Desperate consumers more vulnerable to scams

Scammers are always lurking around every corner. But now they've got a much bigger reason to try to dupe you: the economy. Scam artists are well aware that during difficult economic times, many consumers are more likely to fall prey to them.

Why? Because people feel desperate. They're often willing to take a chance on anything that might get them in a better financial position, even if they really can't afford to do so. What's another $500 or $1,000 or $6,000 on top of their already heavy financial burden? To many consumers, it makes sense to risk that much because they're already so bad off.

The National Consumers League says they received over 15,000 fraud complaints last year, with more than one-third reporting an actual financial loss that averaged over $2,300. The number of people being swindled and the cost to them has risen since 2007.
The most common scams you might run into are fake notifications that you've won a lottery, a request to cash a check for someone, or a too-good-to-be-true business opportunity. Multi-level marketing (MLM) opportunists are making an even bigger push to get consumers sucked into their recruiting pyramids when money is tight. They promote themselves as the "answer" to financial troubles because the participants can theortically control how much they earn.

While an MLM might sound like a good way to make some extra money and potentially become wealthy, studies have shown that over 99% of consumers actually lose money in these ventures. Not good odds if you're desperately in need of money. You'd be better off getting a part-time gig flipping burgers, working retail, or waiting tables. At least you'd be assured of making money, rather than just spending more on a losing proposition with an MLM.

Be extra skeptical of any opportunity offering quick money or some kind of unreasonable guarantee. Before you sign up for anything, do thorough research on the Internet and with professionals you trust. If you have any inkling that things might not be all they're cracked up to be, go with your gut and run quickly in the other direction. Better to be safe than sorry when every penny counts.

Forensic accountant Tracy Coenen investigates corporate fraud and consumer scams, and is the author of Expert Fraud Investigation and Essentials of Corporate Fraud.
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