7 tips to keep you clear of training scammers: Internet Scambusters #966
Most of us want to better ourselves by training up with new skills. But are you so keen that you could be lured into a scam?
In this week's issue we'll explain how groups of scammers work together to pull off a costly con trick on people who want to better themselves..
And we'll tell you about the red flags that could signal a fraud.
Let's get started…
Victims Lose Thousands In Training Scams
Since more of us have been confined to our homes than is usual, it's no surprise there's been a surge in online training. It many cases, it's because we want to use the extra time on our hands to extend our knowledge and skills -- and maybe make a little money.
In most instances, providers naturally want you to pay for acquiring those skills and it's easy to fall for dishonest programs that cost a lot, make big promises, and then fail to deliver -- especially if there's a lure of earning extra cash.
Improving your investment knowledge, coaching for personal or business skills, or learning how to launch a start-up can be powerful keys to unlocking additional income. Scammers know that. And right now, they're busy tricking victims into handing over sizeable fees for little or no benefit.
In some cases, these fees can run into tens of thousands of dollars. Alternatively, fraudsters have set up fake loan sites to pay for training, especially for people wanting to invest in real estate. This is a hot market, with mouthwatering profit potential for those who know what they're doing and have or can borrow the cash to pay for their learning.
$3,000 For a Credit Card
In one recent instance, a supposed lender allegedly charged a $3,000 fee to arrange a loan for would-be property investors. But all they did for their victims was submit a credit card application! In some cases, the firm was said to have encouraged applicants to inflate their earnings or financial assets in order to get credit limits as high as $50,000.
Oftentimes, victims were encouraged to make multiple card applications -- a tactic known in the scam world as "credit card stacking."
Victims were convinced to do this by the promise of fat profits. According to the US Federal Trade Commission (FTC), they were told they could inflate their earnings by up to $100,000 because that's how much they could expect to earn in their first year of investing.
The alleged scammers raked in around $10 million in fees, while their victims ended up with a mountain of debt, poor credit scores and, in most cases, no additional skills. The money they borrowed paid for questionable or worthless real estate and business start-up training programs and seminars.
The "lenders" were said to have tipped off the supposed training providers about the high credit limits of their victims, so the "trainers" knew exactly how much they could get away with charging.
Sometimes, the trick worked the opposite way, with supposed training providers telling applicants they could arrange financing and then putting them in touch with the credit card tricksters.
Either way, it was a "buddy-buddy relationship" between the two sides -- teamwork that made the scheme work, said the FTC.
A few months ago, the Commission launched what it called Operation Income Illusion to shut down coaching programs that "guaranteed" big returns for participants. One of the firms targeted was said to have made more than $137 million from victims.
The sort of tactics coaching scammers use often include glowing promises such as "Learn from the experts how to generate guaranteed income" or "Work from home and make money with little time and effort."
7 Key Tips
It's very tempting, when you're under financial pressure or ambitious to improve your income, to fall for these types of claims. It pays to be skeptical and take your time before deciding whether to pay to learn from coaching organizations.
Some, of course, are genuine, but it may save you a lot of money by avoiding the scams if you follow these 7 tips:
- Don't be taken in by unproven claims, especially those that use the word "guaranteed." No one can guarantee a particular level of return.
- Don't be fooled by testimonials either. Scammers churn these out in the hundreds.
- Don't yield to time pressures that claim you'll lose an opportunity if you don't act immediately. Take your time to think things over.
- Seek professional advice where available. For example, the government's Small Business Administration is a useful source of guidance for would-be entrepreneurs and business startups. The agency offers free mentoring from volunteer experts under a program called SCORE.
- Think very carefully about borrowing money, especially using high-interest credit cards, to pay for training. If you do decide to go down this route, apply yourself; don't pay someone else to do it. And always be honest about your current income.
- As we always recommend, do your own research about the credentials and reliability of training and coaching organizations. Check out alternative training providers.
- Read this report from the FTC on scam coaching and business programs: When a Business Offer or Coaching Program is a Scam.
Alert of the Week
Fake US Customs and Border Protection agents are the latest crooks to join the impersonator scams list.
They claim that they've intercepted either a suspicious package or a parcel of lottery winnings addressed to the victim.
Then they may demand, with threats, the victim provides personal, confidential identity information, or, in the case of the lottery winnings, a substantial fee to get the money.
Customs and border protection people don't use the phone this way, so you can safely hang up.
Time to conclude for today -- have a great week!