Money Scams to Look Out For in a Recession

Common Recession Scams to Look Out For

By: Pam Grundy

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Times are tough, and sadly, tough times bring out tough crooks. Recession scams are on the rise, and some of them are so truly heartless they are nearly unbelievable. Knowing what to watch out for and even when to call the police can save you lots of money and untold heartache.Financial scams have certain common features that should always serve as red flags: if they sound too good to be true they probably are, if they involve you putting up some of your own money they’re probably trying to steal it, if they appear from out of nowhere and offer to ‘save the day’ they probably will do the exact opposite.
Here are some of the most common scams to look out for in a recession. If you run into any of these, run, don’t walk, in the opposite direction. Then call the FBI or the police and report the scammers.

Foreclosure Scams

When a mortgage goes into default, a notice must be filed by the lender with the county in which the property is located. Foreclosure scammers watch these notices and contact the people who are about to lose their homes. Usually they promise to help the homeowner stay in their home by taking over the deed and renting the house to the original owners, promising to sell the house back to them for what is left on the mortgage once they are back on their feet financially. What happens instead is that as soon as the fake foreclosure rescue company is added to the deed (usually as some generic, impossible to trace real estate firm), they cash out the equity in the home with an out of state lender and disappear, leaving the original borrower in more debt than ever and still with no way out of the mess. Foreclosure scams are so rampant right now, the FBI can’t even keep up with all the reports. Never sign any document offered by someone who claims to be able to stop your foreclosure.

You Won a Lottery and Got a Big Check in the Mail.

This scam is so common that many banks have posters in the lobby that explain it. What happens is: you receive a large check in the mail drawn on a major bank you recognize, along with a letter informing you that you’ve won some sort of lottery; but before you can claim your winnings, fees must be paid. The check is for the amount of the fees. You are instructed to deposit the check, and then to call an 800 number to give your banking info so the fees can be deducted and your prize money released. The scammers then clean out your bank account before you realize the check they sent you is no good.

You Get a Call About a Problem With Your Debit or Credit Card

This scam catches more people than you might think. You get a phone call from someone claiming to represent VISA or MasterCard, saying that there is a problem with your card and they need to verify for your pin and your account number in order to reactivate the card so you can use it again. Of course, the minute you verify the information they use your card fraudulently and clean out your accounts. Never give account information over the telephone to anyone who calls you first. If you do this without thinking, call your bank immediately and report the fraud so they can freeze your accounts and stop your card.

You Get a Phone Solicitation From the Fraternal Order of Police or a Charity You Don’t Recognize

Never, ever make a telephone donation with a credit or debit card to an organization that calls you this way. Hang up, look up the real organization in the phone book, and ask them if they are doing any phone solicitation. There is a 99% chance that they are not.

Debt Consolidation Scams

You see theses ads all over the TV: 'Call now and get your debt payment down to one low amount and pay off all you cards and all your loans quickly and easily.' Some of these organizations are genuine, but many of them are little better than payday loan places. If you sign on with them they will add all kinds of fees and commission charges to your debt, and seize your bank account if you miss even a single payment. If you are having trouble with debt, see an attorney. An attorney can often negotiate a partial settlement of your debt for you at a better rate than a debt consolidation company, or, if it is better for you in the long run, an attorney can advise you on whether you might want to consider bankruptcy instead.

Someone Approaches You on the Street With a Weird Request

Someone asks you to help them out in some way and give you a kick back if you cash a check, take some money out of or to a bank, or any other strange request that sounds a bit off but promises to leave you with easy money. Say no thank you and call the police immediately, giving a good description of the person who made you the offer. These kinds of cons are centuries old, and always spike during hard times. They play on the promise of slightly illicit easy money. Don’t fall for it.

You Get a Card in the Mail Claiming You’ve Won a Car, a Luxury Condo, or a Major Appliance

The catch is, you have to call an 800 number and give out personal information in order to claim it. Don’t do it. Not too long ago, thousands of elderly people were caught by a scam in which they received cards in the mail that made them think they had won the Reader’s Digest Sweepstakes. Closer examination of the document revealed it to be a magazine subscription offer. Many elderly people called the 800 number, gave their information, and never did receive a prize, so they complained to their Congresspersons. Eventually the mailing had to be revised because of the avalanche of complaints.

Someone Shows up at Your Door and Offers a Prize or Freebie if You let Them Give You an Estimate on New Windows, Siding, or Roofing

Anyone can walk up to your door and pretend to be anything at all. They can carry around anything they want, give you a free water bottle, look around your property, then come back and rob your house. Never invite any solicitor inside your home. They could be casing your house for a future burglary.

Don't be a Victim of Recession Scams

Bad times bring out desperate people, but the flip side of that is that bad times makes desperate, good people fall for scams they might normally avoid. Con artists usually play on your sympathies and/or your fears and often promise things that don’t seem possible but that you really, really want. If someone shows up uninvited with a miraculous solution to a problem you don’t want to talk about (like foreclosure or debt), that should trigger your fraud alarm bell immediately. Another red flag is any scheme that requires you to front some of your own money, no matter how good the reason may sound, or any scheme that requires you to disclose personal information you normally wouldn’t disclose in order to get at a prize or a cash reward.

If something feels ‘off’ it probably is. Trust your instincts and never deal with anyone you don’t know. If you do become a victim of fraud, report it immediately. Con artists count on your shame and secrecy to make it safe for them to defraud the next person, so don’t cooperate. Call the cops.

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