Filed under: Lynnette Khalfani-Cox, Money
A tragic financial story involving an elderly widow recently had a lot of people shaking their heads -- yet it had all the red flags and signs of a financial scam.
It turns out the woman, a senior citizen named Mary Kubalak of Pembroke Pines, Florida, sent $370,000 to a con artist in Jamaica who lured her with promises that she'd won the lottery, but needed to pay certain fees in order to collect a supposed $7 million lottery jackpot.
Unfortunately, this unsuspecting retiree isn't alone in falling victim to such scams.
At a single agency in West Palm Beach, Florida, officials at the Aging Resource Center say they're processing 400 new cases of financial fraud like this every month -- all of which are some variation of the Jamaican lottery scam.
From credit-related scams and bogus work-from-home schemes to dubious scholarship programs and shady investment offers, there are dozens of financial scams that could all take their toll on your pocketbook - and peace of mind. At their worst, major con jobs - like foreclosure rescue scams - can even cause you to lose a major asset, like your house.
Many common financial scams are cleverly disguised as special offers or infomercials, but many are also easy to detect when you know what red flags and warnings signs to look out for.
Unfortunately, many people fall for these types of financial scams when they are already in a vulnerable position. Losing a job, maxing out credit cards or finding yourself in need of fast cash could make you a good target for a costly financial scam.
Here are some of the most common red flags of financial scams and fraud:
Upfront Fees for Services
Many credit repair companies and even scholarship providers require customers to pay a hefty fee to take advantage of the services available. Sometimes these are posed as "membership" fees that provide you with exclusive access to their resources, while others are just standard fees for service. If you have to pay any type of fee in order to receive services, you could be signing up for a bona fide scam.
Misleading "Pre-Approval" Claims
These are among the most common financial scams because many people who need cash fast are ready to sign up for that "you've been approved for $X!" offer. Pre-approval offers from credit card companies and loan providers can seem innocent enough, until you call the number or submit the application and find out you are actually eligible for a very high-interest rate and a much smaller line of credit than advertised. Many legitimate companies do use low-rate teasers to attract new customers, but many are very misleading. Be very careful about what types of offers you sign up for and submit your personal information, such as a Social Security number and income history to.
Guaranteed Results!
Companies trying to earn your trust and confidence may promise guaranteed results within a certain time period or an incredible money-back-guarantee offer. Be wary of these types of offers because many are, unfortunately, a scam. Companies know that many people feel more confident when they are purchasing something backed by a guarantee, and a lot of people simply don't follow up to voice a complaint and get their money back.
In some cases, the money back process is so complicated that it's not even worth your time to get a refund. Honest businesses don't need to offer such extreme guarantees on services and products. They should be able to provide solid testimonials from happy customers and have a clean track record.
Negative Reviews Online
Whenever you come across a company announcing an outrageous offer that seems incredibly irresistible, do a quick online search to see if they have been reported to sites like RipOffReport.com or even the Better Business Bureau. Many of today's savvy consumers are posting reviews and experiences with these companies online, and you can learn more about the company's history and track record with a few minutes of Internet searching.
Take some time to do a quick "background check" on the company or deal to see if it's actually a scam.
Above all, use your gut instincts. Don't be rushed into any so-called "limited time offer" deal, and don't sign anything if it sounds too good to be true.