Updated: February 17, 2013 6:28AM
Work-at-home schemes topped the list of scams reported in 2012 to the Better Business Bureau serving Chicago and Northern Illinois.
The work-at-home schemes accounted for more than a third of all scam complaints the local BBB received last year, the bureau said in a press release.
“This scam is especially tempting to people that are out of work or in need of additional income,” the release said.
The BBB’s annual Top Ten Scams are ranked based on the number of specific inquiries made by consumers. The list provides insight on the deceptive and sometimes-illegal business practices, according to the BBB.
“In 2012, many consumers were still working on improving their financial situations in these challenging economic times,” said Steve J. Bernas, president and CEO of the Better Business Bureau serving Chicago and Northern Illinois. “Scammers were ready to capitalize on this vulnerability and take advantage of consumers.
“Being aware that these scams exist is extremely important so that people can avoid becoming a victim and losing money or personal financial information.”
The Top Ten Scams in 2012, with some BBB background and advice on each, were:
1. Work-at-home schemes. When the requirement is to send money for materials first, consumers should always be on guard. Do not purchase services or products from a firm that’s reluctant to answer your questions, and be cautious of any company that offers an exceptionally high salary requiring few skills and little work.
2. Advance fee brokers. It is illegal for a business to charge a fee prior to providing a loan. Typically, after wiring money to the scammer, the victim never receives the loan.
3. Credit repair services with advance fees. Consumers with bad credit ratings are particularly vulnerable to this scam. Everything a credit repair operation offers, an individual can do personally at little or no cost. Credit repair operations cannot ask for money in advance, and they cannot automatically remove legitimate negative reports from your credit history.
4. Foreign lotteries. Any lottery from a foreign country is illegal in the United States. Scammers using fictitious addresses will request you send “fees and taxes” to them through a wire service. They take the cash and never provide any winnings, because there are no winners.
5. Prize promotions. There are several variations of this scam, but most include some aspect that requires people who are identified as “winners” to provide money or some type of personal information, such as a credit card or Social Security number, to verify being a winner. In the end, no prize is awarded, and the personal information is then used to withdraw a victim’s money from accounts or for identity theft.
6. Office supply invoices. This scam features fake invoices for office supplies being sent to a business, often for only a couple hundred dollars. This relatively low amount makes it easier for company personnel to quickly sign off and feel it is not worth their time to check the invoice’s validity, which would be done if it was for a larger amount.
7. Pyramid companies. Pyramid schemes are fraudulent because returns to investors are paid from personal money or the money paid by the newest investors, rather than from any actual profit earned by an individual or organization running the operation. These scams collapse because payouts exceed investments, or because the authorities prosecute the organizers for sale of unregistered securities. Often, the organizers simply disappear with funds sent to them.
8. Debt relief services. The Federal Trade Commission has established rules for debt relief services. The FTC rules govern disclosures and representations that debt relief services can make and do not allow advance fees.
9. Home improvement by “traveling” workers. Never pay upfront to a “traveling” contractor who just happens to be in the neighborhood, is doing work nearby, or has extra materials. Once you pay the contractor, he disappears with the money, and no work is ever done.
10. Sweepstakes. If you don’t remember entering a sweepstakes, be very suspicious about being declared a winner.