Protecting Yourself


Depending on the type of financial scam you encounter, there are several things you can do to protect yourself.

Don't Hand over Your Cash

You probably wouldn't invest your hard-earned money in an investment scheme touted by a total stranger in a phone call. So why would you invest in response to an e-mail from a total stranger? One problem with e-mail scams is that they can look so professional and link you to an entire Web site that looks very official. This convinces the unwary that they are doing business with a reputable company when, in fact, there might be only a solitary scam artist behind the whole thing. But when you learn to see through the online bells and whistles, avoiding online financial scams is simply a matter of applying the same caution to the Internet that you use in your everyday offline financial dealings.

There are two great rules of thumb to follow to avoid online schemes that separate you from your money:

  • If it sounds too good to be true, it probably is. When you see a message or pop-up telling you that you can make $75,000 by investing $5, or that you can get rich quick if you click this link in the next minute, or that you have won a sweepstakes but must send $23.97 for shipping and handling and fill in your personal information to receive the prize, then run, don't walk, away. And always report such e-mail to your service provider. This helps them block future messages or pop-ups of this type.

  • No reputable company or organization will ask you to enter your account number, social security number, password, or other information via e-mail or pop-up. Avoid using links to a site from an e-mail message that is asking you for information. If you do decide to go to the site, look it up in a search engine or type in the URL yourself. If you go to the site yourself and note that it is a secure site (many sites "look" like they are secure to fool you, so be sure it's also a company you trust), entering information in forms is fine, but if you haven't initiated the contact, don't provide information.

Here is the U.S. Securities and Exchange Commission's advice about spotting and avoiding online investment scams:

  • Get the facts. Never, ever make an investment based solely on what you read in an online newsletter or bulletin board posting, especially if it involves a small, thinly traded company that isn't well known.

  • Get financial statements from the company and analyze them.

  • Verify claims about any new product developments or lucrative contracts.

  • Avoid offshore investment opportunities. If you send your money abroad and something goes wrong, it's difficult to find out what happened and to locate your money.

  • Check out the people running the company and find out if they've ever made money for investors before.

Find Out More

For a detailed list of questions you should ask before investing, visit www.sec.gov/investor/pubs/askquestions.htm.


Auction Safely

Auctions can be a great way to find a deal, but not when the deal turns out to be a phony. When using an online auction site, follow these guidelines:

  • Use only reputable sites and carefully read the safe buying and selling tips they provide. Good sites update their safety tips as new scams appear and will try to warn you of what you should be on guard against.

  • If the site displays a rating of a user's reputation taken from buyer or seller comments about their shopping experience, check out what is being said about the person or company. Ask for and confirm a seller's phone number in case you have questions or problems, and save any e-mail correspondence.

  • Be very careful about the method of payment you use, and learn what your options are if something goes wrong. If you send a seller a personal check, you might find that the person makes use of your address and bank account information to commit fraud.

  • Sellers also get bitten: They run into buyers who take delivery of the product only to find out that the check or credit card information is bad. Often people feel very safe if they are told they will receive a "bank check" or that the money is being wired, but these offers are almost always fraudulent. You might want to use an online transaction company such as PayPal, or use your credit card, which provides you some protection under the Fair Credit Billing Act. Also, when you use a credit card, be aware that you can dispute the charges.

  • If the seller offers you a lower price if you will deal with them outside the auction site, walk away. It is most likely a scam. They'll get the money, and you won't ever see the goods.

  • Be very clear about what you are bidding on, take care to get a full description of the product, and review any fine print. The most common types of auction fraud by sellers are: failure to send the items purchased; the item purchased has been swapped with an inferior product; failure to ship in a timely manner; or failure to disclose relevant information.

Find Out More

You can learn more about safety precautions you can take with Internet auctions at http://onguardonline.gov/auctions.html.


Using Classified Ads Wisely

When you post your e-mail or other contact information in an online ad, you are giving away a valuable commodity to others online who might harass you, try to sell you things, or sell your information to others. If possible, use an e-mail address provided by the listing service, or get a separate e-mail address to use for the duration of the ad. Be careful not to reveal more information than necessary through photos or text, or by providing contact information.

Follow all the advice I just gave you on auction sites when buying and selling via classifieds. Also, read classified sites' safety material. Classified sites recommend that you purchase items only from individuals within your local area so you have better control over the transaction, to be careful of fraudulent payment forms (especially wire transfers), and to report any abuse to the providers of the system.

Understand that no auction or classified site can be responsible if you chose to hand over your money or sell your product, and got swindled. They can't get your money back for you, although they will point you to government sites where you can report the crime. Do your research: In any financial transaction, follow the age-old advice of buyer/seller beware.

Think About It

Any international transactions should be researched thoroughly, and if you decide to proceed, do so with extra caution.


Final Words of Advice

The Federal Trade Commission offers several tips to help you to avoid phishing and other financial online scams (and I've added a bit of advice of my own in italics):

  • If you get an unsolicited e-mail or pop-up message that asks for personal or financial information, do not reply. And don't click the link in the message, either. Notify your service provider through their junk mail reporting system (see Figure 14-3).

    Figure 14-3. Your service provider should offer easy ways to report junk mail and scams. With Windows Live Mail (formerly called MSN Hotmail), you see the Report & Delete link at the top of every e-mail message.

  • Use antivirus software and a firewall, and keep them up to date. Also install an anti-spyware program (either use free software and run it frequently, or pay for a program you can set up to automatically run and update) to detect and remove any other malware. You should have automatic updates for your operating system turned on as well so that you receive fixes to any problems that have been exploited by a cybercriminal.

  • Don't send personal or financial information because e-mail is not secure. This is also true for instant messaging. An exception to this would be encrypted e-mail or IM. If you pay for a service, the odds are that your communications are encrypted; if it's free, verify whether the service uses encryption.

  • Look for indicators that a site where you submit personal information is secure in the form of a lock symbol on the status bar or a URL starting with https . This isn't foolproof, as these can be spoofed. However, when used in tandem with other precautions that you take to ensure that you are dealing with a reputable organization, these are helpful.

  • Double-check a site before doing business by typing the address into your browser. If you went to a site by clicking a link in, for example, an e-mail message, you might have been redirected and are doing business with a stranger.

  • Review credit card and bank account statements as soon as you receive them to check for unauthorized charges. If you have become a victim of identity theft, report it by going to www.consumer.gov/idtheft/con_file.htm.

  • Be cautious about opening any attachments or downloading any files from e-mail you receive, no matter who sent the message.

  • Forward spam that is phishing for information to uce@ftc.gov and to the company, bank, or organization that is impersonated in the e-mail. Forward spam to your service provider, as well.

  • If you believe your identity has been stolen online, file a complaint at www.ftc.gov, and then visit the FTC's Identity Theft Web site at www.consumer.gov/idtheft for steps you should take.



Look Both Ways. Help Protect Your Family on the Internet
Look Both Ways: Help Protect Your Family on the Internet
ISBN: 0735623473
EAN: 2147483647
Year: 2004
Pages: 157
Authors: Linda Criddle

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