Bogus identity theft websites host cash for clunkers scams, plus recession scams and 3 business scams: Internet Scambusters #348
Cash for clunkers scams take the spotlight in this week's Snippets issue.
Crooks set up scores of bogus sites claiming to be part of the government program to encourage owners to trade in their old gas guzzling cars for new fuel efficient models. In fact, these bogus cash for clunkers sites are fronts for identity theft.
We also take a close-up look at an FTC campaign to halt recession scams and three new business con tricks.
One final thing before we get to today's topic of Cash for Clunkers scams: It seems that we goofed in last week's Scambusters issue, where we featured a list of urban legends published by The Independent newspaper in London that included a mystery flower said to look like a parrot in flight.
The newspaper had it down as an urban legend and we reported it as such. But we've since established that the flower really does exist -- MANY subscribers let us know. It's a rare variety of the impatiens flower species found mainly in Thailand. We apologize for the error.
And now for the main feature...
Cash for Clunkers Scams Flourish Amid Confusion
American motorists seemed to burn through the initial money in the government's CARS program in record time -- but not fast enough to stop crooks from launching a spate of what have become known as "cash for clunkers" scams.
And they carried on scamming even when the program almost ran out of money (although more funding has now been appropriated, and the program is now expected to go through Labor Day, if not longer).
Clunkers scams run wild in car buying frenzy
Officially the program was called CARS -- for Car Allowance Rebate System -- but the government program that offered big discounts for trading in gas guzzling autos for more fuel efficient models quickly became known as "cash for clunkers" 2009.
Within 24 hours of the announcement of the plan, we had cash for clunkers scams too!
And that was even before the program actually launched in late July 2009.
There was just so much confusion and such a frenzy of pent-up demand for the deal, it was just a natural for the crooks.
Then, even when the program ran short of cash, the scammers were still busy pretending otherwise: that you could still get a clunker rebate.
The program works by giving credits of up to $4,500 when buyers trade in their old clunkers, which are then scrapped. But the qualification details behind it are not so simple.
Exploiting the confusion, the clunker scam merchants set up scores of official-sounding websites supposedly offering advice and an easy route to the credits.
Many of these sites said people had to pre-register for the program. And of course, victims were then asked to key in personal information including Social Security numbers. This was a straight phishing attack followed by identity theft (you can find more on phishing and on identity theft below).
Other cash for clunkers scammers charged a fee either for bogus vouchers they claimed were part of the program or for a list of authorized dealers who were supposedly part of the program (in fact, all dealers can take part).
On the other side of the fence, car buyers have been trying to work their own cash for clunkers scam, buying cheap autos then attempting to trade them in for the full credit. It doesn't work -- buyers have to prove they owned the trade-in vehicle for at least the prior 12 months, and that it was insured (i.e., being used!).
With the extra $2 billion recently injected into the program that we mentioned above, the CARS program is now supposed to be funded until Labor Day 2009 (or perhaps even longer) -- if the cash doesn't run out before then.
And even if that happens, the cash for clunkers scam leaves us with another important lesson: always find and check the official sites for any government program, especially those that give away money!
Operation Short Change Targets Recession Scams
Staying with the FTC, we're delighted to see that the consumer watchdog and the Justice Department have launched a new initiative to clamp down on scammers exploiting the economic downturn by offering jobs that don't exist, phony investment and get-rich-quick schemes, and more.
It's called Operation Short Change and comes on the heels of a huge easy-money real estate scam in California that duped 600,000 people out of $300 million.
The program involves shutdown and court prosecution of scam companies. The Commission will also try to get victims' money back -- but that may be a long shot. If you spot a scam or think you've been a victim of one, contact the <a href="http://www.ftc.gov" target="_blank">FTC.
And wise up to recession scams by checking out our recent issues on the subjects of job scams and the bad economy.
Three New Small Business Scams
We round off this Snippets issue with news of three new scams targeting small businesses.
Business scam #1: You won an award!
You didn't enter any competition but you receive a letter or email from a "national association" saying you've won a prestigious award for being "an outstanding local business."
Phooey! They want a couple hundred bucks off you for a "crystal trophy" that's only worth a fraction of that -- if you ever receive it at all.
Tip: If you didn't enter, you almost certainly didn't win (especially when you have to pay something for the "honor").
Business scam #2: You're fined!
Insurance agents are being warned about phone calls from bogus state insurance department clerks, threatening to cancel their license because of some phony infringement.
They claim this can only be avoided by instant credit card payment of a penalty.
Tip: State governments don't use instant fines. Don't believe anyone is who they say they are -- verify it independently first.
Business scam #3: You poisoned me!
In small restaurants and fast food franchises, a scammer claiming to be a recent customer aggressively demands a refund because something you gave them sparked an allergic reaction.
They may exhibit symptoms like red eyes and skin spots, and even ask for compensation for emergency treatment or medications they supposedly had to get.
Tip: Just don't pay. Ask for name and address details. If it's a scam, they either won't tell you or give details that turn out to be phony when you check them.
Watch out for these scams if you run a business -- or pass them on to someone else who does.
From cash for clunkers scams to fast-food "poisoning," this Snippets issue has alerted you to the latest con tricks to be on the lookout for.
That's it for today, but we'll be back next week with another issue. See you then!