Be wary of quick cash for “ugly” houses

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Streets across the country are littered with “we buy ugly houses” and similarly phrased signs. While many of these ads are not false—consumers can get quick cash for an unsightly abode— there are many reports of the companies behind the signs using deceptive and predatory tactics to take advantage of vulnerable homeowners. From significantly undervaluing a seller’s house to outright lying to homeowners, bad actors have taken advantage of many consumers who are in a pinch. 

Predatory businesses in this space look to target individuals in difficult situations. These may be people who need cash quickly, who may be dealing with a death of a loved one, or who are experiencing cognitive issues. While buyers typically offer money up front, sometimes thousands of dollars, it comes with a catch. They may significantly undervalue the home, tack on junk fees, or trap the consumer in complicated contracts that make it difficult for the homeowner to back out. A ProPublica report investigating these purchases found numerous instances of buyers targeting older Americans with unfair and deceptive tactics. The report highlights an 82-year-old homeowner with dementia who lost 1/3 of the value of her house in such a deal. 

While entities touting their ability to offer cash for your “ugly house” are major proponents of these tactics, there are other unscrupulous businesses in this space to watch out for as well. Some of those offering reverse mortgages target similarly vulnerable homeowners with pitches that disguise the true cost (and net loss) of the proposition. Additionally, both buyers and financers have been documented lying to individuals to secure a deal. In one instance, they had falsely claimed that the victim was going to lose their home through legal action if they did not sell. Other individuals were deceived about how long they could remain in their home after they completed the sale.  

Beyond unfair contracts, there are more traditional scammers—those seeking your money for nothing in return. One consumer from California reported to Fraud.org that when they were at risk of losing their home, they were approached by a mortgage servicing company offering a solution. However, over a year later, the homeowner lost $19,000 to the fraudsters and still ended up in foreclosure.  

If there is an opportunity to sell or refinance your home, keep the following tips in mind: 

  1. Know the value of your home. Home value estimates and the price of recently sold homes in your neighborhood can be found online, often via free-to-use websites. Knowing the prices of properties comparable to your own house can help you better recognize if someone is taking advantage of you. 
  2. Get multiple quotes. If possible, try to get multiple offers from different businesses for the service you are seeking. 
  3. Review everything in writing. Especially scrutinize any fees, interest rates, future obligations, or cancellation mechanisms. 
  4. Seek an outside opinion. Run the offer by a trusted advisor. The U.S. Department of Housing and Urban Development has a directory of housing counselors. Note that while some services are free, such as those for foreclosure prevention, homeless counseling, and individuals who cannot afford a fee, HUD-sponsored counselors are permitted to charge reasonable fees for other services. 
  5. Search for reviews or warnings about the business or person pushing the offer. An online search of the company or individual’s name alongside “fraud,” “scam,” or “reviews” may produce warnings from other consumers, law enforcement, or watchdog groups. The Better Business Bureau may also be a resource for checking out companies looking to buy your home. 
  6. Pressure tactics are a red flag. If someone is prompting you to act quickly, often with a time-sensitive offer, think twice before accepting their proposal. 
  7. Be wary of unsolicited offers. Many bad actors in the housing space seek out individuals they believe to be vulnerable targets for their predatory tactics.  

If you or someone you know has been targeted by predatory home-buying services, we urge you to report it via Fraud.org’s secure online complaint form. Complaints are shared with Fraud.org’s network of consumer protection and law enforcement partners who use complaints to identify trends and build cases. 

Let’s all speak up about fraud

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2023’s National Consumer Protection Week begins on March 5 and lasts until March 11. This is a great opportunity to brush up on your fraud prevention skills. But more than just reducing your own risk, sharing what you know with friends, family, and colleagues can help reduce everyone’s risk. It’s good to keep yourself protected—it’s better to help a friend.  

While fraud can affect anyone, regardless of age and other demographic information, Fraud.org and the National Consumers League (NCL) are putting the spotlight on scams targeting older Americans. NCL’s upcoming podcast episode features Lizette Alvarez of the Washington Post and Debra Berlyn of Project GOAL who will discuss fraud prevention strategies for seniors and their families. Below are a few key points to keep in mind as we enter Consumer Protection Week. Be sure to listen to the full podcast episode premiering March 6 for more details on elder fraud.  

Don’t be ashamed of fraud 

Each year, scammers defraud millions of Americans. Given the stigma associated with these crimes, victims often feel embarrassed and ashamed. This leads to far too many incidents of fraud going unreported. As a result, impacted individuals are not connected with resources that can help them recover. It also leaves victims more vulnerable to be re-victimized, as scammers often prey on victims again and again. If you or someone you know has been a victim of fraud, encourage them to talk about what happened and report it to the proper authorities.  

How to help spot impersonation scams: stop and verify 

Imposter scams are one of the most common types of fraud reported to Fraud.org. A common set-up involves a scammer impersonating a family member of the victim over the phone and claiming that they require money to resolve an urgent issue (bond, doctor’s bill, etc.). Scammers are very adept at making these deceptions sound legitimate and a common tactic is to tell the victim that if they tell anyone else what is going on, something terrible will occur. 

A key way to avoid being a victim of an impersonation scams to remember two words: “Stop” and “Verify.”  

First, victims should understand that scammers want you to act quickly. on emotions like fear. By stopping, you give yourself time to take a pause and think through what you’re being asked to do. 

Second, victims should verify. If the scammer claims to be a loved one, call the relative or (in cases where the scammer may be impersonating a child) a parent of the relative. If the scammer is impersonating a bank or government agency, hang up and look up the phone number for that agency or company yourself and call to check whether what you’re hearing is accurate. 

While there’s no silver bullet for preventing imposter scams, learning to stop and verify the claims you’re hearing over the phone, email, or text can help save you from becoming a fraudster’s next victim. 

Share less online 

Phishing scams are not new. Fraudsters have been seeking login information and other sensitive credentials with deceptive emails, texts, and instant messages for years. However, with the proliferation of social media and other digital platforms, more information about our personal lives is publicly available than ever before. Dedicated scammers can use this information to create more convincing phishing attacks. Seemingly harmless information such as employment history, previous residences, or recent vacations may be used to compose a message that appears as if it were written by someone who actually knows you.  

To help reduce the risk of phishing, make sure and make your social media accounts on platforms like Facebook and Instagram private, so that only people you approve can see your profile information. On public social media accounts like LinkedIn, avoid sharing information like travel plans or family members’ names that scammers can use to create more effective phishing attacks. 

Don’t send money to recipients you haven’t met 

At Fraud.org, we hear heart-breaking stories of older adults who report losing their life savings to fraud. An important message to drill home is that if you have not met someone in person, you should be very wary of sending them any money. The is doubly true if you are being asked to send money via peer-to-peer money transfer services. (e.g., Zelle, Venmo, Cash App, or PayPal), bank account debit, wire transfer, or gift cards. 

Although scams can—and do—take place offline, fraudsters can easily hide their suspicious behavior when communicating remotely. Many forms of fraud, such as imposter scams and romance scams, are much more difficult (if not impossible) to conduct in person. Be extra cautious of solicitations sent digitally. 

Pass it on 

National Consumer Protection Week is the perfect opportunity to have conversations about fraud with those you know and love. If we all commit to sharing what we know with just one other person, we can put a real dent in the harm that fraud causes to far too many people. 

 

If you or someone you know has been a fraud victim, help yourself and other by reporting it! By using Fraud.org’s secure online complaint form, your complaint will be shared with our network of consumer protection and law enforcement agency partners. 

Work-at-home

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The ad says you can make lots of money working from the comfort of your home. But if this were true, wouldn’t we all be working at home?

Stay safe. Be Informed.

  • Know who you’re dealing with. The company may not be offering to employ you directly, only to sell you training and materials and to find customers for your work.
  • Don’t believe that you can make big profits easily. Operating a home-based business is just like any other business—it requires hard work, skill, good products or services, and time to make a profit.
  • Get all the details before you pay. A legitimate company will be happy to give you information about exactly what you will be doing and for whom.
  • Find out if there is really a market for your work. Claims that there are customers for work such as medical billing and craft making may not be true. If the company says it has customers waiting, ask who they are and contact them to confirm. You can also ask likely customers in your area (such as doctors for medical billing services) if they actually employ people to do that work from home.
  • Get references for other people who are doing the work. Ask them if the company kept its promises.
  • Be aware of legal requirements. To do some types of work, such as medical billing, you may need a license or certificate. Check with your state attorney general’s office. Ask your local zoning board if there are any restrictions on operating a business from your home. Some types of work cannot be done at home under federal law. Look for the nearest U.S. Department of Labor in the government listings of your phone book.
  • Know the refund policy. If you have to buy equipment or supplies, ask whether and under what circumstances you can return them for a refund.
  • Beware of the old “envelope stuffing” scheme. In this classic scam, instead of getting materials to send out on behalf of a company, you get instructions to place an ad like the one you saw, asking people to send you money for information about working at home. This is an illegal pyramid scheme because there is no real product or service being offered. You won’t get rich, and you could be prosecuted for fraud.
  • Be wary of offers to send you an “advance” on your “pay.” Some con artists use this ploy to build trust and get money from your bank. They send you a check for part of your first month’s “pay.” You deposit it, and the bank tells you the check has cleared because the normal time has passed to be notified that checks have bounced. Then the crook contacts you to say that you were mistakenly paid the wrong amount or that you need to return a portion of the payment for some other reason. After you send the money back, the check that you deposited finally bounces because it turned out to be an elaborate fake.

Find Fraud Alerts related to this scam here.

Pyramid schemes

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The pitch is that you will make money by paying to participate in the program and recruiting others to join. But if it’s really a pyramid, you and your friends will lose money, not make it.

Stay safe. Be Informed.

  • Plans that promise profits mainly for recruiting new members are illegal pyramid schemes. In legitimate multilevel marketing plans, profits come primarily from selling goods and services to consumers.
  • Be aware that some pyramids are disguised as “gifting clubs.” New recruits give money to current members with the promise that they will receive money from future recruits.
  • Know that all pyramids are doomed to collapse. That’s because it’s impossible to keep on getting fresh recruits who will pay to participate.
  • Legitimate multilevel marketing plans only succeed if they offer products or services that customers want. All successful businesses depend on repeat sales. If there isn’t constant demand for the products or services, the business will fail.
  • Sales to other distributors don’t count. Legitimate multilevel marketing plans aren’t based on sales to distributors. Profits should come from sales that you and any distributors under you make to the end-users.
  • Be wary of big earnings claims. No one can guarantee how much you’ll make. That depends on how hard you work and whether consumers like your products or services. Many people who work in multilevel marketing do it part-time to supplement their other income.
  • Check it out before you commit. Get all details in writing, and contact your state or local consumer protection agency for advice. In some states, multilevel marketing companies must register with the government and comply with other requirements.
  • Don’t buy more supplies than you need. Some fraudulent companies try to force distributors to pay for more products than they can reasonably sell.

Find Fraud Alerts related to this scam here.

Investment scams

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Whether you have a little money or a lot, you’d probably like to have more to “feather your nest.” But your money could fly away if you get caught in an investment scam.

Stay safe. Be Informed.

  • Don’t believe claims that there is no risk. There is always risk in investments, and no one but a con artist will tell you otherwise. Know the risk before you invest.
  • Beware of promises that you’ll make big profits fast. No one can accurately predict how an investment will do. Often the investments that promise the most pay-off are also the most risky.
  • Get the details in writing. Legitimate companies will be happy to give you all the information you need.
  • Don’t agree to anything on the spot. Pressure to act immediately is a danger sign of fraud.
  • Understand your investments. Do you know the difference between stocks and bonds, margin accounts and cash accounts, options and futures, mutual funds and certificates of deposit? If not, do your homework before you invest.
  • Don’t act on testimonials from strangers. Someone who appears to want to share a friendly tip about a great investment opportunity may actually be a con artist trying to lure you into an investment scam.
  • Be especially wary of investments in commodities. Crooks often promise that the value of investments in coins, precious metals, artwork, oil leases, gemstones, and other commodities will rise. The truth is that the value of these types of investments can go up or down significantly.
  • Steer clear of “offshore investments.” These are often promoted as a way to avoid taxes. Actually, you are still liable for taxes, and the investments themselves are usually very risky.
  • Be cautious about emails for investments. Many unsolicited emails are fraudulent.
  • Take the time to check out investment offers. A good place to start is with your state securities regulator. Other resources for information to help you make wise investment decisions include: U.S. Securities and Excahnge Commission, 800- 732-0330; the North American Securities Administrators Association, 202-737-0900; and the National Futures Association (for investments in commodities), 800-621-3570 (in Illinois, call 312-781-1467).

Find Fraud Alerts related to this scam here.

Fake check scams

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If someone you don’t know wants to pay you by check but wants you to wire some of the money back, beware! It’s a scam that could cost you thousands of dollars.

Stay safe. Be Informed.

  • There are many variations of the fake check scam. It could start with someone offering to buy something you advertised, pay you to do work at home, give you an “advance” on a sweepstakes you’ve supposedly won, or pay the first installment on the millions that you’ll receive for agreeing to have money in a foreign country transferred to your bank account for safekeeping. Whatever the pitch, the person may sound quite believable.

  • Fake check scammers hunt for victims. They scan newspaper and online advertisements for people listing items for sale, and check postings on online job sites from people seeking employment. They place their own ads with phone numbers or email addresses for people to contact them. They buy “sucker lists” on the black market which has sensitive information of people who have been previously scammed. And they call or send emails or faxes to people randomly, knowing that some will take the bait.

  • They often claim to be in another country. The scammers say it’s too difficult and complicated to send you the money directly from their country, so they’ll arrange for someone in the U.S. to send you a check.

  • They tell you to wire money to them after you’ve deposited the check. If you’re selling something, they say they’ll pay you by having someone in the U.S. who owes them money send you a check. It will be for more than the sale price; you deposit the check, keep what you’re owed, and wire the rest to them. If it’s part of a work-at-home scheme, they may claim that you’ll be processing checks from their “clients.” You deposit the checks and then wire them the money minus your “pay.” Or they may send you a check for more than your pay “by mistake” and ask you to wire them the excess. In the sweepstakes and foreign money offer variations of the scam, they tell you to wire them money for taxes, customs, bonding, processing, legal fees, or other expenses that must be paid before you can get the rest of the money.

  • The checks are fake but they look real. In fact, they look so real that even bank tellers may be fooled. Some are phony cashiers checks, others look like they’re from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.

  • You don’t have to wait long to use the money, but that doesn’t mean the check is good.Under federal law, banks have to make the funds you deposit available quickly–usually within one to five days, depending on the type of check. But just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check. It can take weeks for the forgery to be discovered and the check to bounce.

  • You are responsible for the checks you deposit. That’s because you’re in the best position to determine the risk–you’re the one dealing directly with the person who is arranging for the check to be sent to you. When a check bounces, the bank deducts the amount that was originally credited to your account. If there isn’t enough to cover it, the bank may be able to take money from other accounts you have at that institution, or sue you to recover the funds. In some cases, law enforcement authorities could bring charges against the victims because it may look like they were involved in the scam and knew the check was counterfeit.

  • There is no legitimate reason for someone who is giving you money to ask you to wire money back. If a stranger wants to pay you for something, insist on a cashiers check for the exact amount, preferably from a local bank or a bank that has a branch in your area.

Want to learn more? Go to www.consumerfed.org/fakecheckscams to read CFA’s Don’t Become a Target brochure, watch the funny videos about sweepstakes/lottery and work-at-home fake check scams, and check out the other materials on the Web site. Visit NCL’s www.fakechecks.org, where you can take a quiz to see how well you can spot this fraud, send an ecard to warn other people, and find information to help you and people you care about avoid losing money to fake check scams.

Find Fraud Alerts related to this scam here.

Bogus car advertising

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Drive for long enough in any good-sized city, and you’re likely to see a car that’s been wrapped in an advertisement. Unfortunately, scammers have started to catch on to the popularity of bogus work opportunities on car ads.

Stay safe. Be Informed.

For businesses, these ads are a unique marketing opportunity. For consumers, getting paid to turn their car into a rolling advertisement can be a way to effortlessly earn some extra money. The deal is so appealing that waiting lists are reportedly years-long and advertisers get to be choosy about the types of cars they work with and the number of miles drivers must commit to.

NCL’s Fraud Center has received a number of complaints from consumers who were the victim of a variation on the fake check work-at-home scam involving these ads. (For more on fake check scams, visit fakechecks.org.)

Jennifer P. from Massachusetts told us how the scam goes down. She saw an ad on Craigslist that falsely claimed Monster Energy Drink was looking for people to advertise on their cars, offering a $300 payment in return. After she emailed the contact, she was sent a check made out for $1,900, allegedly to cover the costs of both installing the advertisement and Jennifer’s payment. She was instructed to cash the check, take out her payment and wire the remainder to the “support team” for the advertising campaign. Unfortunately for Jennifer, after she wired the money, she found out that the check was a fake and was left owing her bank $1,900. And, of course, the crooks got away with cash from the wire transfer.

NCL’s Fraud Center has received similar complaints from consumers allegedly asked to participate in fake Red Bull Energy Drink advertising program and numerous reports of the scam have emerged on message boards online since August 2013.

Consumers should never have to pay funds from their personal checking accounts to participate in these advertising campaigns. Any request to wire money to someone you don’t know should be considered a major red flag. Consumers who have been approached by or been a victim of these scammers should report it to NCL’s Fraud Center.

Find Fraud Alerts related to this scam here.

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