This year, the Better Business Bureau’s Top Ten Scams focuses in on the dubious practices of online commerce, asking consumers to read the fine print BEFORE you click “yes.” Complaints in 2009 ran the gamut from teeth whiteners to premium text messages to government grants, but all tied back to consumers’ unwittingly consenting to sign up for the service or product.
“We often chastise ourselves for the impulse buy at the check-out isle, but when we are online we often skip reading the terms in conditions to get in on a deal,” says Lynda Pasacreta, BBB President and CEO.
“Web marketers are savvy to consumers who click first and ask questions later, and are reaping record profits from it.”
The following Top Ten Scams list is developed jointly by the BBB, Business Practices and Consumer Protection Authority of BC, Competition Bureau of Canada, BC Crime Prevention Association and BC Securities Commission. In no specific order, here are the Top Ten Scams for 2009.
1. Health Claim Scams
Bogus products that make “breakthrough” health claims on the Internet or promise cures for illnesses, such as cancer, target the most vulnerable consumers. Be wary of on-line swine flu remedies not authorized by Health Canada that are making unsubstantiated health claims that they kill or ward off the virus. Consult your health care practitioner before trying any new treatment. Don’t be influenced by “miraculous” testimonials discussed on websites and blogs. Think twice before buying a product that claims it can “do it all.”
QUICK TIP: If you have questions or complaints about counterfeit drugs and/or drugs purchased over the Internet, please call Health Canada’s toll-free line at 1-800-267-9675. If you suspect that a website is promoting a treatment or cure that is too good to be true, please contact the Competition Bureau toll free at 1-800-348-5358 or go to www.competitionbureau.gc.ca.
2. Not So “Free” Trials
You may want to try out a new diet product, an acne cream or teeth whitener, but be careful about signing up for ‘free’ trial offers. Many websites offering a free trial for products do not disclose the billing terms and conditions or do not have such details prominently displayed on their website. Before providing any credit or debit card information, review the website fully to avoid in repeated billing. Remember that money transfers and direct debit are two of the main methods by which scam artists seek to obtain your money.
QUICK TIP: When considering trial offers, be sure to first determine whether you are enrolling in a membership, subscription or service contract that allows the company to charge fees to credit cards. To file a complaint, go to www.bbb.org.
3. ID Theft
Often people find out that they are victims of identity theft after they are contacted by a collections’ agency for an account they never set up or because their credit has taken a hit. ID theft is when someone uses your information to obtain loans, goods, or services and does not pay the bills. Increasingly, people are being lured online into revealing personal information.
QUICK TIP: Do not fall for requests for information, or other scare tactics. Online scammers send emails that look legitimate, requesting that your “account information needs to be updated.” Another new tactic called “scareware” has a pop-up message showing that your computer is infected with a virus and that you need to visit a website to purchase and download anti-virus software that would fix the problem. These are all phishing tactics, ways to get you to reveal personal or financial information. If you receive these messages just delete them and do not click on any links. Doing so may compromise your computer’s security. If you are a victim of ID Theft call your financial institutions to request that your current cards be cancelled and that new cards be issued. You should also contact your local police and Canada’s main credit reporting agencies: TransUnion Canada at www.tuc.ca (1-866-525-0262) and Equifax Canada at www.equifax.ca (1- 866-779-6440).
4. Home Repair Rip-Offs
Imagine hearing that your furnace is leaking dangerous carbon monoxide into your home. Many times homeowners are told that they need to do an immediate replacement due to a crack in their heat exchanger or because the contractor has a gas-sniffer device which shows high carbon monoxide levels. This high pressure safety situation often ends up in unnecessary and costly repairs.
QUICK TIP: Do not make a decision to repair right away. Start with the Better Business Bureau and search for a company reliability report at bbb.org. Ask the person to provide a gas permit and a license with the BC Safety Authority and call to verify it at: 1 866 566 7233. Report misleading door-to-door sales practices to Consumer Protection BC. For complaints, contact Consumer Protection BC at 1-888-564-9963 or go to: www.consumerprotectionbc.ca.
5. Small Business Loan and Supply Scams
Looking for credit to keep your business afloat can be tough, and that is why you need to be careful of ‘no credit’ or ‘bad credit’ loan offers. What looks like quick and easy credit can often end up resulting in huge financial loss and possibly ID theft. Other companies call and pretend to be a regular supplier looking to confirm your address in a directory or to ship office supplies. Once bills arrive for unwanted advertising or overpriced supplies, aggressive “collection” agents call with threats of legal action.
QUICK TIP: If you receive an unsolicited phone call, email, or letter from a lender, be suspicious. Avoid dealing with a person who guarantees a loan without checking your credit or reviewing your business plan. Also, beware of lenders who:
• cater to applicants with bad credit;
• pressure you to make a decision on the spot;
• request payment using a wire transfer service such as MoneyGram or Western Union.
Restrict the number of people in your company that can make purchase decisions and insist on a valid purchase order. To report a small business loan or supply fraud, please contact the Competition Bureau at: www.competitionbureau.gc.ca or 1-800-348-5358.
6. Free Government Money Schemes
Do you think you are entitled to free money from the Canadian government? Be suspicious of companies offering “free” advice on obtaining government grants. Often social networking sites and online ads will point to blogs that appear to be written by everyday people who are sharing the secret of how they received thousands of dollars in grants from the government to pay off their debt. In reality, this is a mass marketing scheme that does not provide an easy way for you to get a government grant. Rather, it costs you money to participate.
QUICK TIP: While it’s true that the federal government does give out grant money every year, most grants are given to specific target groups, such as post-secondary researchers, or to specific industries. There is no reason to pay for software or guides when applying for government grants. Such information is already available for free on the Service Canada website servicecanada.gc.ca or by calling 1 800 O-Canada (1 800 622 6232). If you believe that someone is engaging in this type of fraudulent activity regarding government grants, please contact the Canadian Anti-Fraud Call Centre (“PhoneBusters”) at www.phonebusters.com or 1-800-495-8501.
7. Business Opportunities
Your friend or a family member may have invited you to attend a presentation involving an investment opportunity. You don’t know anything about the company, and are desperate to hear that it is legit. These investments appear lucrative, but often involve more hype than substance. The promoter convinces investors that they can be part owners of an exciting investment portfolio, provided that they enlist new recruits. The promoter may even offer promising commissions in cash and bullion.
QUICK TIP: In reality, this could be an illegal pyramid scheme. The new capital brought on by new investors is keeping this imaginary investment afloat. Get the facts. If you attend an information session, be sure to collect business cards and promotional materials. You should also ask the promoters questions. For example:
• Who are the principals of the company?
• What are the average earnings of a “typical” participant – with half of the participants earning more than this amount and half of participants earning less?
• How much are the start-up costs?
Gather as much information as possible, before agreeing to anything. If you have reason to believe that someone is engaging in misleading advertising or deceptive marketing practices please contact the Competition Bureau at: competitionbureau.gc.ca or 1 800 348 5358. You should also consult the BC Securities Commission’s investright.org for information on how to select an advisor and what to look out for when choosing to invest.
8. Cashback Fraud
Cashback fraud usually begins when you advertise something for sale, such as a car. A buyer agrees to pay your asking price, but sends you a cheque or banker’s draft for a larger sum. The person asks you to bank his cheque and send him a money transfer for the difference. Sure enough, his or her cheque bounces a few days after your money transfer has left your account. You’re now out of pocket and looking for a bogus buyer who’s out-of-reach.
QUICK TIP: Criminal cashback works because cheques take longer to clear than electronic bank transfers. Do not ever wire money to a stranger. Do not allow greed to be your guide — be careful of offers higher than the asking price. If you believe that you are a victim of cashback fraud contact www.phonebusters.com or call 1-888-495-8501.
9. Hidden Cell Phone Charges
If you own a cell phone and see new and unexplained charges on your bill each month, it may be due to premium text message services. People complain that they did not realize they were signing up for this service when they agreed to play an online game or to take an IQ test. In the end they receive monthly billings which do not come from their cell phone service providers, but through other third-party companies.
QUICK TIP: Premium subscription services require customers to confirm their subscription twice to insure they are aware of the cost per message, the frequency of messages and the opt-out information. Read all the terms and conditions when signing up for a game and think twice if you are required to provide your cell phone number. To file a complaint, contact the Commissioner for Complaints for Telecommunications Services at www.ccts-cprst.ca.
10. Mystery Jobs Scams
The scenario sounds too good to be true, and it is. You have been led to believe that you will be paid to mystery shop via a wire-transfer service. You receive a cheque, which you are told to deposit, keeping a small percentage of the money as your wage. You are then asked to send the back difference via a wire transfer and to complete a survey on the service you encounter. In the end, the cheque bounces and you lose all your money.
QUICK TIP: Be skeptical of mystery shopper ads in newspapers or online. In most cases these are bogus services requiring you to pay money upfront. Avoid companies that promise guaranteed jobs, and that sell directories of companies that provide mystery shoppers. To file a complaint contact the Competition Bureau at: www.competitionbureau.gc.ca or 1-800-348-5358. For mystery shopping work, go to the Mystery Shopping Providers Association (MSPA) website at www.mysteryshop.org.
Submitted by the Better Business Bureau