As the economy and consumers continue to struggle, scam artists seem to be thriving. In 2011, Americans saw some of the biggest financial scams to hit the nation in years, even decades. To start the new year off on the right financial footing and avoid falling prey to these scams, take a look at the five biggest scams of last year, including purchase overcharges, benefit buybacks, family scams, fraudulent rental deposits and loans that aren't yours.
1. Purchase Overcharges
Overcharging for purchases in retail transactions is one of the biggest scams of the year. In fact, one retail chain was charged with overcharging its customers for purchases in a settlement lawsuit. To avoid purchase overcharges, do your homework upfront to find out the price you should be paying for any big-ticket item. Do not pay any more than this price and if you can avoid financing it at high-interest-rate store credit cards or consumer credit cards, then even better.
2. Family Scams
Military families were one of the biggest targets in 2011. The families of military personnel were often contacted by scam artists scouring online social networks and obituaries. After obtaining personal information, such as parents' and grandparents' names and contact information, the scam artists would contact the families on behalf of the military service man or woman. The caller says their family member is surprising them by coming home from overseas, but their car has broken down or they are stuck somewhere and need the family member to wire money. The person picking up the money is not the military family member and reported losses range from $3,500 to $5,600 per person.
3. Benefit Buybacks
Another scam is a company contacting you offering to buy back your unused benefits from your employer. The company offers an upfront payment for the benefits. The catch is that the payment is much lower than what the benefits are worth. For example, one victim sold a quarter of a million dollars worth of benefits for only $90,000. The other catch is that it ends up being a loan, so you pay interest on the money they paid you upfront, so it ends up not being a deal after all.
4. Fraudulent Rental Deposits
Whether you are moving long distance or around the corner, fraudulent rentals were another of the biggest scams of the year. Consumers finding rental properties online were often convinced to wire a deposit for the rental property. The problem is the property doesn't exist or the person listing it for rent is not the owner. This landed many renters out of cash and out of a place to live. Never wire money to an unknown party and without seeing the property or signing a rental agreement first.
5. Loans that Aren't Yours
Identity theft victims often find loans on their credit reports that aren't theirs after the debt collectors start calling to collect on the debt. A new twist on the scam is debt collectors trying to collect on loans that are paid off or never existed. If you find loans on your credit report that are not your loans, follow the dispute process with the credit bureaus. If you have paid off loans or someone is contacting you about a loan that you never took out, try to clear up the matter with the lender and the credit bureaus, but never send money to absolve the debt. In a lot of cases, the debt doesn't even exist.
While this is not a comprehensive list of the scams that took place in 2011, it is five of the biggest scams for the year. Avoid becoming a victim in 2012 by looking out for these scams and twists on these scams.
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