The recession has spurred a resurgence in consumer scams as Iowans struggle to make ends meet in a period of high unemployment and meager raises.
Better Business Bureau of Greater Iowa President Chris Coleman says complaints are rising about scams that prey on individuals who are in debt or looking for work.
Some of the most tragic cases are financially struggling Iowans taken in by work-from-home scans and secret shopper scams, Coleman said. Despite their precarious finances, they are often persuaded to take money out of savings in the hopes of finding a source of income.
Better Business Bureau Community Relations Representative Barbara Green said one woman sent in $6,000 to a marketer offering a sure way to make good money working from home.
“She got a little case of materials and instructions to make angel pins that she could supposedly sell for hundreds of dollars each,” Green said.
There was no market for the beaded angel pins even at a much lower price, Green said.
Coleman said the bureau has also been asked about a work-at-home plan that appears to be a pyramid scheme.
In exchange for an upfront payment, the customer gets work writing letters to their friends, relatives and neighbors urging them to be part of the same scheme .
Popular telephone scams include callers asking Iowans if they’d like to earn money as “secret shoppers” for a market research company testing customer service on Western Union wire transfer services, often from their nearest Wal-Mart.
The caller indicates the participants are told they’ll get a $600 check in the mail and are asked to wire $400 of it from their personal account to an address they specify.
The wire transfer is supposed to be a test of Western Union’s service. But by the time the victim discovers that the $600 check they received has bounced, they have already wired real money from their personal account to the scam artist’s account.
Coleman said the bureau urges consumers to be wary of any work offer that involves paying money upfront.
“A basic rule we tell people is that “a job is when somebody pays you to work, not when you pay them,” Coleman said.
Debt settlement scams and time share marketing scams are also making their rounds, Coleman said. In both cases, consumers are asked to send money upfront, either to pay costs of marketing their time share, or to make deals with creditors to settle debts.
Coleman urged consumers approached with offers to settle their debts for a fraction of the amount owed to be extremely skeptical, especially if the company says it can resolve the debts within a matter of days or weeks.
“They are better off approaching their creditors and working out a repayment arrangement themselves,” Coleman said.
In the case of time share marketing scams, Coleman said the danger isn’t just that the company may not be able to sell your time share. He said the owner is often asked to surrender control over their time share to the company before learning terms of the deal to dispose of it.
“They might sell or assign your timeshare at a much reduced rate,” Coleman said.
The companies often offer fictitious appraisals showing their time share’s value has plunged, or cite fictitious government regulations that make their time share less valuable.
“They make it sound like these time shares are so devalued that you are better off letting it go for pennies on the dollar,” Coleman said.
Not all of the hot scams are related to the recession. The home alarm system upgrade scam is one of the others.
Sales teams sent to the doors of existing security alarm customers are told that they are being upgraded to the next generation of their provider’s alarm technology.
The homeowners is asked to fill out some contract documents, and are led to believe they don’t need to terminate their contract with their existing provider.
When the bills begin to arrive, customers discover they have signed two contracts with different providers, both of which expect to be paid.
