MAIN Your Money Internet Scams

Top Five Dot Cons

The Internet is established. There are already millions of people online. They are using the Web to shop, pay bills, do banking, keep up with the news and the latest in health and entertainment. There are thousands more entering the online world every day. The opportunities are endless, but so are the risks. Risks as in dot con.

Dot con? Dot con!

While the fraud schemes hitting Web surfers are not new, con artists have adapted to the Internet in a variety of increasingly clever ways. Remember, there were con artists working hard to fool unsuspecting consumers long before the Internet was invented. Mail and telephone fraud has been part of modern day life for decades. Internet scams are just the online versions of the familiar 'sting'.

Using the draw of Internet auction bargains to swindle trusting people into parting with their money, applying new technology to more traditional scams, or using email to reach millions around the world with phony web sites that collect personal information, today's tech savvy scam artists are just a click away.

The Federal Trade Commission keeps track of consumer complaints on fraud - online and off. These are the top five scams that catch online consumers:

• Internet Auctions

The Bait: EBay, UBid and a collection of other on line auctions give shoppers access to 'virtual malls' offering an incredible choice of products at prices far below the retail value. Most sellers and buyers at online auctions are honest people, but this is a good playground for online thieves. The problem has gotten so bad that auctions bring in roughly 48% of all online fraud complaints reported to the Federal Trade Commission.

The Catch: Bargain hunters and collectors go to auctions to look for specific products. They find exactly what they're looking for and strike a bargain that is just 'too good to pass up'. Excited at the great deal they've found, they send off a check. After sending their money, consumers say they've received an item that is less valuable than promised - a knock off that was supposed to be a designer product - a damaged version of the pristine collectable item they purchased - or in the worse cases, nothing at all.

The Safety Net: Before you bid on any item in an auction, especially for a collectible or something that is very valuable, make sure the seller has at least 10 positive reviews. It may be hard to stay away from what seems like an incredible deal, but getting scammed at bargain prices is not very much fun either. If you're the seller, check out the buyer's feedback - fraud works both ways! This may not be a perfect solution since scammers are clever. They can 'seed' their reviews with positive feedback to fool anyone who checks. To be absolutely sure, insist on paying with a credit card, use an escrow service, or pay through some other traceable means. The harder you make it for online auction crooks, the better online auctions will be for honest business.

• Credit Card Fraud

The Bait: Web sites that pretend to be your bank, credit card company, investment broker or offer access to services you want... "Surf the Internet and view adult images online for free" just enter your credit card number to prove you're over 18 or to "verify" your info to the bank!

The Catch: Consumers say that fraudulent promoters have used their credit card numbers to run up charges on their cards. They can take the information that you provide and empty your accounts. Even worse, the ones that ask for additional personal information are a prime source of identity theft.

The Safety Net: Share credit card information only when buying from a company you trust or at your regular login page for your credit card or bank! Always dispute unauthorized charges on your credit card bill by complaining to the bank that issued the card. Federal law limits your liability to $50 in charges if your card is misused... if you report it. Even if you find a charge of a dollar - report it. Many crooks initially use a small amount to identify active accounts. A one dollar charge may be a signal that criminals have figured out your bank or credit card account number!

• Multilevel Marketing Plans/ Pyramids

The Bait: Easy money! You can make money through the products and services you sell and even more from recruiting friends into the program.

The Catch: Some pyramids are legitimate business structures, but many multi-level marketing programs are actually illegal pyramid schemes. A few people on top collect money while millions at the bottom have no way to recoup what it cost them to join. Many consumers say that they've bought into plans and programs, but their customers wind up being other distributors, not the general public. When products or services are sold only to distributors like yourself, there's no way to make money.

The Safety Net: Even on the Internet, there is no way to become a millionaire overnight or make a fortune without any effort. Avoid plans that focus on recruiting others instead of promoting your product. If a business opportunity requires you to recruit distributors, buy expensive inventory or commit to a minimum sales volume, chances are you're going to lose money on the deal.

• Business Opportunities - Work at Home

The Bait: Financial freedom and security. Promises that you can your own boss and earn big bucks - often with no need to work!

The Catch: Like most promises of immense profits with little work these work at home business opportunities are often more wishful thinking than reality. Many consumers eventually discover there's no evidence to back up the earnings claims. These schemes often involve making handicrafts, stuffing envelopes, typing or medical billing. The handicraft making or envelope stuffing scam backfires when, after paying fees and completing the assembly of the products, victims are told their work is too shoddy and the work is not qualified for payment. In the medical billing scam, you will be required to purchase supplies and lists of doctors who inevitably don't exist or are not interested.

The Safety Net: Network! Get the names of other people who started businesses through the same company and see what they have to say. Make sure you contact people besides those who are writing the glowing recommendations you see on the Web site. Keep in mind that this is a business opportunity and should be entered into with the proper scrutiny. Get all the promises in writing, and study the proposed contract carefully before signing. You may want to get a legal opinion to make sure you are not getting taken.

• Investments

The Bait: You get an email with a good tip. You're given information about buying a stock that has had a recent dramatic price increase (the alarms bells should immediately go off here). You purchase the stock certificates for a nice amount and wait to collect your fortune. In the meantime, the scammers wait until they have collected plenty of speculator's investments, sell off their stocks and skim the profits. The eager investors are left with worthless paper or nearly worthless stock certificates after the price falls.

The Catch: Big profits always mean big risk. "Let the buyer beware" was a catch phrase in ancient Rome and is still true today, especially with unscrupulous online traders preying on the unwary.

The Safety Net: Check out the promoter with state and federal securities and commodities regulators, and talk to other people who invested through the program to find out what level of risk you're assuming. If you get any advice on any kind of investment in a spam email - treat it as the junk mail that it is! Anyone with an insider tip that will make them a fortune is not going to share it with millions of strangers through an email campaign.

Can you keep out of the traps that Internet con artists set to scam you? Not always. But careful research, and a healthy amount of common sense - always pays. Treat offers that come from online sources the same as you would any other information. If someone came knocking on your door asking for personal information, you'd ask who they were and why they needed it... and how they found you. Asking the same questions online tends to keep you safe.

More Web resources to Internet Scams:

• Internet ScamBusters
• fraud.org