What would you say if someone...
- Called on the phone and offered a free gift, just for allowing them to verify your credit card number and expiration date?
- Showed up at your door and quoted a bargain price on repairing the roof or sealing the driveway "because the materials were left over from a big job in the neighborhood?"
Tried to sell you extra health insurance, claiming your present policy and Medicare will not cover nursing home care?
Few Good Answers
- I have to check with the Police Department or Better Business Bureau first.
- No, thank you.
- I want to think it over for a few days.
I need to talk to my family and my lawyer before I decide.
A Guide to the Classics
Two strangers tell you they have found a large sum of money or other valuables. They tell you they will split the good fortune with you if everyone involved puts up "good faith" money. You turn over your cash, and you never see your money or the helpful strangers again.
A so-called bank official asks for your help to catch a dishonest teller. He asks you to withdraw money from your account and turn it over to him so he can check the serial numbers. You do and you get a receipt, but your cash is gone. No legitimate bank official would ever ask you to withdraw your money.
Shortly after the death of a relative, someone delivers a leather-bound Bible that your deceased relative allegedly ordered. Or you get a bill in the mail for an expensive item on which you must make the payments.
The Funeral Chaser uses obituary notices to prey on bereaved families. Remember, you are not responsible for anyone else's purchases, and all legitimate claims will be settled by the estate.
Bargains That Aren't Bargains
A "free" inspection uncovers needed repairs that will cost thousands of dollars. Or a contractor comes to your home and offers a special half-price deal on a roof because he has extra materials from another job. These are favorite tricks of dishonest firms or individuals to victimize homeowners.
Always get several estimates for any major work, and don't allow yourself to be pressured into accepting a one-day-only offer. Ask for references and check them out. Verify names, addresses, and phone numbers provided as references are legitimate. They could be giving you the phone number of a friend of theirs.
- Get a written contract and make sure you understand its provisions.
Never pay for work in advance; withhold payment until the job is complete. Pay by check, not cash.
The cause sounds worthy and the solicitor is sincere, but it's a charity you've never heard of, or its name that sounds kind of like a well-known charitable group. Before you give:
- Ask for identification on both the charity and the solicitor.
- Find out the charity's purpose, how funds are used, and if contributions are tax deductible.
- Ask what percentage of your donation goes toward the cause and what percentage goes toward administrative costs.
- Call the State Department of Consumer Affairs to see if they are authorized to solicit in your state.
- Never let them pressure you into donating.
If they are a legitimate organization, they can wait for you to make an educated decision. I
f you are not satisfied with the answers and feel something isn't quite right, don't give.
Illegal Pyramid Schemes
Someone offers you to invest a certain amount and solicit others to do the same. They then solicit others, and so on...like a chain letter. This is the Pyramid Scheme. Sometimes the initial investors are paid a small dividend. But when the pyramid crashes – and it always does – everyone loses, except the person at the top who skimmed off everyone's money and never invested it.
Regardless of the name given, pyramid schemes are illegal. According to the Office of the Attorney General of the State of California, "Every person who contrives, prepares, or operates any endless chain is guilty of a public offense which can be punished by imprisonment in the county jail not exceeding one year or in state prison for 16 months, or two or three years."
It is mathematically impossible for everyone who enters to recover their investment, let alone make a profit. It is inevitable that at some point there will not be enough new recruits to the scheme to pay back those who have paid.
Women Helping Women Scheme
In recent years, there have been "empowering" techniques used by a new pyramid scheme in the called "women helping women." Other names for this scheme include:
- Women Empowering Women
- The Dinner Party
- The Gifting Club
- Women Gifting Women
- Circle of Friends
Please do not be fooled by the " gifting " terminology, the exclusive invitations, or the quick return promises you may be offered. Your money is hard-earned; be careful with it!
Dinner Party Scheme
In the Dinner Party scheme, individuals are invited to the table. Guests are solicited for as " little" as a few hundred dollars or as much as $5,000 (at the "appetizer" or "soup and salad" level). At the "dessert" level, they promise an inflated payoff, and guests are enticed with stories alleging a profit is returned within as little as a month.
To achieve the promised profits, a continuous chain of participants must be recruited. The scheme soon runs out of new participants and the house of cards comes tumbling down.
Remember, don't be fooled by any of these schemes. Hold on to your hard-earned money!
Rule to live by: If it sounds too good to be true... it probably is.
Over the last several years, our nation has made enormous progress in expanding access to capital for previously under-served borrowers. Despite this progress, too many families suffer because predatory mortgage lending practices strip borrowers of home equity and threaten families with foreclosure.
If you believe you have been a victim of predatory lending practice, federal agencies can help. Please use to the list of agencies in the External Links below to contact the organization that can best help with your specific problem.
- For information about loan fraud and prevention advice, see "Don't Be A Victim of Loan Fraud" in the External Links below.
- See "Local Resources" in External Links below on ways to avoid being a victim of predatory lending.
Review the FBI "2010 Mortgage Fraud Report Year in Review" (Pulished August 2011)
U.S. Department of Housing and Urban Development - Local Resources
This City of Stockton web page last reviewed on --- 6/15/2015