Five Scams to Avoid in the New Year

Computer next to a pile of moneyIt's an unfortunate fact of life – when unemployment looms large, so do the number of scam artists looking to make a quick buck. That's why, despite headlines that predict a good year for jobs in 2011, it's time to remind yourself that folks will be looking to prey upon your naïveté and kindness -- quite possibly with the following five ploys.

Money for College
Student loan debt now exceeds outstanding credit card debt, according to CNBC. So it's no wonder the FTC says scams that purport to be able to find you free money for college are raging. Just say no to any deal that asks you to pay money – up front – for a list of scholarships you might qualify for (even if you're offered a money-back guarantee.)

Be wary of any pitch that indicates the availability of exclusive information. And if you're told that you've been selected as a finalist for a scholarship -- particularly for a contest you don't remember entering, but also for any that now requires an application fee to continue through the process -- run in the other direction. Instead, check with your high school guidance counselor for legitimate scholarship offers. also as a good free scholarship search engine on its website.

Love and Other Drugs
This scam goes something like this. You meet a man -- probably cute -- on an online dating site, exchange some witty repartee, then the new love-of-your-life lets on that he's actually in some foreign country, has lost his passport, platinum plastic and all other means of funding his way back to you. If you could wire him some quick dough (of course he'll pay you back once he's across the pond) he won't just love you tomorrow, he'll love you forever, blah, blah, blah.Watch out, says the FTC, for any Lothario who wants to get you out of the safety of the dating site and onto your personal email or IM, who was planning to visit you but then can't because of some tragic (read: costly) event, who needs your financial help to get back on his feet, or who claims to love you much, much too quickly. And note: Do not wire money. It's not like a credit card where you have the backing of a big corporation. It's like cash. Once you do it, it's gone.

Friends With Lucrative Benefits
Bernie Madoff was only the tip of the fraud-related iceberg. The Justice Department announced last month it brought criminal and civil cases against more than 500 people for fraud schemes that tallied losses of more than $10 billion. Ouch.

What you want to watch out for is what the authorities now call an affinity scam. Someone you know -- perhaps from church or temple, perhaps from your club or development, perhaps through a friend -- has an investment that you have the ability to get in on because you happen to know the right people. It's very complicated to explain, naturally, and difficult to research, but you -- you lucky dog you -- you can get in if you act quickly. What we now know is any investment requires due diligence -- you want to know who is managing the money, what is that person's track record, what institutional funds are in there with you? And if you truly can't resist, don't put any more than 5% of your nest egg at risk.

SMiShing is the New Phishing
You've heard of phishing no doubt. That's when someone pretending to be your bank sends you a realistic looking email asking for your personal or banking information. You reply and send it and you've put your top secret details into the wrong hands.

Well now we have SMiShing (and its cousin Vishing) which are the same scam but perpetrated over SMS messages or Voice over Internet Protocol. The scammers pose as your bank, leave you a message or text where they claim our credit card or banking data has been compromised and ask you to call back to get details. When you call back you're asked for your bank account number or SSN or PIN and you're cooked.

Here's the rub: Never email or call your bank following a trail on an email or otherwise. Instead, always call the toll-free number on the back of your ATM card or sign into the secure server where you bank online and email customer service directly.

Unemployment Scams
Finally, with unemployment still nuzzling 10%, scams that promise to get you a job or find you a work-from-home opportunity (for a price) of course, are to be avoided. Avoid anything that promises to get you a job, that asks you for money to find you a job, that promises you a list of government jobs no one else has (all government jobs are posted at, or that advertises using the words "work from home." No one is going to pay you to stuff envelopes in your pajamas. No one.
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