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5 Financial Scams That Target Your Money

Financial strain combined with busy lives can compromise the ability to make sound financial decisions. Are you a generous person with precious little time to research charities? Are you too busy to carefully monitor your online profile? If “yes”  to any of these questions is your answer, then I caution you: be aware of these five financial scams.

The financial scams that we will review can be categorized as either “get ahead” scams or “help” scams.

In nearly 20 years of law practice emphasizing bankruptcy, I have been very impressed by the generosity of my clients. At the same time, my clients are generally hardworking people, and are exceptionally busy. They often provide substantial financial help to family as well as support to charitable causes like disaster relief, religious groups, or charitable organizations—sometimes in combinations. Balancing families, commitments to others, and workplace responsibilities, it is no wonder that my clients sometimes don’t take the time to investigate whether an opportunity or a request for help is truly legitimate, or whether it is an exploitative scam.

The “help” scams that touch the hearts of my generous clients make me sad. Unfortunately, the best of intentions and most generous of natures are exploited from time to time by unscrupulous shysters.

When it comes to “get ahead” scams, I sometimes sadly learn that their efforts, and drive to get ahead financially have been exploited by equally shady characters.

Both types of scammers are very active now. They know that many innocent, good-natured people may have a little extra cash this spring. The scammers step up their efforts in late February, March, and April because their targets may receive federal tax refunds.

Even if you aren’t expecting a tax refund this year, you may still be a target for the scammers. The “get ahead” variety will attack whatever funds you’re willing to part with in the hopes of investing in bettering your life in some way.

We all remember the old internet email scams of yesterday; clumsily written, and misspelled email come-ons offering huge windfalls in exchange for helping some long-lost offspring of exiled monarchs move a still larger fortune from some small country to ours with your help. All you need provide is a complete personal dossier that enables identity theft and a raid on your bank accounts.

Today’s newer scams are often better written, and sound more plausible, than the offers of a huge commission for helping someone move funds from overseas. These new scams are still every bit as dangerous to your family’s finances and identity as those that originated in the mid-90s.

Three Questions

Let me ask you three difficult questions:

  1. If you are under either financial stress or have an unexpected need for income, would you consider an offer to “get ahead” quick?
  2. Has your good nature and willingness to sacrifice a bit of your worldly goods—perhaps feelings of guilt for the conditions that you see the needy in when compared to your own—led you to consider doing something—anything—that could “help”. You may feel that you are either too busy or that it is rude to question the veracity of those who make such plaintive entreaties for urgent financial help?
  3. Are you too preoccupied or does it seem too confusing to properly monitor your profiles on social media? Unprotected, open profiles provide scammers the best hunting grounds for opportunities and information.

If you don’t consider yourself at risk in any of the aforementioned areas, do you know of a friend or loved one who might be financially pressed or overly generous, and may more easily fall prey to one of the scams we described above? If under financial strain, you can always contact with us for a free and confidential consultation. If a friend or loved one is in need, we welcome you to accompany them so that you can provide moral support and encouragement. After all, that is why we have friends—for support and encouragement.

If you or a friend or loved one owes money on medical bills, taxes, credit cards, collections or court fines, by all means call us. If you or a friend or loved one is struggling under the weight of a costly mortgage or vehicle payment, then please come in for a consult. Don’t fall prey to the allure of a scammer’s “get ahead” story.

The Five “Big Ones”: The Hottest Scams of 2012-2013

  1. Over payment/Fake Check/Car Ad scams: – A “get ahead” scam. The online ad says: “Get Paid Just for Driving Around”—naming a prominent and reputable company offering $400 or more per week to drive around with the company’s logo on signage placed on your vehicle. The scammers are convincing; they even mail you a check with strict instructions to wire-transfer part of the money to the “appointed” graphic designer who will create, customize, and deliver the advertising banners which will be later mailed to you for placement upon your vehicle. When the check mailed to you bounces a week later, the “graphic designer” is long gone, you are out the money which you wired over to the “graphic designer”, and you have a nice overdraft situation to deal with at your local friendly bank or credit union. Exasperating!
  2. Emergency Scam: Grandchild or friend in trouble overseas! Help! I am in London and lost my wallet so can’t even pay for a phone call to explain, so I am contacting you by text message or email to send me $500 (or more) by wire transfer. Some nice person lent me their computer or this text messaging capable cell phone which can’t make nor accept overseas calls. That’s why—and how—I am able to contact you only by text message or through this new email account I just set up at the local Internet cafe. I need to pay an overdue hotel bill, and to make travel arrangements, so if you could please wire $500.00… You get the picture of course.
    Thanks to social media sites, the scammers can feed you back a more plausible story by extracting personal details from your social media profile. For example, you might receive a very factually specific “help” scam message like, “Yeah, remember the video camera Jane got me for Christmas? I was so excited to take that new video camera I received last Christmas on this spontaneous trip to Denmark. I am so bummed that just after arriving, I was mugged, lost my cash, credit cards, and phone, and I can’t even pay my hotel bill. By the way, not paying your hotel bill here in Denmark is punishable by imprisonment. They have given me two hours to get the funds to pay the hotel bill or else the Danes are going to imprison me along with a huge bail obligation I won’t ever be able to afford.”
    “Emergency” is an old “help” scam, but the new twist is that real events and names are used in the communication to make it more believable. This information is skimmed from unguarded social networking profiles.
  3. Mystery Shopping: a “get ahead” scam. Mystery shopping can be legitimate, but to learn how it really works, visit the Mystery Shopping Providers Association site. You might avoid falling prey to a scam.
    The mystery shopping scam is really just a variation of the over payment fake check scam described above. As a scam, the mystery shopping “employer” hiring you first sends you a check. As your first project, you are assigned to “evaluate” the customer service quality of a money transfer wiring service. You are supposed to cash the check on your own bank account, then you are to wire back some significant portion of the proceeds to the mystery shopping “employer”. They toss in a legitimate sounding requirement to complete a questionnaire about the money transfer wiring service staff—whether they were professional and courteous, etc.
    When the check you received from your mystery shopping “employer” bounces, and you are left holding the bag for a large overdraft obligation, you will realized that you are the victim of a scam. Good luck tracking down your mystery shopping “employer” to make good on the bounced check.
  4. Advance Fee/Prepayment scam: a “get ahead” scam. We all need a little extra cash from time to time to provide for family or household needs. The fraudsters know this. Watch out for “no credit check” or “easy repayment terms” for a loan advertised online. You will find there is a catch to such a great deal in that you have to first send in a payment for a “loan insurance policy” or to “secure” or “process” your loan.
    Of course, once you send in the payment for the “loan insurance policy” or to “secure” the loan or to “process” the loan, you learn that there was never any loan to be made, and you have lost the funds you paid.
  5. Charitable contribution to help those who suffered through tragic events: a “help” scam. Now, this one is really sick. While not necessarily a financial benefit/gain scam, it is among the lowest of the low. Reports abound of entreaties through social media and email seeking donations which are (falsely) dedicated to the suffering victims and their families. There has allegedly been at least one FBI arrest related to one of the many scams preying upon national sympathy for the Sandy Hook Elementary School victims.
    If you do wish to donate to Sandy Hook Elementary related causes, perhaps you should first review the Better Business Bureau’s Wise Giving Alliance site to help you confirm that a charitable organization that interests you is legitimate.

Incautious generosity, financial strain, and family/work time pressures can lead to scam vulnerability and potentially to a financial disaster. Take the time to think carefully. Am I or someone I know truly vulnerable to a “financial gain” or a “help” scam? You may still be confused about some aspect of these offers, or some other major financial decision that could have life changing consequences. If so, a free 30 minute consultation with me, consumer/small business bankruptcy attorney James H. MaGee may be of help. Every situation is different, and the options may vary according to the details of the case, but as it is a free 30 minute consultation, why not take advantage of my expertise with no obligation?

Rebuilding the financial foundation for your life after falling behind on bills, or after a life changing event, is complex, no two cases are exactly alike. I may be able to help you understand your situation more clearly; I can certainly help you by discussing certain trade-offs and options concerning your situation, including bankruptcy chapters and their applicability to your situation. You can email my scheduler through our website for your free 30 minute consultation at or e-mail directly at [email protected]. To schedule immediately, you can reach a member of our friendly staff by calling at (253) 383-1001. Our office hours are Mondays through Thursdays, 9 AM until 5:45 PM, and on Fridays from 9 AM until 12 PM.

Winning Ways to Distribute Your Tax Refund

If you’re receiving a tax refund for tax year 2012, or any tax year, congratulations! The government is refunding the no interest loan that you made in that tax year. Your refund may be small, in which case you deserve congratulations again for not making too large a loan to Uncle Sam, or it may be larger, in which case it may make sense to review your withholding options.

Those topics are for another day. Let’s take the case of the typical taxpayer.

Tax Return documents
In 2012, for the 2011 tax year, taxpayers received a tax refund that averaged $2,700. That’s more than a month’s worth of income for two thirds of US taxpayers.
So, what would you do if you received an extra month’s pay?
I agree with most personal finance advisors who recommend that you pay yourself first. The one thing that you can count on is the need to save for events in life that you didn’t count on. You may not have planned for an event that involves an unexpected expense, but if you have a savings plan, you have better options than someone who has no plan.
OK, so how much of the refund should I save? Let’s pick $1,000.
Here are some ideas—winning ways—to make that payment to yourself.
1.       Make savings a habit. Start a Roth IRA. If you don’t qualify yourself, consider opening one for a family member. If you or your family member had taxable income for the year (even if no tax was due or paid), you can usually contribute up to $5,000.00 into a Roth IRA. The Tax Code provides that this contribution will grow tax-free year after year. What’s more, it can be withdrawn penalty free and tax-free after the person who owns the Roth IRA reaches age 59 1/2. Even if financial troubles occur in the future, the money in the Roth IRA is virtually unreachable by creditors, even if you or your loved one has to file for bankruptcy.
2.       Create a personal financial emergency fund. Set up a separate savings account for this purpose at a bank or credit union. Financial planners recommend that this fund cover three to six months of your typical living expenses. Most employers’ payroll systems can help you set up a paycheck allotment or auto-deposit of $100 monthly into your emergency fund. In just two years, your fund will grow to nearly $5,000.00.
3.       Get a professional financial review. If you feel that you might have enough income for some modest retirement counseling, then get a professional review of your finances from a fee-only non-commissioned financial advisor. You should expect to pay less than $1,000.00 for your personal review, leaving the balance to allocate as your advisor recommends. How is this different than calling Edward Jones or Charles Schwab?  There is a big difference: your local stockbroker is a salesperson, not a truly neutral financial advisor. Contact the National Association of Personal Financial Advisors for a local referral.
4.       Invest in your home. Whether you concentrate on a specific room in your home—the kitchen, a bathroom, the family room—or spread your efforts inside and out, you can make noticeable improvements by doing it yourself. Not only will you enjoy living in your upgraded home, you may find that the home improvements you made improved the resale value of your home should you need to sell your home someday.
5.       Invest in yourself. Some people may not like it, but those who “dress for success” usually do succeed more than someone with the same skills and personality who don’t pay attention to their appearance at work and socially. The book at the link was originally published in 1975. The advice is just as good today as it was then. Don’t overspend though. Limit yourself to $500, and follow the guidelines in the Dress for Success book or other business-friendly sources. You can always upgrade your wardrobe again after you get that big raise because you showed your bosses that you take your work, and your appearance at work, seriously.
If you feel your wardrobe is covered, there are other good ways to invest in yourself—your skills, your mind and body, even your creativity.
6.       Extend the life of your car. The tips at the link helped one car owner keep his machine running for 3 million miles. Keeping your car running well, and avoiding major expenses—like purchasing a replacement car—is a great way to save. If you already do a great job of maintaining your vehicle in tip top condition, you may want to treat yourself to a great detailing job for the exterior and interior. Tacoma’s own Griot’s Garage has great tips and videos that will help.
7.       Hire a lawyer. There are events in life that require professional advice and services. You’ve seen several of them in the 6 winning ways I covered above. A lawyer can help you author key documents that establish plans that cover events in life that many of us don’t want to think about, but must be addressed sooner or later. Starting with a will to simply cover the division of your assets, nominations of a guardian to care for minor children, care for pets upon your passing, “health care directives” to instruct health care providers about how you want your care handled under certain circumstances, and finally, directions for the division of “non-probate” assets such as life insurance policies, IRAs and 401k’s and “probate assets” such as homes and realty investments in your will. Your lawyer can help you ensure that your wishes are clearly established in a will that will help your loved ones avoid surprises and unnecessary stress that your family after your passing. If you divorce your spouse someday, the same lawyer who helped you establish your will is in a great position to help you to address any changes to your beneficiary designations as a result of your divorce.
You or someone you know may want to turn over a new leaf, and implement one or more of these ideas. Great! However, if indebtedness is too great, you may need to take steps to deal with that past debt before you can return to positive net financial worth. If you can’t see a way clear to paying off your debts in full within two years, filing a bankruptcy case can often quickly restore your creditworthiness and put you back on the path towards a brighter financial future. Call us at (253) 383-1001, or visit our, to schedule a free personal consultation with me so that I can explain how and why. Don’t wait; stop procrastinating! Act now to regain your peace of mind right away.

Do I have to include credit cards with a zero balance on my bankruptcy petition?

While bankruptcy is designed to help people escape serious debt problems, the situation becomes interesting when it comes to credit accounts with zero balances. These are typically credit card debts, either through credit card companies or those issued by individual businesses. When filing for bankruptcy, debtors only need to include actual debts, so in theory, they do not need to list those zero balance accounts. The situation becomes a little murkier if these accounts include monthly or annual fees, and those fees will become due during the bankruptcy process.

In most instances, you can leave these accounts out of your bankruptcy petition. You should be aware that your petition for bankruptcy does become a matter of public record and that most credit providers regularly data match bankruptcy petition notices and their own records. While your account may have a zero balance, your credit provider is quite within their rights to cancel those cards to prevent you incurring new debt.

Should your credit provider not cancel those accounts, they will be available to use post bankruptcy. This can help to kick start a new positive credit history post bankruptcy so it is well worth considering paying down any credit accounts with low balances prior to filing for bankruptcy. Paying down those accounts will not guarantee they survive the bankruptcy process, however, it can be well worth exploring the option.

Bankruptcy will, especially in a Chapter 7 bankruptcy, discharge all eligible debt no matter how large or small the balance is. Paying down to zero any low value (less than $200) balances makes sense for a number of reasons, most particularly, having that account survive bankruptcy and available post bankruptcy.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with piles of debts. I can counsel you on your debts. I am sure that I can be of assistance to you, a family member or a friend as we all know someone experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations packed with plenty of information. The life impact of meeting with me in person will be unforgettable. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can email my scheduler through our website for your free 30 minute consultation at staff1. To schedule immediately, we can be reached at 253-383-1001 M-Th 9am-5:45pm and Friday 9am – 12pm.