6 Red Flags Of A Financial Scam

November 30, 2010  |  Filed Under » , , ,  |  View as article

6 Red Flags Of A Financial Scam

Financial scammers have gotten savvier and more aggressive in their pursuit of your money and identity. So what should you look for when you think you're getting a deal, but aren't sure if it's really a rip-off? Here are seven red flags of a financial scam, so you can avoid them.

Email From Someone You Don't Know

You've likely heard of the Nigerian email scam that asks you to deposit money to an overseas account. Ignore email if you don't recognize the sender, particularly if there's an attachment that could send a virus to your computer. If a bank or business contacts you, don't reply to the email or click on any link - just visit the bank or business website to see if there's anything that requires your attention.

Callers Asking For Personal Information

If someone calls saying he or she is with XYZ Bank, it must be true, right? Don't assume the person calling is being truthful, particularly if this person is asking you for information like account numbers or passwords. Politely end the conversation, and call your bank. When in doubt, go to the source.

Guaranteed Approval For Your Loan

Here's how this scam works: a telemarketer will tell you that for a fee ranging from $25 to several hundred dollars to apply for a loan or credit card. Customers are told they get this fee back, but they don't - it's all a scam.

Another scheme like this one is the scholarship scam, where a company or advertisement promises to find you scholarships for a fee. Scholarships searches and credit repair are things you can accomplish on your own for free. Don't be fooled!

Promises To Fix Credit Problems

These companies promise to dispute any false things on your credit report, which is something you can do for free. Some credit repair companies even suggest people with bad credit get an EIN (Employee Identification Number - like a social security number), which is actually against the law. While there are legitimate companies that do offer credit repair help, make sure that you perform the necessary research prior to getting involved.

No Value, No Product

Work from home, make thousands a week! It sounds so good, you're thinking of calling after another bad day at work, right? These promises are hollow, and the scams often have you recruit more people to post ads, and so on - a pyramid scheme. If an advertisement is vague about the work, and sounds like they're selling you something, it's probably a scam.

No Sales License

There's this smooth salesperson, maybe it's even someone you know personally, who is trying to sell you insurance or investments. It sounds really good. He or she promises high returns, low risk. But is this salesperson licensed? Ask - some of the biggest scams right now involve sales of unlicensed securities by unlicensed sales people. If there's no license, avoid the deal.

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