12 Top Scams Affecting Your Pocketbook

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It seems like there's always a new scam making the rounds, and even those who are savvy can fall for them. Here are 12 of the latest scams that you should watch out for -- including phone scams, online scams, investment scams and others -- and how you can protect yourself.

1. Identity Theft Scam

Hui-chin Chen, a financial planner at Pavlov Financial Planning in Arlington, Virginia, told a harrowing tale of a colleague's client who had his email account hacked. The hacker contacted the financial planner and requested an emergency withdrawal into a new bank account. Fortunately, since it was a new bank account, the adviser called the client and found out that he never made the request. The advisory firm's internal controls stopped the adviser from transferring the funds to the thief.

To protect yourself from this type of identity theft, always make sure you have a secondary verification when a financial adviser or second party has access to your money.

2. Internet Scam

Online scams come in a variety of forms, and they're not always detected until it's too late. "I would talk to at least a couple of consumers every day who were defrauded through various online scams. The most common were online purchases, lottery, inheritance and online romance scams," said Thomas Nitzsche, media relations manager for ClearPoint Credit Counseling Solutions, who previously worked in the international department of a major money transfer company.

Just remember, if you get an email promising a prize after you pay, hit the spam button. If it sounds too good to be true, run away. No one is going to give you free money. You're not going to win the lottery or inherit money from a long lost relative you've never met before.

3. The Penny Scam

With the penny scam, thieves hack into your bank account and withdraw a penny, according to Melissa Thomas, founder and CEO of Melissa the Coach -- Financial Coaching. Since the amount is so small, no one reports it, or in many cases even notices the loss. The scammers repeat this fraud with thousands of accounts, quietly skimming real money from unsuspecting consumers.

To avoid falling prey to this clever trick, report even a small loss to your bank, and inform them of the penny scam. Furthermore, don't be afraid to report a scam to the police -- even a tiny scam.

4. Natural Disaster Scam

After a flood, tsunami, hurricane or tornado, watch out for scammers offering quick fixes for your disaster-related problems. If you're not sure who you're dealing with, you could be at risk for unscrupulous business people to take your money, promising to repair your roof or plumbing and run, leaving you without repairs and an empty pocketbook.

Keep your guard up, even during stressful times. Just because you've suffered a disaster doesn't mean that all offers to help are legitimate. Request a reference list, proof of insurance and check all potential contractors with the Better Business Bureau.

5. Online Help Scam

Sherrian Crumbley of KNS Financial recounted how an elderly friend was having difficulty with her computer and tried to call Google. After calling the listed phone number, the "representative" asked for proprietary information in order to gain remote access to her computer. Fortunately, the woman was smart enough not to be fooled by this common scam.

Be very careful before turning over access to your computer. This should be done only when you are 100 percent certain of the site's and repair person's authenticity. Once a fraudster claims your computer, they can steal valuable personal information.

6. Send Me the Money Scam

Beware of a request for guaranteed funds from a cashier's check or money order, advised Eric Rosenberg of PersonalProfitability.com. There are legitimate uses for these types of fund transfers: to pay rent, buy a home or car. Yet, it's unlikely that a legitimate business will ask for this type of confirmed payment by mail.

In general, ask yourself why someone would ask for payment to be mailed with a cashier's check or money order in lieu of a personal check. Keep your antennae up whenever someone you don't know is requesting a guaranteed form of payment.

7. Financial Adviser Scam

Avoid any money manager who insists that you do not use a legitimate third-party custodian -- like Schwab or Fidelity -- for your managed funds, said financial planner Roger Wohlner. In fact, that's how Bernie Madoff scammed so many smart, wealthy people.

That means if your investment dollars aren't held outside of the financial planner's office in a well-known financial custodian's account, pull your money out. Legitimate financial advisers use regulated investment management firms as back-end regulated overseers of your investments.

8. Real Estate Rental Scam

Casey Fleming, author of "The Loan Guide: How to Get the Best Possible Mortgage" and long-time mortgage lending professional, shared a stunning rental rip-off story. These scammers scoped out vacant, bank-owned homes, broke in and changed the locks. Next, they rented the homes out, collecting the first and last month's rent. Then the scam artists vanished, likely on to the next property. When legitimate real estate agents came to list the home, they found the unfortunate fraud victims living in the home.

When renting a home, watch out for signals that something isn't quite right. One red flag might be a rental listed a tad below market rent to get it rented quickly. When renting a house, ask yourself if the rental application appears complete and legitimate. Finally, most bank-owned homes are poorly maintained. Don't rent out a property in disrepair, no matter how tempting the rental price.

9. Money Scam

Job-seekers, don't fall for the scam that asks you to pay money to receive job information, said Jason Butler of The Butler Journal. Legitimate companies have information on the internet, and job listings are posted for free. Butler saw one such scheme targeting college students and a similar money scam on Craigslist as well.

If you're desperate for a job, seek out all of the free online job listing services. Don't forget to check out LinkedIn and company websites for job listings. If a company is charging you for a job, don't pay.

10. Senior Scams

Seniors are ripe targets, with a lifetime of savings and big hearts, said Louis DeNicola of Cheapism.com. Senior scams come in all sorts of varieties. The "You've Won" scam notifies the unsuspecting senior that they won a prize, lottery or some sort of large claim. Before the winner can claim their prize, they must pay money for taxes, fees or other charges.

Be aware that if you've won, then you don't owe. Report a scam to the local authorities, the police, your state attorney general, and the Better Business Bureau. If a deal seems too good to be true, it is.

11. Affinity Scam

Many of us belong to a church group, Rotary Club or other "affinity group." We're more likely to trust other members of the group and let our guard down when offered an investment by "one of our own."
"Affinity fraud bypasses the natural distrust we have for schemes promoted by strangers," said Todd Tresidder, former hedge fund manager and owner of Financial Mentor. For example, a church bigwig might buy a certain investment and unwittingly promote that investment to other members.

Don't forgo your normal due diligence just because someone you know and trust recommends an investment. If you receive an offer or investment, check the qualifications of the provider, and do your own research before buying in.

12. Investment Scams

Believe it or not, there are insurance and investment sales people operating without a license or credentials. These unlicensed scam artists use the promise of high commissions to lure independent insurance agents, financial advisers, accountants and financial representatives to peddle fraudulent investments, said Tresidder.

"Be wary if your agent offers high returns with little or no risk on viatical contracts, brokered CDs, equipment leases, factoring, promissory notes or other unconventional investments," he said. In fact, some of the purveyors of bad investments might have been swindled themselves and not have any idea how these products actually work.

Always ask an investment sales representative about their license, credentials and how they are paid. Just because your insurance agent knows insurance doesn't mean she's qualified to sell you an investment product. If a sales representative is paid an above-average commission, find out why. If that individual can't explain the product in an easy-to-grasp fashion, don't buy it.

When it comes to keeping yourself safe from a scam artist -- ask questions, seek references, view insurance and licenses, and wait to give out money or information. Set a waiting period so you can perform your due diligence and thoughtfully consider the offer. Remember the classic economic advice from Milton Friedman: "There's no such thing as a free lunch."

This story, 12 Top Scams Affecting Your Pocketbook, originally appeared on GOBankingRates.com.
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