Scams!

Scams have been around since snake oil was invented.But consumer advocates say that scams have taken a particularly nasty turnthanks to two recent trends: new technologies that allow anonymous scammers tocreate fake relationships with their marks, and the downturn in the economy,which encourages cash-strapped people to do desperate thingslike wiring moneyto strangers in another country, or falling for too-good-to-be true moneymakingschemes.

Here are some of the biggest scams you should avoid:

Haiti Charity Scams

So many people give money after a natural disaster,and the generosity following the January earthquake in Haiti wasincredible. But that kind outpouring of cash and support can often wind up inthe wrong hands. Just like scammers preyed on donors after the Sept. 11 attacksand Hurricane Katrina, they’re also trying to solicit funds from folks who wantto help Haitians.

But be cautious about giving a donation over thephone. “Never be pressured into makinga donation on the spot,” said Janet Jenkins of the Wisconsin Department of Agriculture, Trade and Consumer Protection(DATCP). “Legitimate charitieswon’t do that.”

Instead,look up the charity in the phone book or online and then decide if you want tocontribute.

And don’t trust e-mail solicitations from people youdon’t know who say they’re in Haitiand need money. Susan Bach of the Wisconsin Better Business Bureau (BBB)suggests using the BBB’s Wise Giving Alliance (www.bbb.org/us/charity), whichreviews nonprofit charities. Check it before sending any money.

Mystery Shopping Scams

With so many people out of workand so many peopleposting their résumés onlineit’s easy to fall for this scam. Typically, Bachsaid, it begins with a letter announcing that you’ve been hired as a mysteryshopper for a big corporation (scammers have abused the names of localbusinesses such as Woodman’s, Ashley Furniture, Briggs & Stratton andManpower for this one). First, though, you must deposit a check so you havesome funds to work with. Then you’re asked to test the services of amoney-wiring company by sending money to Canada. Sadly, the check that wasdeposited was phony, and the “mystery shopper” is out the money he or she wiredacross the border.

“The checksare usually for several thousand dollars,” Bach said. “In Woodman’s case, theywere very real-looking checks. They had an account number and they looked likethey were professionally printed, except that they weren’t.”

TheGrandparents’ Scam

Some grandparents in St. Croix Countywere swindled out of more than $19,000 by some particularly heartless scammers.The fraudster called the couple and said he was their grandson’s attorney andthat the grandson was in an accident in Canada and hit a pregnant womannow ina comaand he needed money for her medical care and his bail.

“It was just a big ruse,” Bach said. “They convincedthe grandparents to wire money on eight separate occasions to these people in Canada. Threeof those wire transfers occurred on Thanksgiving Day.”

Bach said this is a relatively new scam that’spopped up all over the country. Beware.

TaxTime Scams

It’s thattime of the year againthe time when scammers try various ways to capitalize ontax season.

Here’s onecon: “People will get e-mails from what purports to be the IRS saying that theyhave a refund and they’re supposed to call a number or click on something andgive personally identifiable information,” said Jenkins of DATCP. “But the IRSnever contacts people by e-mail. They don’t contact people by phone. They writeyou a letter. Don’t buy into that type of scam.”

They’re justtrying to get personal information.

Here’sanother bad bet, although it’s legal: refund anticipation loans. Some taxpreparers will offer to give their clients an instant refundas long as theycan take a chunk out of that refund for themselves.

But if youfile online and can wait another 10 days or so, you can have your entire refunddeposited directly into your bank account.

“Not onlywill e-filing get you your refund fast, but the majority of us can e-file forfree,” said Christopher Miller of the regional office of the IRS. “If you go toIRS.gov, you’ll find 20 or so software providers you can use for free if youmade less than $57,000.”

The IRS isoffering free tax assistance on Saturday, Feb. 20, from 9 a.m. to 2 p.m. at itsoffices at 211 W. Wisconsin Ave.If you earned less than $49,000 last year, you can receive free tax preparationand electronic filing help. Otherwise, you can ask questions, get tax forms orrequest a payment plan if you can’t pay your taxes by April 15. If you wanthelp preparing your tax return, bring a photo ID, your Social Security card,and all relevant documents.

MeaninglessDiscount Cards

Do some duediligence before signing up for special offers. For example, Jenkins of DATCPsaid some medical discount cards are pure fantasies. “You’ll see an ad or getsomething in the mail that indicates that if you purchase this discount cardand pay ‘x’ amount of dollars per month then you can get up to 80% discountfrom all of these providers in your area,” Jenkins said. “The problem with manyof them is that the providers who are listed never even heard of this companyand certainly don’t offer discounts because you bought this card. You need tocheck things out and make sure of the ins and outs about things before you paymoney for something.”

DebtSettlement Schemes

We’ve allbeen told that if you have outstanding balances on a number of credit cards, awise thing to do is to consolidate your debt and pay it down in sensibleamounts. That well-worn advice has led to a cottage industry of creditconsolidation services. The problem, though, is that many credit counselorswork for a for-profit company and earn hefty commissions on the folks theyenroll. And the money paid to them doesn’t always go to one’s creditors.

Here’s howit works: A client will sign up with a credit consolidation or debt settlementcompany. The company will claim to be able to settle the debt for a fraction ofwhat it’s worth, then set up a payment schedule with manageable monthlypayments.

But here’sthe catch: The first paymentsa few months of payments, or even the first yearof paymentsgo directly into the coffers of the company as its fee.

“The higheryour debt, the more excited they get, because you’ll have to make biggerpayments,” said attorney Michael Mack, who specializes in consumer debtforgiveness.

Later, thepayments are split between the company and an account that will eventually goto one’s creditors once a sizable chunk has been amassed.

All thewhile, though, the creditors have no idea that the client has signed up for thedebt settlement programand, to make matters worse, the client has stoppedpaying off his or her credit cards and the balances increase. Oftentimes, thecredit card companies sue the client for delinquent payments.

But aren’tthese credit counselors certified?

“That meansnothing,” Mack said. “They certify themselves.”

Instead,look for nonprofit credit counseling services, such as the Consumer CreditCounseling Service (CCCS) of Greater Milwaukee, which is affiliated with the United Way ofGreater Milwaukee. (Go to www.creditcounselingwi.org for more information.)

KathrynCrumpton, the agency’s manager, suggests asking questions first: Is the debtsettlement company licensed in Wisconsin?Does it have a physical presence in the state? What are the fees? Does it offerfinancial literacy education?

“If there’stoo much pressure, then you’re in the wrong place,” Crumpton said.

CreditRepair Services

Want to wipesome bad behavior off of your credit report? Don’t bother with hiring a creditrepair outfit.

“They can’tdo anything you can’t do,” Mack said. “The vast majority of these are scams.”

You candispute information by writing to the credit reporting agencies. It will betaken off of your credit report for 30 days while the matter is investigated.If the information is inaccurate or cannot be verified, then it can be removedfrom your credit report. It takes some patience and effort, but it can be donewithout hiring someone to do it for you.