Top Scams of 2008

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Posted by Wisconsin Better Business Bureau January 08, 2009 at 15:49:40:

In reply:
Web Fraud 2.0: Distributing Your Malware posted by Brian Krebs August 23, 2008 at 10:51:35:

Original text: The allure of cyber crime lies in its promise of quick riches, much like that of the illegal drug trade. But building a network of hacked personal computers that can distribute ..

The tough economic times have made a strong impact on this year’s list of the Top Scams. Consumers are feeling the pinch and are looking for investment opportunities, new sources of credit, or thinking of home improvements to enhance their home’s market value. During an economic downturn scammers are out in full force looking to catch people at their most vulnerable.

1. The Mystery Shopper Scam
Consumers answer “help wanted” type ads – or are sometimes sent unsolicited emails -- that offer easy, guaranteed income by becoming a mystery shopper of large retail companies. They’re sent a check, asked to deposit it into their personal account, withdraw money and wire back to their new “employer” as a “test” of the customer service at Moneygram or Western Union. The problem is that, even though the consumer’s bank initially accepts the check, it’s counterfeit and the consumer owes his/her bank the amount of money he withdrew. In November, a Two Rivers man lost $5,000 to a mystery shopping scam. He received a check, was told to deposit it and keep $500 as his payment.

BBB Advice: Although some legitimate Mystery Shopping jobs exist, many are scams. Check out mystery shopping, or other job offers, with the BBB at, or at the Mystery Shopping Providers Association at

2. The Grandparent Scam
In October, a Milwaukee grandmother lost $15,000 by wiring money to someone she thought was her grandson. She received a call and the voice on the other end of the phone said, “Grandma? It’s me.” She filled in the blanks for the scammer by saying the name of her grandson. The caller then told her that he was on a trip to Canada and was arrested for a passport violation. He needed her to wire money to get him out of jail.

BBB Advice: If you should receive a call from a relative in trouble, don’t panic. Take the time to confirm the information with another relative and always be wary when asked to wire money somewhere, especially to Canada.

3. Fly-by-Night Contractors
The Wisconsin BBB received numerous complaints regarding unethical contractors – some who would require cash up-front and then never return to complete the work. In July, an Abrams couple hired a blacktop contractor to pave the driveway on its farm. The contractor was offering a “deal” because he had leftover materials from a nearby job. The husband and the contractor had agreed to a $1,000 price, but when the husband left to tend to something on his farm, the contractor presented a bill to his wife for $8,700, which she paid. Unfortunately, the contractor was never heard from again.

BBB Advice: When hiring a contractor, never fall for the “I’m giving you a great deal because I have leftover materials” line. Instead, take the time to check the contractor out with the BBB, ask for and check references, get at least three different bids for the job, and ask to see if the contractor is properly licensed, bonded and insured.

4. Business Opportunity Scams
Unfortunately, with the downturn in the economy, many consumers are looking for business opportunities to make some extra cash. Earlier this year, many consumers paid thousands of dollars for the rights to distribute a new energy drink in their area. However, after they paid their deposit, they received few, if any, supplies and have been unable to contact the company since.

BBB Advice: Research all business opportunity offers before paying any money up-front by contacting the BBB, the state’s Department of Agriculture, Trade and Consumer Protection, and a financial advisor. If the business opportunity involves selling products from well-known companies, call the legal department of the company whose merchandise would be promoted. Find out whether the business opportunity and its promoter are affiliated with the company. Ask whether the company has ever threatened trademark action against the promoter.

5. Advanced Fee Loan Scams
Consumers across the country, including many from Wisconsin, lose thousands of dollars to scam loan offers. Here’s how the scam works: The consumer applies for a loan online. He is approved for the loan, and even receives official looking loan documents. However, he’s told that because of his poor credit history, he needs to make several monthly payments in advance. He often borrows money to make these payments, and then wires it – usually to Canada – but never receives his loan. Unfortunately, consumers often lose between $5,000 and $6,000.

BBB Advice: Do not use advanced fee lenders. If you are strapped for cash, don’t be tempted by offers of a “guaranteed” loan, regardless of your credit history. Advanced fee loans are illegal in Wisconsin and should be avoided.

6. Craigslist Scams
Although Craigslist, the free, online classified ad website, is a popular way to buy or sell something, scammers use it to defraud people of thousands of dollars every year. Here’s how a common scam works: A person places an ad on Craigslist to sell something – perhaps a used car. He receives a very good offer for the car, but the would-be buyer sends him a check for more than the agreed upon price. The buyer usually offers a plausible explanation for this error – a simple mistake, or extra money to be paid for shipping expenses, etc. The buyer asks the seller to wire the difference back to him, or to a third party (his accomplice). Unfortunately, the check is counterfeit and the seller is out the amount of the check – and sometimes even the merchandise he already shipped to the bogus buyer.

BBB Advice: Be very wary of buying or selling items on Craigslist. If you do, ask for a cashiers check, and wait until this check clears before withdrawing money or shipping the item. In addition, look out for someone who claims to be an online escrow agent that offers to hold your money until the transaction is complete. He/she might be part of the scam, too.

7. Infomercial Scams
In a classic ploy to win the hearts of gadget-loving consumers, the infomercial business promises much but delivers little. Often times, the shipping and handling charges far exceed the actual cost of the item. And, if you return the item, shipping and handling charges are never refunded. In 2008 alone, one Wisconsin company that specializes in infomercial product fulfillment received nearly seven hundred complaints – the most by any Wisconsin business. Deceptive advertising, incomplete disclosure, and faulty shipping procedures make up the majority of qualms regarding this business.

BBB Advice: Be very clear about what you are ordering, how much it costs, when you will receive it, and associated charges you can expect. If you order from an infomercial, keep detailed records of the transaction and use a credit card to secure the purchase.

8. Phishing Scams
The preferred venue of the con-artist, the internet offers a cyber world easily infiltrated by the less-than trustworthy. In a scam tailored to the BBB, scammers prompted unsuspecting consumers to register software, thus opening attachments or links and providing an opportunity for the phishing of personal information or the introduction of a virus. Another internet scam targeted those expecting packages from FedEx or UPS and duped consumers into revealing personal information.

BBB Advice: Be wary when opening attachments or accessing links, even if they appear to be from a trusted source. Verify via phone that the retailer sent the information before proceeding with the transaction, particularly if the sender is requesting financial or identifying information.

9. Debt Repair Scams
Offers for miraculous credit repair are common in radio, TV, newspaper, direct mail advertising and on the internet. Some of the schemes require consumers to pay large fees upfront – and in return may promise to erase any blemishes on credit records, get new Social Security numbers for clients or allow consumers to piggyback on someone else’s credit record.

BBB Advice: No one can legally remove accurate and timely negative information from a credit report. However, you can dispute something you believe is inaccurate, and you don’t have to pay a credit repair company to help. Go to to check your credit report, and get more information.

10. Mortgage Foreclosure Rescue Scams
Mortgage foreclosures in Wisconsin are on the rise – up 18 percent from August to September 2008, and up 13 percent from September 2007. And, since troubled properties are public record and easily accessible to the public, mortgage “rescue” scams are on the rise, too. These scams play out in one of two ways: the homeowner pays a large, upfront fee to the rescue company to work with his lender to renegotiate the mortgage, but the rescue company takes the money and is never seen again. Or, the rescue company takes advantage of the homeowner by buying the house below market value, and rents the property back to the homeowner at the same price (or higher) as the homeowner’s original mortgage. In either scenario, the homeowner has not only lost his house, but also loses the money he paid upfront – money which would have been better spent if he’d applied it to his mortgage.

BBB Advice: If you are in danger of foreclosure, approach your own lender for help first. Your lender would rather work with you than lose money by foreclosing on your home. Be wary of outside companies that contact you first. If you must contact a third party for help, use reputable companies that you have thoroughly checked out with the BBB first. Also, if a company tells you to stop paying your current mortgage because its rescue package is "about to come through," that should set off alarm bells. The company may be trying to put you even further behind so you feel you have no choice but to hire it. If you get to a big meeting and learn you are selling your home when you don't want to, walk away. You have no obligation. In fact, many states give you a couple days to cancel the sale even after you have signed the paperwork. Finally, watch for new, federally guaranteed loan modification offers, which may be legitimate offers to help you.


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