Lazy Man and Money

5 Tips for Not Getting Scammed Online

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It’s tax season and that means that you should expect me to write about tax scams. That would be too easy. Everyone else is writing about it anyway.

Instead I’d like to look at just a few online scams. It would be impossible to cover everything online in one article. One of the problems with some online scams is that they are advertised on the traditional and social media. I’ve been hearing a lot of Noxitril male enhancement ads, which reminds me of the old Enzyte marketing. I certainly won’t be giving them my money, but it seems like some people are or else they won’t be able to run the ads.

One of the reasons that there are so many scams online is that it’s easy to put something out there. I used to be able to put a website up in under 10 minutes on Amazon Web Services. It’s nearly impossible for law enforcement to crack down on all the scams out there. More computer tricks are being invented to scam online users their hard earned money. Potential fraudsters have a lot of tricks to try to get your personal information.

Here are my best tips to fight back against the fraudsters:

1. Be skeptical

As my long-time blogging friends at Money Crashers says

Conmen have dubious ways that make their scams appear sound and legitimate. I’m not sure how to help someone develop critical thinking skills, but you have use them whenever you come across anything online. There are many email offers that are phishing scams. People on social media can push MLM scams as well. There are fake testimonials and product reviews on many sites.

It’s hard to know what to trust, so your best defense is to be skeptical.

2. Protect Your Personal Information

As I wrote above, there’s a lot of different kind of online attacks out there. Fraudsters employ a variety of tricks to access your details and password. From that article, I learned there is a thing called “SMiShing” that’s like phishing with SMS messages.

While this isn’t an online attack, I often get calls from banks about certain things and they look for me to confirm my information by giving it to them. I always ask to call them back, so that I know it’s not a stranger on the other end pretending to be the bank. Sometimes I find it hard to remember to do this though.

And it should go without saying, but it should be very rarely necessary to give out your Social Security Number over the phone. In fact, I don’t think I’ve had a reason to do that. I’ve done it online a few times with some banks and medical institutions that I am confident aren’t scammers.

3. Beware of counterfeit checks

Most people don’t have this problem. However, we sell products online. Sometimes we find something really discounted at a T.J. Maxx or thrift shop and can get more by posting it on Craigslist or OfferUp. I’ve read that scammers send you a fake check with more money than the agreed amount. They will do it intentionally and request that you refund the extra amount. When you make such refunds, they ghost you.

4. Take time before making decisions

Never allow someone to rush you to make a buying decision. I always like to compare several products before deciding to buy. This is especially true if the product is is going to cost more than a few hundred dollars. You also need to be aware of “exploding offers”, which is a limited time deal that’s only good if you decide that day. If it’s good company, they’ll be confident enough in their product or service to know you’ll get back to them after you do the research.

Here are some more training materials on tips to avoid being scammed. It’s a great collection of videos, articles, and infographics. Also, it’s all free.

5. Always use written contracts

I’m toying with the idea of getting rid of my phone number. Seriously. I’ve been thinking of going full out Kramer in Seinfeld when he wants to opt out of receiving mail. I only like to talk on the phone with about three people and the number of robocalls makes about 90% of calls to me useless.

Sorry, I went off on a tangent there. What I meant to write is that you should be sure to get everything in writing. When someone offers me a deal on the phone, I ask them to mail it to my house. If it’s a scam, that sometimes is enough to end the call. Once you have everything in writing, it’s important to read all the fine print. I know that few people do (and I’m one of them). This is one of those times you have to balance being skeptical with the offer itself.

Final Thoughts

I know I gave a lot of “homework” in reading other resources in this article. It might seem like protecting yourself is difficult. However, most of this stuff is something that you learn once and you have it forever. The scammers are usually going to try to target the people who aren’t going to take the time to learn the basics in the first place. It’s not worth their time to try to get someone who is knowledgeable, so they’ll likely move onto their next “mark.”

* The thoughts expressed in this article are my opinions only. I make no suggestion that any particular company or product is a scam or fraudulent. However, it is important to note that such expressions are legally protected opinions as court judges have previously cited my article about what a scam is.

So Claw Machines are a Confirmed Scam?

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It’s been awhile since I’ve written a good article on scams. I used to cover MLM scams all the time, but since now everyone does it, it doesn’t seem like I need to any more. However, I recently read about claw machines being a scam and figured that I need to write about it.

We’ve all been there. Or maybe you’ve just been smart enough to avoid the claw machines in the first place.

Claw Machine Scam
Claw Machine: Sure, smile while I scam you out of your money!

I can’t remember ever really playing with one… until recently. When you have a 4 and 5 year old, a fun game to get an awesome toy is a great idea. I give them each one shot at the local arcade and they oh so close every time.

I figured that the claws were rigged to never work. I’ve never seen anyone win. At least I’ve seen people win at carnivals.

What I never knew is that the claw machines are rigged, but they DO work a small fraction of the time. What appears to be a game of skill is actually essentially a slot machine that relies totally on the luck of machine picking you as the winner.

Don’t believe me? Watch the video:



Or if you don’t happen to be a good place to watch a video, you can read the Vox article Claw machines are rigged — here’s why it’s so hard to grab that stuffed animal.

If you are too lazy to do either, I’ll give my short version of the story. Claw machines can by programmed by the operator to throttle the number of times that the claw has any actual gripping strength. There are things like “drop percentages” backed into the machines. So essentially the machine owner can set whatever profit level they want by using the price of the toy, the cost per play, and the percentage of having the claw work properly.

Of course, when Vox reported that these document were available online, BMI Gaming took them down.

I’m curious how this is legal. It seems little different than just a slot machine. Maybe you don’t get money directly, but you get something of value. At least the slot machine doesn’t deceive people into thinking it is a game of skill… it’s pretty obvious that it’s a game of luck, right?

Finally, this scam is often played on children. That’s pretty low. So little Johnny or Jill start a lemonade stand to make a few dollars and then get tricked out of it by a grocery store or restaurant owner? It’s almost literally taking candy from a baby.

Am I making too much of this? Let me know in the comments.

Looking for further reading? Kotaku had a detailed this back in 2012. There’s also some good news as some game companies promised not to rig them any more.

Beware: Supremo Call Center Scam

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Yesterday I got a call from a scammer saying that my computer was infected with a virus. If anyone ever calls you saying such a thing, it’s a scam 99.99% of the time. I’d say 100% of the time, but it might be a call from your workplace IT. The rest of the time, the person on the phone will try to get you to download some software that will give them control of your computer.

Ars Technica outlines the scam here. Another blogger details his call.

Note: Supremo itself is a legitimate company with legitimate software for good and useful purposes. However, it seems that if a computer operator gives permission to a nefarious third party, they do some really bad things. It’s a little like how a hammer can be used as a tool to help build a home, or a weapon to inflict damage. This isn’t a criticism of Supremo, but the only way to describe the scam is through the software.

I kept the scammers on the line for awhile playing dumb. This is the only way I can think to really “harm” these scammers. A minute that they are on the phone with you is a minute they aren’t defrauding someone else. It’s really easy to keep them on the phone by asking them repeat stuff. You can even do it while you are doing some other activity.

Eventually, I let them talk me into entering “www.supremo.com” into the search bar (which for Firefox is a separate bar that initiates a search). They asked what I saw and I went with the Ars Technica result that explained that call centers are scamming people.

They hung up as soon as I mentioned that.

Look Out for (and Avoid) Tax Scams

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I was planning on writing this article a couple of months ago, but I got busy (yes that Le-vel thing again.) Fortunately, my wife got a phone call that reminded me to write this. I didn’t hear the call, but she quickly hung up and said, “Some kind of tax scam” when I asked who it was.

There’s a lot of tax fraud out there. The IRS lists a “Dirty Dozen tax scams”.

I’ll give you a minute to click and review the list.

For those who didn’t take the time here are a couple of common ones. There’s identity theft where someone else uses your identity to claim a refund. This is probably the biggest tax scam out there.

Second on the list was the phone call that my wife was referring to.

New scams are always creeping up on the IRS radar. For example the IRS warns people of this one. In short:

“Typically, con artists falsely claim that refunds are available even if the victim went to school decades ago. In many cases, scammers are targeting seniors, people with very low incomes and members of church congregations with bogus promises of free money.”

I think there are two main defenses you can use to protect yourself against this fraud. First, it is helpful to grow that critical thinking muscle in your head. Yes the brain. If it sounds too good to be true, it probably is. If someone is calling you up on the phone to offer you something, and you don’t know them, it’s probably not a good idea. (Incidentally, these are also the kinds of things that can help you avoid many MLM/pyramid scheme scams.)

The second thing you can do is file your taxes sooner. If you get your taxes done quickly, it gives someone less time to steal your identity and beat you to the punch. Unfortunately, this advice comes too late this for this year’s taxes. The best way to get them done quickly? In my opinion, TurboTax is the way to go for most people.

Is Donating My Car a Scam?

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Happy Consumer Protection Friday. (If I keep writing it perhaps others will join in and make it a real thing.)

Typically, I cover MLM scams because I find it interesting how they confuse victims into thinking they are legitimate business opportunities. This week I’m switching it up. I’m going to look into car donation charities. You’ve probably heard those annoying, earworm, jingles sung by kids on the radio (yes Kars4Kids I’m looking at you… and please make an attempt to learn to spell).

Are they good charities or should you put your money elsewhere? Let’s find out.

To start, I should mention that I normally wouldn’t have thought about car donation companies being scams. I’ve gotten rid of one car in the last 15+ years and it was a sale as a private party. I don’t remember how I moved the cars before that.

Car donation scams cross my radar when this LA Times headline piqued my interest: California Atty. Gen. Kamala Harris sues to shut down 2 car donation charities.

It’s not very often that I hear about Attorneys General suing companies. It is less often that those companies are charities. The article was full of information that I didn’t know. This was perhaps the gem: “…car donation organizations give a much smaller portion of the donations they receive to charity than similar sorts of fundraising campaigns, spending nearly two-thirds on salaries for their own employees and other administrative costs.”

So if you donate a car worth $9,000, you are really only giving $3,000 to the people who need it.

Is that really a scam? I say that a scam is in the eye of the beholder and my opinion of a scam is not necessarily going to be yours. That said my opinion allows for a very broad definition.

These car charities definitely fit my opinion of a scam. Why? Simply because it isn’t what a consumer (or in this case the charity gifter) would expect. It feels to me that the organization exists to create well-paying jobs for the people who work at the organization… and maybe give away some money to help others in need in order to sleep well at night. Aside from the salaries at the charity, there are also high advertising costs (the radio airtime on those jingles isn’t free) to bring in the money for the jobs and the recipients of the charity. Finally, I presume that the cars often need to be fixed up before being passed on to the recipient.

So then I went to look for more articles. I found this one on Kars 4 Kids, which said:

“According to [Doug White, professor at Columbia University], many car-donation-based charities that operate under this simple model ‘hoodwink’ the public, losing a large portion of the money raised from the sale to the middlemen who recycle the car or sell it on behalf of the charity. Kars 4 Kids is one of the few that does most of the work in house and thus avoids many of these losses.”

I’d definitely call “hookwink” the same as “scam”, wouldn’t you? However, it at least sounds like Kars for Kids might be a good charity because it doesn’t use the middleman, right?

Not so fast.

NBC’s New York affiliate found:

“Financial statements for two nonprofits associated with Kars 4 Kids show the charity lost more than $5 million on real estate investments in 2010. In the same time frame, Kars 4 Kids spent about $6 million on programs for children.”

That makes it sound like it’s “Kars 4 Real Estate Investments” doesn’t it? There’s also this:

“In 2009, attorneys general in Pennsylvania and Oregon forced Oorah to pay $130,000 in fines for failing to disclose the religious purpose in ads.”

You didn’t realize that Kars 4 Kids (which gives its money to Oorah and Joy of Our Youth) is a religious organization. I didn’t either. It’s fine to donate to religious organizations, but maybe people would donate to a religion of their own faith… if the jingle actually disclosed it.

Fortunately, it looks like I’m not the only one to cover this. It seems like BankRate has a consumer warning. About.com is very blunt: “The ads that you see everywhere that offer to help you make a car donation to charity are almost always rip-offs.”

So how do you avoid these car donation scams? I’d personally just avoid donating cars and money to them. If you have a car that is working condition, perhaps you can sell it for cash. Then donate the cash to a reputable charity that you’ve researched and vetted. This way, you know where your money is going.

P.S.

Years ago I created a car site with a friend’s help. I had forgotten about it until this article. It turns out that How to Donate a Car is one of the most popular articles. Now I have to go back and see if the author I hired was accurate.

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