Personal Finance

Scams During Tough Economic Times

During tough economic times, you might hope that scammers would lay low.  Since people are having hard times, they might have a more suspicious attitude (and scammers would do something worthwhile with their time).  Sadly, the scam artists are hurting just like the rest of us and hustling to take advantage of the desperation of others.

Advance Fee Fraud

One scam that is popular during tough times is the advance fee fraud (which we’ve touched on before).  After trying to get a loan, maybe you have the “good fortune” to run into someone who has the inside track on getting all the cash you might need (and at a very attractive interest rate no less).  The details can be whatever convoluted story the scammer dreams up, but the end result is that the loan is yours if you just pay a small “application fee” or “service charge”.  This small fee is all the scammer is after, and once he’s got it, he’s gone (along with the imaginary  loan).

The famous Nigerian Bank Scam is a variant on this. Instead of a loan, a portion of a fortune is yours for the taking, just say that you’ll accept!  Without fail, a string of “roadblocks” will crop up, each requiring you to send a “relatively minor” sum of money.  They will string you along as far as possible, bleeding you dry (and trying to get you to embezzle money “temporarily” from any other sources of funds you have access to).

It’s definitely not something you want to try at home, but and 419 Eater have hilarious records of exchanges where they respond to Nigerian scammers and mess with them (the ULTIMATE is when they convince the scammer to send embarrassing pictures, or to send the “victim” money first, an advance fee for the advance fee if you will).

I loved a blogger’s reaction piece (unfortunately I’ve lost the link) when a scammer called him up offering him free grant money from the government.  He just had to pay them a $50 processing fee.  He tried the obvious and said, “Ok, take the $50 out of my free money” and the woman said they couldn’t do that.  He said he wasn’t interested then, and she kept pestering him why he “didn’t want free money?”  He had to tell her forcefully that it’s not free money if he has to pay for it.  There are a large number of posts detailing that there is no free money for the taking (not even stimulus money) and the books and CDs promising to tell you how to quickly and easily get it are scams.

Employment Scams

Also related to advance fee fraud, an employment scam preys on someone’s desperation to find work.  The service posts in a variety of places (newspaper classifieds, on-line job boards, etc) that they’ll help you find a job, guaranteed or your money back!!!  You go for a meeting, and the “recruiter” spends his time chatting you up and convincing you to write him a big check for the services he’s about to provide.  You’ll be told that there’s no effort on your part, just pay the money, they’ll do all the work, and you’ll have a high paying new career in the near future.  Nothing happens (of course), and they keep stalling you.  Eventually you get angry and their tune changes (NOW they say all that they offered was resume advice and career coaching, and it’s far too late to take advantage of their money back guarantee).

I actually encountered this years ago.  I was job hunting, came across a job that looked like a fit and had an appointment scheduled.  The day of the interview, I was reading up on the company ahead of time, and almost immediate found a string of complaints that had been posted that they don’t actually offer jobs, just try to talk you into paying them money for worthless services.  I called to cancel the interview, and when the woman asked why, I told her I’d done a Google search on their company and after reading about them I didn’t want to have anything to do with them.  She started saying that I couldn’t believe everything I read on the Internet, at which point I politely got off the phone with her.

A host of similar scams prey on job hunter anxiety, like resume services.  They offer a free “proof reading” of your resume, which will result in their identifying “major problems”, and selling you a brand new resume (that they’ve just plugged your information into their standard template, something that will be obvious to the hiring manager or HR department).

At the end of the day, as rough as it is job hunting, you have to do the legwork yourself.  There’s no “hidden job market” you can buy your way into.  While it’s certainly worth getting help with your resume, talking to friends who are good writers, reading resume advice online, going to an Ontario Employment Center, or going to a university’s career services (often they’re happy to help non-students) would be far more effective (in addition to being free).

Have you encountered any scams recently trying to take advantage of people’s desperation in the current economy?

15 replies on “Scams During Tough Economic Times”

It wasn’t recent but a friend of mine got sucked into a “modeling” scam. He was walking along the street when he was “discovered” by an agent. All he had to do was pay a fee to assemble a portfolio and they would be able to find him modeling jobs.

It’s a great scam since it also plays to the vanity as well as the greed.

I think the basic portfolio was $30 but of course they try to upsell you all the way.

I got scammed back in college with a pyramid type MLM business that is all over TV today promoting their “opportunity” and saying that they’re an $8 billion company. I lost thousands of dollars attending their seminars, listening to their get-rich-quick con-men, buying their motivational books at full retail, and buying their motivational cassette tapes for $5 each. I recently threw out at least 1,000 of them.

I can’t tell you the relief I felt when I finally told my “upline” to shove it!

A friend of mine almost also fell into the modeling trap, but I decided to go with her to see this agent and it wasnt hard to tell that he was no photographer or agent but just a scam artist. He went to get some sample portfolios and its been couple of months we are still waiting on them 🙂

people trying to downsize by selling a vehicle may be inundated with calls from companies (usually not even in your area code) saying they have a preapproved buyer willing to pay the asking price. just send a fee (usually a couple hundred) and the sale is done.

of course, once you do, the ‘deal’ falls through and they keep the money. when i had a car for sale, i received at least 6 of these calls.

Mr. Cheap, I never bother to debate with them. Usually I say “I’ve heard of this scam before.” and hang up. I’ve wanted to launch in to a tirade, something along the likes of “Do you tell your parents/kids that you fleece people over the phone for a living? How do you sleep at night?”

The callers usually have an accent and judging by the area codes, are calling from all areas of the continent. Tennessee, Kansas, etc.

Just after I graduated and while I was looking for my first “real job” I got scammed for $2000 by a sleazy “resume services” company called Allen and Associates.

I’m still furious about it 9 years later! (actually equally angry at my own gullibility as at their sleaziness)

The recruiter scams are huge, some charging thousands of dollars for access to their “private lists” of employers supposedly dying for someone with your skill set. Any time you have to pay a headhunter or recruiting services company an upfront fee, it’s almost always a scam. Go for the HRSDC sponsored programs (many are actually worthwhile even for those currently employed) and stay away from the private firms unless they are recommended to you by a trusted friend.

The other headhunting scam is where the agency sets you up with a few interviews but you don’t get the jobs for whatever reason. They then ask if you want to work for half as much as a temp position instead, thinking you’ll be demoralized and desperate and take the low paying job.

I have also had the vehicle ‘guaranteed sale’ offer. I took them up on the offer but had the fee put on my AMEX. When the inevitable backing out of the ‘guaranteed sale’ happened, AMEX happily reversed the fraudulent charge. These fraudsters actually had the nerve to call again and offer their service again after I had pulled the payment.

Just out of curiosity, did any of you posting here about being scammed in the past do anything about it? For example, badger the company to get a refund, call the police, write an article in the local paper…

The idea being to save others from the same fate, obviously.

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