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FDIC Consumer News - Winter 1996/1997
|Fraud from Abroad
learned over the years to safeguard our money when shopping, traveling or investing
abroad. But more and more, you can lose money to a con artist in Africa, the Caribbean, or
anywhere else in the world, without leaving your home or office.
A few years ago the Internet was an exotic and remote source of information. Today it is a new channel for some of the tried-and-true scams of old. The National Consumers League in Washington says the Pyramid or Ponzi Schemes-in which you are promised high returns on your investment, but the money goes only to those who invested before you-are at the top of its list of the five most common scams found on the world-wide information highway.
Sweepstakes are now the number one fraud being operated from Canada, says Michael Hartman, a U.S. Postal Inspector in Harrisburg, Pennsylvania. You may be told you've won a $25,000 prize, but first, you must pay $2,000 in "taxes" or fees. The victims get no prize of any value. If anything is received it is worth less than the "reimbursement fee."
The mail and the phone can also bring investment scams into your
home, including such popular ones as higher interest rates or tax shelters in a foreign
bank. Check these out carefully before sending any money. Many unlicensed "phantom
banks" use names that are very similar to the names of some of the largest banks in
the world. And in some of the scams they even claim to have FDIC deposit insurance. In
reality, they are none of these things. To see if a bank is FDIC-insured, look in a
directory of financial institutions at a library, contact a local bank for assistance, or
ask the FDIC's Division of Compliance and Consumer Affairs (listed on Page 11). Call the
Internal Revenue Service if the claim is that you can shelter your money from taxation by
depositing it abroad. Also check with your state banking department to see if they have a
banking license, because a business license isn't enough to legally carry on banking
activities in the U.S. In another investment scam, some victims bought overpriced
semi-precious gemstones as a hedge against inflation. Now they are being told by con
artists in Canada who sold them the stones originally that if they invest in just another
stone or two to complete the collection, it will be purchased by a group of overseas
collectors. But there are never collectors. It is another ploy to get the victims to buy
more stones that are worth less than 10 percent of the claimed value.
Third, prosecution can be tough. Take the case of unlicensed banking
operations-most of which operate
Tips on how to handle such callers.
Don't hesitate to call the police or sheriff's department. Chances are if you are being approached, so are others in your community.
Think about what is being offered. As Postal Inspector Hartman says of the sweepstakes and gem scams: "Does it make sense to have to pay money to collect a prize? Does it make sense to buy another stone to sell yours?"
If you think a call, fax or a letter is a scam, contact the National
Fraud Information Center at 800-876-7060. You will talk to a trained person who has heard
it all before. If you wish, they will report the situation to law enforcement agencies.
But the information will be kept confidential.
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