Financial Planning for February 2005

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This Is Your Last Chance!
Saving Your Money for Better Uses
If you’re reading this article, it’s a fair bet that you have encountered that high tech scourge of humanity known affectionately as "spam."

Before you jump to conclusions, this is not an article designed to tell you how to get rid of spam. Not even we are that good. Rather, our intent is to help you avoid one of the many effects of spam - becoming a victim of fraud. If you have been using e-mail for very long, you have probably received a "hot" stock tip or the "opportunity of a lifetime" to make a bundle working part-time at home. If you have followed up on one of these or the host of other scams that grace your inbox, don’t feel bad. You’re in good company. Everyday, sincere unsuspecting Americans lose money on internet scams and whether you are trying to raise a family, build a business, save money for retirement or simply save for a vacation, you can’t afford to waste money on the high tech equivalent of highway bandits.

So, what are the more common scams and how do you spot them? More to the point, how do you protect yourself from becoming a victim? Let’s do a little investigating.

First, let’s look at some of the more common scams and since there is one particularly egregious fraud going around today, let's start with charity scams. While any scam purporting to raise funds for charitable causes is despicable, the most recent round purporting to raise funds for victims of the tsunami in the Indian Ocean are particularly egregious considering the devastation of both life and property. The scams take a number of forms, but the most common are phishing schemes where the swindler asks for donations but is really looking to collect personal and financial information that can later be used for credit card fraud and identity theft.

Another type of scam appeals to the "get something for nothing" syndrome common in much of today’s society. The Nigerian fee scam, though it has received a significant amount of press, still plagues honest citizen’s inboxes. This is the scheme where you receive an unsolicited e-mail that purports to give you a large "fee" for allowing the con artist to use your bank account to transfer funds out of a particular country. Though it is called the Nigerian fee scam, this particular fraud is being used in connection with the tsunami and is not limited purely to Nigeria. The whole idea behind this scam is to get personal information, including your bank account information, to steal your money directly from a bank account.

Internet auctions are an effective way of appealing to the thrifty among us. Let’s face it, most of us like a good bargain and what better than an Internet auction to drive the prices down on "name brand" products? The scams can be perpetrated through legitimate businesses like E-bay, or "new auction" sites. In a worst-case scenario, you stand to lose all of your money when you send it to the "seller" of the auctioned item. In a best-case scenario, you may receive a product, but of lesser value than the product you supposedly purchased.

Of course, there are still the standard credit card frauds. These can come in the form of unsolicited advertisements for products, unsolicited offers of low interest credit cards if you apply over the internet and, of course the good old-fashioned theft of your credit card information followed by using such information to purchase items over the Internet illegally.

In addition to the preceding scams, there are numerous other scams and variants on tried and true swindles. So how do you protect yourself against unscrupulous con artists? In some ways, the answers are easy, but for every easy answer, someone has figured a way to beat your fix, or you must at least act that way.

Probably the single most effective way to beat scams presented to you through spam is to simply delete any e-mail from an unknown source. While this may cause you to delete the occasional legitimate e-mail, it is far better than having to fight with credit card companies, credit bureaus and others who may also be victims of a scam that victimized you. Most of the time, you can tell by the subject line of an e-mail that it is legitimate if you do not immediately recognize the return address, but this is not always true and you must therefore be judicious in the e-mail you open.

If you receive a request via e-mail or telephone to aid the tsunami victims, do not reply to the e-mail or give any information to the person on the other end of the line. Instead, if you are inclined to help, take down any pertinent information then investigate the claims of the group asking for contributions. There is plenty of information on line to help you decide whether a group is legitimate, but don’t rely simply on a supposed website if you have never dealt with a particular group. You can check most organizations out through the Better Business Bureau and you can go to the IRS website to search for legitimate charities. Well, the IRS can tell you if the group is a recognized charitable group. After that, you can ask the group for its Form 990 before giving money.

If you receive a request from anyone to assist in moving money by using your bank accounts, RUN! Too many people have been caught up in these schemes and lost tons because the request sounded legitimate, but was totally bogus.

At the end of this article, we will give you a few helpful sites, but there is one other tool at your disposal - common sense. Adages like "If it sounds too good to be true, it probably is" and "You don’t get something for nothing" were made for the Internet. The bottom line is you do not know who is on the other end of an e-mail communication or a telephone line unless you have an already established relationship that has proven legitimate over an extended period. This common sense approach will minimize losses and wastes of your hard-earned money.

If you want to take a further look at this subject, you can go to a number of websites, including Internet Scambusters and Neither of these is the only resource to help you avoid scams, but both appear to be comprehensive and include links to various law enforcement agencies and other resources to help you stay safe. Taking the time to walk through these and other scam alert sites will save you tremendous headache in the future.

This has been just a short trip into the world of online fraud. The subject could probably take up several print volumes, but suffice it to say that you have to be careful in cyberspace not to give away your money. Doing your homework can go a long way to avoiding possible losses. If you have any questions on this or other financial planning topics, give us a call. We are here to help and we have the expertise to do just that.

Happy Valentines Day to all of you lovers and to everyone, have a great February.


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