Costco Connection - January 2011

CONSUMERconnection No recession for con artists

THE ECONOMIC BUST has been a boon for scammers and cons. We are faced with a new wave of “recession scams”—scams born out of economic uncertainty.

These scams target people who can’t make their mortgage payments, cannot meet their healthcare needs or are desperate for employment. The equation is tragic: the more desperation, the more opportunity for scammers to act.

Here are three cons to look out for.

• The job-hunting scam. These scammers prey on eager candidates hoping to get a head start on applying for a specific job or to gain access to jobs others may not know about. This scam comes in the form of a fee-based service that offers prospective employees an “exclusive” job listing page, or a monthly membership in a job-listing site that advertises jobs “unavailable to the public,” for a monthly, upfront subscription fee. The truth is, most of the jobs listed are dead ends, duplicates or jobs that can easily be found on sites such as Careerbuilder.com, Monster.com or Craigslist.org. This scam only takes money from job seekers’ pockets and offers no advantage whatsoever for finding a job.

• The healthcare hustle. In this scam, a company appears to offer affordable healthcare, though it really offers nothing more than a healthcare “ discount card.” In fact, people who fall for this hustle are often stuck with hefty healthcare bills and no insurance to cover them. Ironically, the card doesn’t offer any discount at all. I recommend not only reading the fine print, but, when it comes to an investment such as healthcare insurance, where a long-term commitment is required, researching the company before handing over a single cent. This scam has caught the attention of the Federal Trade Commission, which has promised to crack down hard on these companies.

• The foreclosure con. We have all seen the advertisements: “We can save your house,” or “Allow us to refinance your mortgage.” These companies, often unregulated by any government body, have sprung out of the mortgage crisis, and, contrary to their guarantees, they cannot save your house, refinance your mortgage or get you out of your terrible housing dilemma. Instead, for a hefty upfront fee, they coerce customers into doing such things as refinancing at a terrible rate or, worst of all, signing over the title of their home to the company, only to be forced to rent it back for a large sum of money at a later date.

Ask David
Horowitz

I BOUGHT A three-year-old 2007 Ford Edge with 75,000 miles on it. As I was driving to a wedding, all of a sudden my car came to an abrupt stop, and smoke began to billow into the cab and all around the exterior of the car. I took it to a mechanic, who claimed it had a leak that would cost $7, 100 to fix. This is nearly as much as I paid for the car. What can I do?

Adam H.

Nevada

The first warning sign with most of these scams is the phrase “upfront fees.” Often, companies that force you to pay fees in advance will take the money and run, or get you so financially invested that you feel you have no choice but to continue with the service.

Second, these companies are typically in a rush to get you to sign along the dotted line. Therefore, stop, think about it, do the research and make a smart, educated decision. No wise decision is ever made out of desperation.

Third, beware of a company asking for the ability to sign for you. Some scammers pose as brokers and will try to get you to sign over important documents, such as financial statements and bank records, in order to approve them as co-signers.

This is a sure sign that you are being scammed, and this is difficult to reverse, because once you have granted a person or company signing permission, it is extremely difficult to take that right away from them.

Stay smart and savvy, even if you are feeling financial pressure.

Always research a company or a lone operator before doing any business with them. Guard your documents and do not expose yourself to any form of identity theft or financial fraud. Finally, even though these are desperate times, do not take any desperate measures that may end up costing you more and doing serious damage to you and your financial status in the long run.

For more information on how to spot or thwart these cons, visit

www.thesurvivorsclub.org and www.walletpop.com. C

I suggested that, instead of
haggling with the mechanic,
Adam call Ford in Detroit and
speak directly to the depart-
ment responsible for fixing
these types of issues. He
should simply explain what
happened and they would
direct him to a person who
could identify the
problem and walk
him through what
needs to be done.
Update: Adam did
just that, and wrote
to me afterwards,
explaining how
Ford had properly
resolved the situa-
tion. Ford was able
to narrow down the
flaw to a leak in the
power takeoff unit, and
the car was fixed for a
fraction of the original
estimated cost; Ford even
paid for the repair, as the
vehicle was still under
warranty. Ford was also
glad that the customer had
informed them of this defect
in the vehicle. C

Stay ahead of the scammers

What can you do to avoid these scams or spot them before it’s too late?

AMY CANTRELL

David Horowitz is a leading consumer advocate ( www.fightback.com). He is a frequent guest on radio and television stations. Consult your local listings for dates and times.

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