6 new credit scams to watch out for
by Mark Riddix, Investopedia.com
Monday, July 26, 2010 provided byforbes
In today's high tech digital age, you have to very careful about protecting your financial information. Criminals will go as far as taking legitimate financial services and turning them into corrupt money making scams. One of the best ways to protect your finances is by being aware of the latest financial schemes being perpetrated by con artists. Here are six new credit scams to be on the lookout for.
1. Skimming Scams
Swiping your debit card may be more convenient than using cash but it also carries a whole lot more risk. Identity thieves have become technologically advanced and are now planting skimming devices at gas stations, restaurants, retail stores and ATM machines. These skimming machines will inform thieves of your name and card number.
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Criminals can then use Bluetooth devices to wirelessly transmit all of your information back to their location. They then can use this information to amass huge amounts of fraudulent charges in your name.
2. Mortgage Rescue Scams
Mortgage rescue companies often promise that they can stop the sale of your home no matter how far behind you are on the payments. This is not always the truth. The mortgage rescue scam has become increasingly popular since the housing crisis of the last few years. The scam normally involves paying a company hundreds of dollars a month to prevent a foreclosure only to discover that the only thing the company did was cash your checks.
Mortgage rescue scams often involves convincing the homeowner to sign the deed away to their house. The rescue company then transfers your title into a trust and either rents it out or sells it to someone else. The worst part of the whole situation is that you could still be legally liable for the mortgage payments.
3. Credit Repair Scams
While there are many credit repair agencies that offer legitimate services that actually help people, there are just as many running scams that prey upon the credit-challenged. These companies often charge up-front fees costing you hundreds of dollars and promise to clean your credit up overnight. They claim to have inside knowledge that will help get things removed off your credit report or get a creditor to forgive your debt. The truth is that many of these companies promise a whole lot more than they can deliver.
4. Phishing Email Scams
Have you ever received an email from your bank that you need to verify your account information? Crooks often use emails like this to obtain your name, address, social security number, account numbers and any other personal information. They will even go as far as to set up fake websites that resemble those of your financial institution. Never send sensitive information via email or text and remember that banks never request any personal information about your account via email.
5. Credit Card Scams
Secured credit cards can be a good financial product for individuals looking to rebuild their credit. There are some secured credit cards however that are total rip-offs. Some companies offer secured cards with so many fees that there is virtually no credit left on the card once you receive it. There are activation fees, setup fees, monthly service fees and annual fees. That doesn't even include the ridiculous interest rate and fees to make payments online. Scams like these are supposed to help you rebuild your credit but actually end up destroying your credit.
6. Letter of Credit Fraud
The letter of credit fraud is a relatively new scheme that is propagated on businesses and investors. A letter of credit is a legitimate financial contract that ensures payment to a seller. It is not an investment, however. Today, scammers are offering fake letters of credit to investors as investment opportunities with exorbitantly high interest rates of "100-300%". Duped investors find out that these so called guaranteed letters of credit are often not even worth the paper that they are written on.
The Bottom Line
As you can clearly see, con artists are getting more creative with techniques to cheat you out of your money. They are trying everything from using new technology to falsifying documents. If you are not on the lookout for these new tricks than you just may find yourself falling prey to one.
