Foiling financial scam artists

You can hardly watch or read the news without hearing about the latest scam to separate folks from their hard-earned money. As criminals become increasingly more sophisticated, their schemes are more difficult to spot.

At the same time, people trying desperately to overcome financial hardships or to make a quick buck sometimes overlook red flags hinting that an offer is not quite right.

Here are a few precautions to avoid becoming the next victim:

Be skeptical. If it sounds too good to be true, it probably is. Beware of:

• Investments promising to double your money in six months or claiming to be risk-free (like so-called "pyramid schemes" where returns for ground-floor investors depend on later investors falling for the same ruse).
• The infamous "Nigerian banking scam," in which supposed foreign officials offer large rewards for helping them transfer money out of their country.
• Authentic-looking checks from sweepstakes you supposedly won. You'll be asked to deposit the check and send a portion to cover processing fees and taxes. By law you should never have to pay for any legitimate prize; furthermore, you're legally responsible for any lost funds if the check you deposit is bogus.
• When in doubt, consult a financial professional or the State Attorney General's office.

Identity theft. Each year, criminals steal billions of dollars by pretending to be someone else. By intercepting mail, going through trash or even peeking over someone's shoulder at the ATM, thieves use stolen Social Security numbers, credit card numbers or bank account passwords to borrow money, open new accounts or charge big-ticket items to unsuspecting victims.

At a minimum, victims spend many hours undoing the damage. At worst, identity theft can ruin your credit rating and leave you deeply in debt. Practical Money Skills for Life, a free personal financial management site sponsored by Visa Inc., contains detailed identity theft and security precautions you should take (www.practicalmoneyskills.com/learn/identity_theft).

"Phishing." In this 21st century version of identity theft, culprits go fishing ("phishing") for people's personal information by sending realistic-looking but fraudulent emails that seek confirmation of personal information such as account numbers, log-in IDs and passwords – supposedly for security purposes.

Online payment companies like eBay and PayPal, as well as conventional banks, are commonly targeted. Be aware that legitimate businesses will never ask you to verify sensitive information via email. The Security and Exchange Commission's Web site, www.sec.gov/investor/pubs/phishing.htm, discusses how to spot and avoid phishers.

College aid scams. Many criminals prey on desperate parents and students by promising to intercede with organizations offering scholarships and grants – for a fee, of course. Avoid companies that offer money-back guarantees, claim exclusive access to information or ask for money up front – and avoid high-pressure sales tactics. The Federal Trade Commission's guide to avoiding scholarship scams is found at www.consumer.ftc.gov/articles/0082-scholarship-and-financial-aid-scams.

Safeguard credit card information. Never give out your credit card number over the phone unless you initiated the call. And, when shopping online, only use "secure" Web sites – those whose address begins with "https://" instead of "http://" and that display a small "lock" icon in the lower right-hand corner of your browser.

Theere will always be scam artists looking to rip off unsuspecting victims. Your job is to not be one of them.