This morning, I went on Good Day LA to talk about recession-related scams. Unfortunately, fraudsters tend to take advantage of people's vulnerability during tough times. Here are the three big ones to watch for:
1) The credit card scam. This scam usually starts with a phone call from someone who says they are calling from your bank or credit card company. He says the company has noticed some unusual activity on your credit card, and he wants to check it with you. Then, he asks for your credit card number to confirm he's talking to the right person.
Once you give that to them, he has all the information he needs to steal money from you and to make charges using your card.
The lesson: Never give out information over the phone to someone who calls you, no matter who they say they are. It takes a few extra minutes, but hang up and call your bank yourself. That way you know who you're talking to.
2) The stimulus-package scam. As soon as the stimulus bill was passed, scam artists started making websites that offer to give people information about how to win grants from the stimulus package in exchange a fee, usually around $70 a month. But these websites are actually scams. All of the information you need is free on government websites, which end in ".gov," such as www.grants.gov. There's no need to pay for that information.
The lesson: Don't pay for information you can get for free.
3) The mortgage modification scam. This one has gotten really popular because so many people are behind on their mortgages right now. Companies offer to modify your mortgage for you, but they ask for payment upfront, usually in the amount of one month's mortgage payment. Anytime someone asks for payment upfront, that's a red flag and you should walk away, because you might never see your money again. Legitimate companies do not ask for upfront fees.
The lesson: Don't make upfront payments to companies.