If It Looks Too Good to Be True ... Recognizing and Preventing Mail Fraud

by Judy Dahl

The scams range from phony invoices for work never performed, to notifications about fake foreign lottery winnings. They snare victims of all ages, from all walks of life.

Unfortunately, if victims don't recognize a scam until their life savings are in fraudsters' hands, they rarely recover their money. Prevention is the key to eliminating mail fraud, and protection begins with awareness of the latest scams.

The environment

U.S. Postal Inspection Service, the federal law enforcement agency mandated to enforce the U.S. Mail Fraud Statute. It's the oldest federal consumer protection statute, instituted in 1872.

Today's criminals use sophisticated channels to perpetrate mail fraud. "We're seeing increased uses of technology—the Internet, voice-over-Internet protocol (VoIP), prepaid cell phones, and wire transfers," notes Backus. "It's created a borderless world where criminals can hide in foreign countries and target American consumers.

"In the past, the majority of fraud schemes were conducted domestically, which made it much easier to catch the criminals," she continues. "In our global society, international criminals create more challenges for law enforcement and, as a result, we're actively involved with foreign law enforcement in several countries, working together to protect consumers."

Still, says Steve Cox, vice president of communications for the Council of Better Business Bureaus, "Although the delivery mechanism has changed, the basic schemes haven't. Before the Internet, criminals contacted consumers by phone or mail, or even door-to-door. Many Internet scams qualify as mail fraud, because any payment or shipment of goods usually happens by mail."

The threats

Cox says the top three types of consumer mail fraud are: financial fraud; lotteries, auctions and sweepstakes; and employment.

Financial: This type of fraud includes identity theft, advance-fee loan schemes in which you pay a "broker" to find you a fantastic loan deal that never materializes, and investment fraud. "And as the housing market cools, the issue of foreclosure fraud is rising," says Cox.

"In markets that were very hot a few years ago, some folks got into adjustable-rate mortgages that they're having trouble paying now," he explains. "Illicit brokers will offer to buy the house for the remaining value of the homeowner's loan—which ignores the owner's equity in the home and the true market value—and then will sell it to someone else for much more. It's almost like stealing the owner's equity."

Sweepstakes, lotteries, auctions: This is the "something for nothing" category. "You might receive notice that you've won a foreign lottery, and that you need to send money to cover something like handling fees before receiving your prize, which of course never comes," says Cox. "With auctions, I advertise a product, you send money, and the product isn't what you expected or doesn't arrive at all." Most victims of these scams are elderly (age 65-plus), according to the reports his organization receives.

Employment: The most well-known employment scam is the "work-at-home" scheme. In response to an ad, a consumer sends money for information about starting a home business like stuffing envelopes. Instead of a plan, information on duping others similarly arrives, or nothing arrives. "Or there's the 'advance-fee' scheme. I offer to have you test or review products. You send handling fees up front, and I either don't send the products or don't pay for your review," says Cox. "Folks falling for these schemes are generally ages 25-44."

If you're a business owner, your business also may be targeted. "The phony invoice is the No. 1 scheme," says Cox. "A scammer calls under some other guise—like a salesman doing a pitch—to gather information about the business. An invoice shows up for a reasonable dollar amount, and the business often pays it without checking into it."

The No. 2 scam involves unsolicited office supplies. Fraudsters send poor-quality office supplies that a business typically might use, along with an invoice, which usually includes an actual purchasing agent's name. The No. 3 scam is an advance-fee loan scheme similar to the ones targeting consumers.

Protecting yourself

"Consumers' good judgment is the last line of defense against con artists," says Backus. "Be very skeptical of anything that sounds 'too good to be true.' " If you receive a suspicious solicitation, she advises, "first, check out the firm or organization making the offer or seek advice based on the type of offer being made. Often the company has no track record of complaints, but the scam may be very familiar to watchdog consumer protection agencies."

Cox offers these tips for reporting suspected fraud to the U.S. Postal Inspection Service and your local Better Business Bureau:

1. On the envelope in which the phony invoice or solicitation arrived, note the date received and sign your name. Be sure to keep all of the solicitation materials with the envelope in which you received them.
2. Complete a Mail Fraud Report, available at any local post office, or online.
3. Send the Mail Fraud Report and copies of any bills, receipts, advertisements, canceled checks (front and back), and related documents to:
   
   Inspection Service Support Group
   222 S. Riverside Plaza, Suite 1250
   Chicago, IL 60606-6100
   
   Keep the originals for your records. Also send copies to your local Better Business Bureau.

Useful resources

The U.S. Postal Inspection Service: The federal law enforcement agency mandated to enforce the U.S. Mail Fraud Statute.

The Council of Better Business Bureaus: The umbrella organization that oversees the administration and support of the 130 Better Business Bureaus across North America.

Consumer Sentinel: See how law enforcement agencies all over the world work together to fight fraud using Consumer Sentinel, an innovative, international law enforcement fraud-fighting program.

Looks Too Good to Be True.com: A joint law enforcement/industry Web site developed to provide educational and prevention information.

The Federal Trade Commission: The home of the Bureau of Consumer Protection, which protects consumers against unfair, deceptive, or fraudulent practices.

Mail fraud complaint form: Report mail fraud online

Published October 2, 2006