Thursday, October 23, 2014
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Crooks Use High-Tech Scams to Commit Fraud



One of the most common methods of identity theft is through stolen purses and wallets but, increasingly, crooks are using technology to commit fraud. Here are some of the most common scams and tips for guarding against them.

Skimming

How it works: Skimmers swipe your credit or debit card through a handheld device, or they install an overlay device—a slightly different color than the machine—on an ATM or gas pump. The device gleans information—your name, account number, expiration date, security features—off the magnetic stripe on the back of the card. The thief copies information from your card to a fraudulent one and sells it to a counterfeiter.

How to avoid it: Try not to let your card out of your sight when shopping or in a restaurant, and watch for devices on ATMs and gas pumps.

Pretexting

How it works: A criminal gets your personal information under false pretenses, such as by calling and posing as a survey firm, then sells it to people who may use it to get credit in your name, steal your assets, or investigate or sue you.

How to avoid it: Never give out your financial information via phone or email unless you initiated the contact.

Got Spam? Send it to the FTC

Unsolicited commercial email—also known as spam—is filling our inboxes. It's estimated that unsolicited junk mail accounts for more than nine out of every 10 email messages. If you get spam that you think is deceptive, forward it to spam@uce.gov. For tips on reducing the amount of spam you receive, go to ftc.gov/spam.

Opt out to prevent fraud

Visit the Direct Marketing Association to get your name and names of those in your care off mailing lists, telemarketing lists, and email lists. The site also offers information about preventing identity theft, avoiding sweepstakes scams, and being a smart catalog shopper.
Keep your firewall and virus-protection software up-to-date.

Phishing

How it works: Scammers send emails—often including the name and logo of a legitimate business or financial institution—luring victims to a "spoofed" or fake website where they're asked to enter personal information.

How to avoid it: Beware of emails that use a generic greeting (Dear Visa customer, or Dear friend) rather than your name, refer to an urgent problem, say that your account will be shut down unless you reconfirm billing or other personal information, or urge you to click on a link within an unsolicited message. Remember: A legitimate business or financial institution will never ask you to enter sensitive financial information via email.

Smishing

Smishing is phishing via SMS (short message service) and it's targeted at cell phone users who use text messaging.

How it works: You receive a text message along these lines: "We're confirming you've signed up for our dating service. You will be charged $2 a day unless you cancel your order." The message includes a Web link that routes you to the main phishing page, where you're prompted to download a program—a Trojan horse that turns your computer into a zombie controlled by hackers and used within a larger network to steal personal account information and perform other malicious activities.

How to avoid it: Be cautious about deregistering from a service when you're sure you didn't make a formal arrangement with the sender. Be as vigilant about security for your cell phone as you are for your computer. If you have children who have cell phones, warn them about this scam as well.

Fraudsters have long tried to talk people out of their money with hard-luck stories.

Vishing

How it works: You receive a phone call from an automated random dialer informing you that your credit card has been used illegally and asking you to call a fake 800 number, where you'll be asked to confirm your account details. Or you may receive an email asking you to call a toll-free number.

How to avoid it: If you get a call asking you to give personal information, hang up and call the financial institution that issued your card, using the number on the back of the card. Your provider will know if the call is legitimate. Delete any emails making similar requests, and never provide personal information in response to an email.

Pharming

How it works: When you type in an Internet address and hit enter, you're redirected to a fake Web site where you're asked to submit personal information.
  • A hacker may have hijacked the legitimate site and is redirecting all traffic.
  • Malware such as viruses and Trojans may be directing you to the site.
  • A minor misspelling of the domain name may trigger the redirection.
  • It may be DNS (domain name server) poisoning, which is most dangerous of all—a poisoned server is redirecting traffic. Basically, you enter a Web address into your browser, and poisoned servers send you to a website other than the one you requested.

How to avoid it: Keep your firewall and virus-protection software up-to-date. Also, look for "https" in the URL before entering sensitive information and for the closed padlock icon in your browser frame, separate from the vendor website window; these indicate secure sites.

A legitimate business or financial institution will never ask you to enter sensitive financial information via email.

Online payday loans

How it works: While all payday loans have certain features—such as loan- shark-high interest rates—in common, loans arranged online are even more troublesome than those applied for in person. The online loan applications ask for the personal and financial information anyone would need to steal your identity. And some online payday lenders lack secure Internet connections, so you could be broadcasting your personal information throughout cyberspace. You'd have to give the lender permission to access your checking account to withdraw fees and interest, which could result in overdraft fees from the lender and your financial institutions. Since lenders want you to renew or "flip" the loans, they often make it difficult to pay them off, and it's typically difficult to track the lender down.

How to avoid it: As Todd Mark, vice president of education for Consumer Credit Counseling Service of Greater Dallas, warns, "It's just plain and simple a bad idea to give a payday lender access to your account."

If you're thinking about a payday loan, call your credit union first. It likely offers low-cost, borrower-friendly alternatives.

Phony appeals

Fraudsters have long tried to talk people out of their money with hard-luck stories or too-good-to-be-true "opportunities of a lifetime." They used to do it face-to-face or by U.S. mail; now email is often the preferred channel. And the messages frequently come from the other side of the world, although that is seldom obvious.

The Nigerian letter scam is a common one. A message arrives claiming a reputable authority figure in an African nation needs help transferring millions of dollars to U.S. accounts, and offers a percentage if the recipient helps. But first the recipient must send an advance fee to cover the transaction costs, and often gets requests for other fees. The sender typically finds reasons to charge other fees until the recipient wises up. Then the sender disappears—with the money.

Crooks are using technology to commit fraud.

International con artists also often snare lovelorn Americans through online dating sites. After the American's interest is piqued, the online correspondent claims to have a sudden need for cash, often due to a personal tragedy.

Other common international-fraud scenarios include:

  • Inheritance scams promising a substantial legacy from a long-lost relative in exchange for payment of fees up front.
  • Employment scams offering a work permit for a highly paid job abroad in exchange for substantial advance fees. In some cases, applicants may be responding to ads posted online or targeted as a result of a résumé the applicant posted online.
  • Online auction scams involving overpayment for the purchase of an item offered online at an auction site such as eBay. After refunding the amount of the overpayment and perhaps even sending the item to the purchaser, the seller discovers that the international money order used for payment was fake.
  • Lottery scams use emails or letters to notify recipients that they've won the Spanish (or another country's) lottery, but must pay fees before collecting. Once they pay the fees, they discover that only Spanish residents who purchased the tickets in Spain may win.

To avoid foreign fraud:

  • Never send money to someone you don't know.
  • Don't believe you can get something for nothing.
  • Never expect to win a lottery if you didn't buy a ticket.
  • Remember: If it seems too good to be true, it probably is.


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