevolent intent which often times damages a computer or quitely records information about the user.  An example of this is a Keystroke Logger.  This is a program which records everytime you press a key on your keyboard and sends that information to some other computer.  User IDs and passwords are entered by typing on a keyboard.  To prevent this, many virtual keyboard programs are available online that allow you to click letters on a screen rather than enter them physically on a keyboard.