Automated teller machine (ATM) crimes can take several forms. Thugs may
simply approach someone using an ATM and demand money. Or, more
sophisticated thieves will watch the victim use the card (perhaps even with
high-powered binoculars) and learn his or her card number and personal
identification number (PIN). Later they’ll steal the card or make their
own and go back to ATMs for cash.
One or more persons loitering around the ATM, often in a car, behind bushes
or otherwise nearby. You spot unauthorized ATM withdrawals on your bank
Use only ATMs in well-lit, busy areas where unusual activity would be
noticed. For after hours or late night use, the best choice may be an ATM in
a supermarket, convenience store, gas station or other protected area. When
in doubt about a particular location, go on to another ATM where you’d
it works: Someone steals checks from your home, office or
mailbox and forges your signature. Crooks don’t need blank checks to pull
off a check fraud. Many know how to easily remove the ink on checks, often
by “washing” them with a cleaning solvent. They also will alter what’s
already been written, such as by changing a check payable to the I.R.S. to
one payable to J.R. Smith. A counterfeiter also can make new checks in your
name using a home computer and a printer.
signs: You notice that checks are missing from your checkbook or your reserve
supply of checks. Mail containing checks or bank account information is
“lost” or appears to have been tampered with. You spot unauthorized
transactions on your bank statement.
Don’t carry more checks that you need. Keep extra checks in a secure
place. Write checks using a pen with thick, dark ink. Draw lines to fill in
gaps in the spaces where you designate to whom a check is payable and the
amount. John Brugger, a U.S. Postal Inspector in Washington, adds that
consumers should “insist that their checks have built-in security features
that help make them tamper-resistant to check washing or counterfeiting.”
Also immediately report to your bank any irregularities in your bank
statements. Report mail theft or tampering to the U.S. Postal Inspection
Service, which is listed in your phone book.
There are hundreds of ways. Here are just a few. A thief may steal your
credit card. Someone may order a new credit card in your name by stealing a
pre-approved application from your mail and having the card sent to a
different address. An unscrupulous sales clerk can make a duplicate copy of
your credit card receipt or use a special device to capture data from the
magnetic stripe on your card. One way or another, the thief using phony ID
can make or order a credit card, in your name, and use it to obtain
merchandise or cash advances.
Unauthorized charges appear on your credit card statement or you get a
statement for a credit card you didn’t request. Your mail appears to have
been tampered with. Mail containing a new credit card or a credit card
statement doesn’t arrive as expected.
Promptly report to the card issuer any unusual activity on your statement.
If you receive a card you never asked for, or if you don’t get a card
you’re expecting, promptly report that to the issuer. Protect your credit
cards and card numbers, and don’t keep PIN numbers near the cards.
Properly destroy all credit card receipts and statements when no longer
needed. Limit the number of credit cards by canceling those you don’t use.
Cut up old cards after they expire.
Several frauds and rip-offs are targeting people having debt problems. Some
ads declare that a bad credit history can be “erased” or that “debt
consolidation” can quickly cure credit problems. Most often, the consumer
will pay exorbitant fees or interest rates for unnecessary services. Other
ads tout easy ways consumers and small businesses can get low-cost loans,
often even without a credit check or collateral. But in many cases the
up-front fees are excessive or never lead to a loan being given. Some
unscrupulous lenders also may offer to “consolidate” your loans into one
loan with no credit check. These may turn out to be home equity loans that
carry exorbitant interest rates, onerous payment terms, and the risk of
foreclosure on the consumer’s home.
Many legitimate lenders provide debt consolidation loans, but you should shy
away from offers that promise to erase a bad credit record if you simply pay
a fee and combine different debts into one new loan. Only years of steady
performance in paying debts can repair a credit history. Be wary of anyone
offering to erase your bad credit record by creating a new identity for you,
perhaps by ordering a new Social Security number. That’s illegal. Beware
of anyone who asks for money up-front to “guarantee” approval of a loan.
“Advance fees” should not be confused with application fees charged by
many legitimate lenders, who do not “guarantee” approval of loans after
receiving an application fee. Also beware of people who hold seminars to
sell kits they say can be used to pay off your mortgage or other debts. The
kits, which typically cost $300 to $500, contain items that look like checks
but have names like “certified drafts.” Purchasers are told the drafts
can be issued in any amount. In reality, these items are worthless, and
anyone who pays bills with them risks being prosecuted for using a
If you have credit problems, immediately contact your banker and other
creditors. Don’t wait until your accounts are turned over to a debt
collector. Most of the time, creditors will work with you on a solution,
especially if you’ve had a good record in the past. If you can’t solve
your debt problems on your own or with the help of lenders, there are other
reliable sources of help, including state and local agencies that also offer
credit-counseling services for little or no charge. One way to re-establish
credit is by obtaining a “secured” credit card (you post a deposit
that’s usually equal to or greater than your credit limit) and make your
payments on time for a year or so. Not all secured credit cards carry the
same interest rates and terms, so shop around. Before agreeing to any loan,
deal only with reputable lenders, read the fine print, compare interest
rates and question any unusual fees.
it works: You see a newspaper or Internet advertisement by an
unknown bank, probably one far away, claiming to offer insured certificates
of deposit (CDs) at unusually high interest rates. The ad also may say the
funds will be held in accounts in “tax haven” countries where the
interest will be free from U.S. taxes and protected from scrutiny by U.S.
authorities. You send in your money only to learn later that the bank is
bogus and the CD is not federally insured. Chances are you won’t see your
most obvious sign is an extremely high interest rate compared to market
rates for CDs advertised by reputable institutions. To fool unsuspecting
investors, many successful scams also have involved so-called banks with
names very similar to large, well-known U.S. banks. Some foreign entities
also say they have “private” insurance for your investment, but this may
just be a false claim made only to soothe the fears of potential depositors.
As with any deposit or investment, check things out and know who you’re
dealing with before sending money. Crooks can counterfeit CDs as easily as
checks, so if you want the security of a federally insured CD, only buy from
a federally insured financial institution or a reputable broker. Some con
artists call themselves banks and falsely advertise FDIC membership to fool
unsuspecting depositors. You can find out if an institution is FDIC-insured
by contacting the FDIC’s Division of Compliance and Consumer Affairs or
doing research on the FDIC’s Internet site (www.fdic.gov).
Also check out the article about the new FDIC program aimed at fraudulent
Internet banks. And remember that deposit brokers may sell FDIC-insured CDs,
but the brokers themselves are not insured by the FDIC. If you’re not
familiar with the broker, contact the Securities and Exchange Commission
(SEC) or your state securities regulator.
it works: By trickery or using publicly available information,
someone obtains personal information about you, assumes your identity and
applies for credit cards or checking accounts. The crook has become
“you.” He or she then can go on a spending spree.
signs: You get bills, credit card statements, calls from
businesses or collection agencies, or other notices for debts and purchases
you know nothing about.
Don’t give credit card numbers, Social Security numbers or other personal
identifying information to anyone over the phone unless you initiate the
call. Legitimate banks and others who offer credit cards, such as telephone
companies, never call customers asking for information such as PIN
numbers. Don’t include your Social Security number on your checks. Protect
your mail and your trash from financial thieves. If you become aware of
anyone using your identity, immediately notify the creditor, law enforcement
authorities and the major credit bureaus.
Unusual or inexpensive goods and services are offered over the Internet. The
consumer typically pays for something that doesn’t arrive, or the goods
and services are not as advertised.
Exaggerated claims often aren’t easy to spot, but if something sounds too
good to be true, it probably is a scam. Although people selling goods and
services over the Internet may claim lower overhead by selling directly to
the public, you should use common sense in determining whether their claims
are reasonable. For instance, if a bank doing business over the Internet
offers 20 percent interest on deposits, is their cost of business so much
less that they can quadruple the interest rate paid by traditional banks?
Most likely, it isn’t.
When banking or buying over the Internet, only give credit card or other
personal information to companies you know and trust. If you don’t know
anything about the company, contact your local Better Business Bureau to
find out if any complaints have been filed. Your Internet service provider
also can provide useful advice about safely using the ‘Net. Also see our
warning about fraudulent CDs on the previous page. For more tips for
avoiding online problems and scams, see the fall 1997 issue of FDIC Consumer
You get or see an offer of “guaranteed” big returns (up to 100 percent
or more) on investments, business opportunities and other “no-risk”
deals. Many of these deals involve pyramid schemes where funds received from
new investors are used to pay earlier investors, thus lending credibility to
scam artists who may boast of returns paid to investors. At some point,
though, the crook takes the money, flees the area, and leaves the latest
investors with nothing but worthless paper. A related scam involves “prime
bank” instruments. These are nonexistent investments that scam artists
advertise as returning 100 to 1,000 percent of the investor’s original
Avoid investments that defy logic and offer unrealistic returns. Again, if
it sounds too good to be true, it probably is a scam. Avoid high-pressure
sales pitches. “If these supposedly high-return, no-risk investments were
legitimate, nobody would have to contact you or pay to advertise them,”
says Gene Seitz, an FDIC fraud investigator based in Washington. “They
wouldn’t even have time to call you because they’d be too busy answering
defense: Deal only with reputable investment firms. Ask
the SEC or your state securities regulator about the legitimacy of a broker
or an investment opportunity. Check out business opportunities with places
such as your state corporation licensing division and/or the Better Business
You receive an official-looking letter from someone claiming to be a
Nigerian who, because of Nigerian government rules, needs help transferring
money out of that country. Perhaps you’re asked to deposit the funds into
your bank account for a “reward” of 20 to 30 percent of the funds, which
usually are in the millions of dollars. To do your part, you’re simply
asked to supply your bank account number and some money supposedly to cover
“expenses.” But the crooks behind these scams simply keep your money and
use the account information to steal more money. Another variation involves
a request that you act as a “front” in a real estate purchase so the
true identity of the Nigerian can be kept secret. You’re offered a hefty
fee for your services but you’ll have to provide “good faith” money
and help pay certain expenses. Then the only funds exchanged go from the
unsuspecting victim to the con artist.
signs: Nobody is going to give you a percentage of millions of dollars simply for
the privilege of using your bank account or your name to transfer money to
the U S. Some people have lost their lives trying to collect their money
lost in this scheme.
If you receive a letter or fax containing promises of instant wealth,
don’t respond. Promptly take it to your nearest U.S. Postal Inspection
it works: A consumer, often an elderly person, is approached by
someone claiming to be a bank examiner, bank security officer, police
officer, Internal Revenue Service (IRS) auditor or some other “agent”
involved in an “official” review or investigation. For example, the
consumer may be asked to withdraw cash from his or her bank account, or to
let the investigator review personal account records, supposedly to aid in
an investigation of a possible fraud at the bank. The successful con artist
walks away with the cash or the confidential information that can be used to
raid the consumer’s bank account.
signs: Be wary of anyone who approaches you claiming to be a
government employee investigating a bank, a bank employee, or otherwise
asking for access to your cash or bank records. Government agencies do not
turn to bank customers to withdraw personal funds or give account
information as part of an investigation. Also, in cases such as IRS audits,
you’ll be notified in advance by mail.
Decline any requests to give cash or confidential information to anyone who
approaches you claiming to be a police officer or government investigator.
Promptly report the matter to your bank’s security officer and/or local
law enforcement authorities.
You get an unsolicited phone call or mailing with an offer of prizes, a
vacation package, merchandise or other opportunities that are said to be
“too good to miss” and “available only if you act now.” You agree
over the phone to give cash or bank account information up-front to take
care of a supposedly minor fee or tax. Later you discover that the con
artists have taken your money and you have little or nothing to show for it.
High-pressure sales people offer prizes, goods or services that can only be
delivered upon receipt of cash, a credit card number or checking account
number. While prizes are usually subject to federal income taxes, this money
is only payable to the IRS when you complete your income tax returns. Taxes
never are collected up-front when legitimate prizes are awarded. Be wary if
the caller says merchandise is “unique” and available only at a special
price if purchased now.
Buy only from a reputable telemarketing firm. Never pay a fee to receive
something “free.” If you have doubts about a particular firm, contact
the Better Business Bureau and/or the Federal Trade Commission to see if
complaints have been registered against the firm. Also keep in mind that
seemingly innocent “telephone surveys” may be used by scam artists to
collect information that can be used in future telemarketing frauds.