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Beware of the Grifter: The Anatomy of a Scam

As we continue to see high rates of unemployment, foreclosures, and bankruptcies; a lot of people that are in financial restraints fall victim to these types of scams. Unfortunately, once you fall prey to this there's really nothing anyone can do. Here are some tips to protect yourself.
Ash Exantus (Ash Cash)
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Personal Finance Expert

Personal Finance Expert
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I recently received an email from a young lady asking me what recourse can she take if she believes she was scammed. She received a letter stating that she had won a foreign sweepstakes for a million dollars, accompanied with a check made payable to her for $4,000. The letter stated that before she could get the prize money she would have to deposit the check in her bank account and wire the $4,000 to cover the taxes. She did just that and now she has yet to receive her prize money, the bank has returned the check, closed her account, and reported her to collections.

As we continue to see high rates of unemployment, foreclosures, and bankruptcies; a lot of people that are in financial restraints fall victim to these types of scams. One moment you are wondering where your next meal is coming from, the next moment you receive a letter that will almost fix your problems instantly. Unfortunately, once you fall prey to this there's really nothing anyone can do. You are 100 percent responsible for everything that is deposited or withdrawn from your account unless it is a bank error. In my 11 years in banking, I can't begin to tell you how many unsuspecting people fall victim to this. The reason this scam is so successful is because it relies heavily on your emotion to get out of your situation. Even though it sounds too good to be true, the possibility seems worth the shot. Well you know the saying..."If it sounds too good to be true, then it probably is." So here's how this scam works:

  1. The Scammer obtains your personal information There are many ways scammers get your personal information. It could be from something you signed up for online, a sweepstakes, survey, mail that's improperly disposed, newspaper clippings, or magazine subscriptions.

  • The scammer sends you an email or letter Through today's technology scammers are able to create websites, emails and letters that look like they are coming from legitimate sources. They send this fake correspondence stating that you are the grand prize winner of a sweepstakes or lottery and give you instructions on how to claim the prize.

  • The scammer requires you to send them money You would've either received a check in the original letter or you are sent one via mail after the scammer contacts you. Either way they will be requiring you to deposit a check into your bank account and once the check clears they will need you to withdraw and wire the funds to someone via western union or money gram in a foreign country. This should be a dead give away that it is a scam but again most people are making this decision based on emotion.

  • Your bank returns the check and charges your account The scammers know that if you deposit a check in the bank by law it must clear within 1-7 business days depending on where the check is drawn from. The check that the scammer gives you is drawn off someone else's REAL account but they're betting that by the time the REAL owner realizes that their account has been compromised that you would've already sent them the money (which is virtually untraceable via Western Union or Money Gram). The REAL owner contacts his/her bank to inform them of this fraudulent check and in turn their bank contacts yours, your bank returns the check as fraudulent and because you sent the money via wire transfer already your account is now in a negative.

  • Your bank reports you to Chexsystems & Collections With a negative in your account and no way to pay it back your bank closes your account and reports you to **ChexSystems (**Chexsystems is reporting agency that banks use in deciding whether to open a new account for a consumer. The report contains banking irregularities such as check overdrafts, unsatisfied balances, depositing fraudulent checks, or suspicious account handling that other banks have reported in the past five years). With this record in Chexsystems you would not be able to open another bank account anywhere else until you pay off the balance. You are also reported to a collection agency that will attempt to collect the funds but will report you to the three credit bureau's (Transunion, Equifax, Experian).

    • Obviously all of these issues are a big inconvenience and can add stress to anyone already going through hard times. As a general rule of thumb, if you did not buy a lottery ticket or sign up for a sweepstakes then you did not win! No matter how tempting it may sound you must understand that in order to win a game you actually have to have played and if you're going to use the excuse... "maybe I forgot," then you must think you were born yesterday! You know that if you entered a sweepstakes for $1,000,000 or $1, you would not forget. Don't let your circumstance allow you to become vulnerable and naive to the scammers out there who are waiting to take advantage of you. This goes for all types of scams! If your name is attached to it then the chances are that there are going to be some type of ramifications to you personally. Nothing + Nothing = Nothing! There isn't any replacement for old fashion hard work. If you want something in life then you have to put in the work. Nothing in life is free.

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