Con men, scammers, bunco artists, flimflammers, hustlers, smoothies, Ponzi schemers, weisenheimers, and sharpies of all kinds, you'll find them all, and worse, online. They've flocked to the Internet because it's so easy and cheap to perpetrate scams there and because it's so hard to track down the people who've burned you.
But you can fight back. I'll show you how to make sure that you don't become the victim of an online scam, and how you can fight back if you've been conned.
It's actually pretty easy to spot online scams. Follow this simple, time-honored rule for avoiding any con game: If something sounds too good to be true, it is too good to be true.
What is spam?
Spam is unwanted email that's sent to you without your asking for it. Don't respond to the offer, often it's a scam. And don't send an email asking that they not send you the offer again because that only lets them know your email address is a valid one.
n general, any time a Web site, email, or anything else you come across on the Internet doesn't feel right to you, listen to your instincts, they're almost always right.
What kinds of things do you need to watch out for on the Internet? There are all kinds of scams. But here are the most common ones to look out for, and how you can make sure that you'll never get burned:
- Watch out for rip-off artists at Web auctions. Web auctions are a great way to buy online, but fraud at auction sites has become the most common kind of Internet scam, according to the Internet Fraud Watch at www.fraud.org. Find out if the Web auction site offers free auction insurance so that the site covers your costs if you get burned. And pay with an escrow service that holds the money for your goods until the goods are delivered, and only releases the money after it's been received by you in good order.
- Beware of business opportunity schemes. Often, these are merely camouflaged attempts to get you to buy marketing materials and merchandise that you'll never unload.
- Don't respond to credit repair offers. Never answer someone promising you he can "repair" your credit rating. Respond to these offers, and you'll only get ripped off.
- Stay away from pyramid schemes and multilevel marketing (MLM) schemes. These are some of the oldest scams on the books. You're promised a big-time profit if you pay an initial fee and recruit others to join the plan. The catch is, you'll never get your initial fee back.
- Don't buy from a site that has no mailing address or phone number. Only buy from a site that has a valid mailing address and phone number, and never buy from a site that lists only a post office box.
- Don't buy stocks based solely on advice you come across on discussion boards, chat areas, or via unsolicited email. People looking to bid up a stock so they can sell it quick and get out for a profit often go into discussion areas, use assumed names, and tell grand lies about the stock to artificially inflate its price. Worthless stocks have been run up this way by con artists, and people have been burned.
- Stay away from work-at-home offers. You'll be conned into buying a book or series of books or expensive mailing materials and goods.
Never Give Out Your Social Security Number
There's no legitimate reason why you should provide your Social Security number to anyone online. Armed with your Social Security number, a con artist can do a world of damage, including assuming your identity. Never give it out.
- Always use a credit card when you buy online. When you pay with a credit card, the most you are liable for, if you've been scammed, is $50. The truth is, most credit card companies waive even that fee.
If you get burned, there's a lot you can do to fight it. You might get your money back, and if not, you could get your credit card company to cover most, if not all, of the costs of your scam. You also have recourse to a wide variety of government and private agencies to help you get your money back, and even to prosecute the scam artist who targeted you.
How to Deal with the Company That Burned You
The first step if you think you've been burned is to contact the company or person you think burned you. Have all the information about your complaint handy. Here's what you need:
- Product and sales information. Have ready the product's name, price, serial number, date and time you bought it, and any other identifying information. If you were notified by the company via email about your purchase, have a copy of that. If you filled out a Web form to order and printed out that form, have a copy of that as well.
- A description of your complaint. Write out exactly why you think you've been wronged.
- A cancelled check or credit card bill. If your check has already been cashed or your credit card billed, have that information ready.
Armed with this, detail your complaint to the company
Follow up the call with an email and a letter outlining the complaint, preferably via registered or certified mail. Writing a letter preserves your rights under consumer laws.
Give them 10 to 14 days to act and tell them you're going to take legal action unless they resolve the complaint to your satisfaction. Make sure they know you're sending copies of your letter to your state consumer agency and your state attorney general. (See the following sections for information on which groups to complain to.)
Getting Help from Your Credit Card Company
If you pay with a credit card, you are covered for all but $50 if you are the victim of a scam. Credit card companies investigate complaints, and if they find that you're in the right, you only have to pay the first $50. Many even waive that $50 fee.
As soon as you suspect you've been conned, call your credit card company and give them the details over the phone. Follow up with a letter, detailing your complaint. Describe how you tried to resolve the complaint and include letters or email that you've sent or received.
Complaining to Private Consumer Agencies
If you've been the victim of a scam, or suspect you have, there are people on your side, private consumer agencies. Here's where to go to complain and get help:
- Better Business Bureaus, These are private agencies funded by businesses to promote good business practices; these are located locally in each state. For a list of all Better Business Bureaus in the country, go to the Better Business Bureau Web site at www.bbb.com. Also, file a complaint with the Better Business Bureau's special Web protection site at www.bbbonline.com.
- The National Fraud Information Center, This is another good place to make a complaint. It sends your complaint to the proper state, federal, and local law enforcement agencies. You can fill out a complaint form online. Head to www.fraud.org and fill out the form. If you prefer the telephone, call 1-800-876-7060.
Complaining to Government Agencies
A variety of government agencies handle consumer complaints. Here are the agencies to contact when you've been scammed:
- Your state Attorney General's Office, or your state's Department of Consumer Affairs, These are good places to start. When complaining, make sure to contact not just the agencies in your state, but also in the state where the Web site does business.
- The Federal Trade Commission, The FTC is the main federal agency that prosecutes Internet scams. Fill out a complaint at their Web site at www.ftc.gov.
- The Security and Exchange Commission, The SEC at www.sec.gov involving stocks and securities. You can fill out a complaint on its Web site or email your complaint to email@example.com
Head to This Site for Everything You Want to Know About Internet Stock Fraud
The SEC has put together the most comprehensive page anywhere for information about stock fraud, and it has excellent guidelines to follow when investing over the Internet. Go to the SEC's Investor Assistance and Complaints page at http://www.sec.gov/invkhome.htm. In addition to lots of articles, tips, and resources, you can make out a complaint online.