WalletPop

eBay seeks to strangle its Australian sellers

Gary E. Sattler — 2008-05-13T17:00:00+00:00

Filed under: Entrepreneurship, Ripoffs and Scams, Shopping, Technology, Fraud

We should be used to this by now. Yet another money grubbing directive has surfaced from mother eBay Inc. (NASDAQ: EBAY), As covered in a story in The New York Times, eBay has decided to test market the strategy of allowing payment for transactions on its site solely through its wanton money portal, PayPal. The company intends to run this test on Australian eBayers. I wonder if our mates Down Under would be willing to tell us how they feel about this strategy?

eBay is claiming that this change in operating procedure will lower the incidences of fraud on the site. That's funny coming from them, when you consider that the worst eBay fraud nightmares generally run through its own PayPal system. I can believe that eBay's own fraud exposure might be cut by funneling everything through PayPal, but that's about eBay's bottom line. It's not about the bottom lines of its loyal patrons. The matter is further examined in this Associated Press article.

BloggingStocks reports that, as it stands right now, PayPal collects 2.9% from every sale which runs through its system in the U.S., plus another .30 cents for any sale under $3,000. The picture gets even gloomier for Australian eBayers, where PayPal charges 4.4% on sales, plus the additional .30 cents. What percentage of eBay Australia's sales currently run through alternate payment means? That's what I want to know.

If this change is enacted by eBay against the entirety of it's operations, it will be just one more step in the inevitable creation of "Wal-Bay", a site where large volumes of foreign made junk will be peddled by a thin crust of well protected sellers. In the meantime, alternate online selling strategies continue to take hold and grow as eBay's own growth has stalled. eBay can fake revenue growth for just so long. It's only a matter of time before things really start to get ugly over there.

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Watch out for gas spam scams

Josh Smith — 2008-05-12T19:00:00+00:00

Filed under: Ripoffs and Scams, Transportation, Fraud

Just when you finished setting up the final Viagra and ED related keyword filters on your inbox, the scamming spammers have found a new ruse to part fools with their money. The new scam claims to offer a discount of 70 cents on each gallon of gas and originate for now anyway, from an individual representing himself as "Gas Saver." According to McAfee, a security and anti-virus company, in terms of volume gas related spam is still relatively low, but it has the potential to skyrocket over the summer in tandem with gas prices.

Next time you sit down with a friend or relative, do your part; remind them that they shouldn't purchase medication, gas or lottery winnings from an email. It seems to have been said again and again but just like the MPAA and the RIAA run their public service announcements before movies; maybe we need to have an announcement before sending money from your bank to another account. Remember, if it sounds too good to be true, it probably is, especially when it comes to reduced gas prices.

I truly wonder how many times local news stations and papers need to run the story of an individual scammed out of their life savings due to an email that touted a too-good-to-be-true scheme. At the very least, it seems these email-armed con men are on the ball when it comes to identifying consumer needs, or perceived needs anyway. I hear later this year they are coming out with a reprinted version of Dante's Inferno which has been updated to include a new circle of hell specifically for spammers. Until then, be sure to check out how to get gas for $2.99 a gallon for the next three years legitimately.

New LifeLock services: More value or more scam?

Tracy Coenen — 2008-05-12T15:45:00+00:00

Filed under: Ripoffs and Scams, Fraud

Recently we discussed the LifeLock identity theft protection services, and whether or not the services offered are nothing more than a scam. Our readers have varying opinions, and I ultimately came to the conclusion that what LifeLock sells is not worth the money. There's very little actual protection, and the company's "guarantee" doesn't seem to be worth the paper it's printed on.

Now Lifelock has announced two new service offerings. The company says it is approaching one million "members" and these services "... will further secure LifeLock's position as the industry leader in identity theft protection." The new "eRecon" service is billed as a technology solution that monitors over 10,000 websites, bulletin boards and chat rooms used by criminals to sell and trade identities. If your information is found, the company say it will call and tell you. The "TrueAddress" service is billed as a technology solution that monitors address databases and notifies you if your address is changed in one of them.

Sounds like a lot of hype and little substance. What do you think the chances are that they're going to find valuable information about you with either of these tools? Would you really pay for the miniscule chance that they might find someone in a chat room talking about your identity? The effectiveness of these services has to be sketchy. I don't know how much they're going to charge for them, but I sure wouldn't buy them.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Identity theft: More than $3 million spent in 3 months

Tracy Coenen — 2008-05-09T15:30:00+00:00

Filed under: Fraud

You have to give this guy credit for being very good at what he did. My mom always told me, "If you're going to bother to do something, make sure you do it well." I bet James Hartman's mom is super proud of him. He stole his brother's identity and spent over $3 million in 3 months with it. On his list of goodies purchased via his brother's identity: A $48,000 pickup truck, a $49,000 pickup truck, two Dodge Durangos for $77,000, a Dodge Viper for $94,000, two ATVs, two houses, and some land. The grand total: $3.2 million.

James Hartman stole Ed Hartman's identity with his social security number and a photocopy of his driver's license. James says his brother approved of all the purchases. Ed says he knew nothing of it until someone called him because they were suspicious of the copy of the driver's license, being used to purchase another toy.

What a wonderful way to honor and love one's family. I've often theorized that family members steal more from their kin than they would from complete strangers. I don't know why, but it's sick. (Yes, this post is dedicated to my "Uncle Louie".)

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Ask the Dolans: Should I pay for a credit monitoring service?

Ken and Daria Dolan — 2008-05-09T10:00:00+00:00

Filed under: Banks, Cards, Insurance, The Dolans, Fraud

Ken and Daria Dolan, America's First Family of Personal Finance, answer your money questions every Friday.

Dear Ken and Daria,

I realize it's important to stay up-to-date on your credit score, but is it necessary to pay for a credit monitoring service?

Jeff

Want to learn more about protecting and improving your credit score? Visit our Credit Center at Dolans.com.

Click here to ask Ken and Daria your question.

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Anniversary: 30 years ago, the first 'spam' was emailed

Geoff Williams — 2008-05-06T09:00:00+00:00

Filed under: Ripoffs and Scams, Fraud

Several days ago, the 30th anniversary of spam came and went.

We're talking email, and not Spam, the food product. Anyway, I looked at quite a few articles that ran on the day of the anniversary May 3 or around then, like this story that originally appeared in The Washington Post, and I can't find any that quoted the man who began it all, Gary Thuerk. I was particularly interested in what he might have to say because I was lucky enough to interview him for Entrepreneur magazine during the 25th anniversary of spam.

At the time, I was getting more spam than I ever had in my life. I get a lot now, but in 2003, I was bombarded, and my computer was riddled with viruses and Trojan horses and other fun things. So when I was assigned to interview Thuerk, I had a lot of choice words prepared for him. I was going to light into him like a barbecue. I couldn't wait to pummel him with my gratitude for what he did on May 3, 1978, which is to be the first to send an unprompted email to a small but select number of people who had email, and he tried to sell these elite computer users, naturally, a new type of computer. I admit I wasn't thinking like a professional, but had made this personal. I wanted to do my best 60 Minutes Mike Wallace impression, and for Thuerk to fold like a house of cards and apologize for unleashing such a rotten practice into the world.
So I tracked him down at Hewlett-Packard where he worked when he sent the email and was still working in 2003, and to my disappointment, within seconds I could tell I was dealing with a really nice guy. And as it turned out, he didn't like spam any more than anyone else. After all, he only sent his "spam" to 600 early email adopters decades before spam would spiral out of control.

So we ended up having a very pleasant interview, and I found myself wishing him no ill will whatsoever. It really took the wind out of my sails. If I couldn't blame this guy for everything I didn't like about email and the Internet, who could I blame?

Anyway, in the last week, I had two reporters who read my Entrepreneur article -- a journalist from a Spanish newspaper and another from NPR -- email and ask me if I had Gary Thuerk's contact information. I didn't. He had begged me not to print his email, and because he seemed like such a stand-up guy, I didn't make any special effort to hang onto it, and so now, I have no clue where he is. Ironically, Thuerk is quite a private person who, at least five years ago, had made a serious effort not to let his email wind up on any mailing lists or web sites. In other words, he wasn't getting any spam.

But if any of you out there run into him, be nice to the guy. I have a hunch that by now, 30 years after the anniversary and over 10 of having spam be an everyday PC nuisance, he has probably heard every spam-related joke and insult out there.

Geoff Williams is a business journalist, primarily for Entrepreneur magazine, and the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).

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How to hire a private investigator

Gary E. Sattler — 2008-05-05T15:30:00+00:00

Filed under: Extracurriculars, Fraud, Relationships

The chances are good that you'll never need the services of a private investigator, but if you ever do, hiring a good one is essential to getting the desired results. I have found that definitive guides on the matter are virtually nonexistent, so based upon my rather extensive elbow rubbing with the men (and ladies)in blue, I have created the following guidelines for hiring a private investigator to serve your investigative needs.

Define your need. Understanding the type of services that you need an investigator to perform will aid in finding your ideal detective. As with all other fields of endeavor, PI's each have their own specialties. I suggest that you draw up an outline of what services you seek, a rough time line within which you'd like to see specific results and the final resolution that you are seeking. Creating a mental picture of the experience as you would like it to turn out can help you to make it become a reality. Be realistic however, effective investigations can be extremely time and labor intensive. Define your needs, then begin your search.
Draw up a list of candidates. If you live in a large urban region, creating a list of potential PI candidates should be no problem. Your best source for local investigator names will probably be the phone book yellow pages. Look over the advertisements for indications of investigative specialties and years in the field. Make up a list of candidates to call, leaving spaces for notes between the names. You might also consider contacting your local chamber of commerce, local law firms or even your local police for the names of private investigators they might recommend. You can try to find a local PI by using the Internet, but I wouldn't recommend that. Any investigator that you'd want to work with will be in the phone book. Conversely, the Internet is ripe with fly-by-night operators.

Set up initial consultations. Use the process of phoning your candidates for an initial consultation as your first phase of investigative screening. You will be conducting a mini-investigation of your own. First, any investigator worth you time will meet with you for an initial consultation without charge. When you call, pay attention to some particular things. Is your call answered by a receptionist or secretary? Is your call answered by a machine? Are you sent directly to voice mail? Does the investigator answer his or her own calls? If you do have to leave a message, be brief, stating only that you need an investigator. Don't reveal details of your case. Make a note of when you left the message and pay attention to how long it takes for your call to be returned. Only make appointments for initial consultations with investigators who leave you with a positive impression on that first call.

Meet at their office. You always want your first meeting with an investigator to be in their own office. Unless there are extenuating circumstances, never have this initial consultation in your home. You want to get a good look at where your prospective hire operates. You want to get a look at the condition of his surroundings, his level of organization and to get a feel for his (or her) history and level of success. Former police officers generally make prime private investigators. Normally, if your candidate was a cop, you'll usually see clear evidence of that hanging on their walls. Look for plaques, certificates, citations, ribbons, patches and medallions. A picture of your interviewee shaking hands with the Governor can also be a very good sign. Take a look around their office for active computers. A good investigator will usually have one or two computers up and running at all times during working hours. If your prospective investigator seems to want your initial meeting to take place somewhere other than in front of their own desk, be very cautious about them.

Start by asking questions. Remember that at this stage you are the investigator. You are the prospective client and your needs come first. Many investigators will wrongly begin questioning you about the nature of your case at your initial consultation. Make it clear that you want to know about them before disclosing specifics about your case. Ask about the type of cases they deal with the most. Ask about cases they have successfully resolved. Ask about their connections within their field and with law enforcement. Ask them what they do all day. All good investigators are proud of the valuable services they provide and they will be happy to share their successes with you. Ask for a current list of references. A good investigator should have one ready for you even before you ask.

Judge their conduct. Look for direct eye contact, complete and concise answers, a forward posture, relaxed actions and controlled hands. Stay away from the investigator who leans back in their chair, throwing one leg over the other while breezily rattling off vague answers to your questions with their hands clasped behind their head. You want the person who leans forward on their desk with hands in front, while outlining exactly how they've helped people. Watch for open hand gestures with palms up. This can be the signal of a person who wants to serve you. Only after your potential investigator has truly impressed you as a person who can and will do the job, should you begin disclosing your details in a subsequent meeting.

Inquire about their fees. There are three general fee structures which private investigators use. The first is the straight hourly rate. This can be a dangerous scenario. Charges at hourly rates can be difficult to analyze to determine if you're getting proper service. If your prospect indicates that he bills by the hour, get clear and concise information about how he applies his time and how he itemizes this charges.

Many good investigators use what could be called landmark billing or task billing. Because investigations can often be taken many directions, some investigators will only charge you for prearranged tasks as they are completed. For instance, if you wanted to do a background check on a potential spouse, your investigator could just perform a credit check and criminal background check, and then bill you for those services. Then, if you decided that you wanted a disclosure of assets done, that could be handled and billed as a separate service. These types of billing schemes can work well and can be very cost effective by allowing you to tailor your service requests as you go.

The third billing service I'd look into is a flat fee for a stated goal. Let's say that your spouse made a hasty exit from the state with your Dodge Viper and you hire an investigator to get it back because you dearly loved that car and it's titled in your name. You and your investigator simply agree on a fee for recovering the car. When the Viper is back on your driveway, you cut him a check. If he can't recover the car, you owe him nothing.

In Conclusion: Most instances when you may need to hire a private investigator are stressful enough. Don't add to your burden by hiring someone who's not fit for the task. If you are in a position where you need the help of an investigative professional, be sure to put in the time and effort it may take to find the right one. Be diligent about the details and get plenty of input from friends, family and associates. Good investigators can sometimes be tough to find, but they're out there and they're nearly always worth the investment.

Gary Sattler is a freelance blogger and a former Wisconsin state certified humane officer.

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A tip for getting into the school of your dreams: Lie like a $2 toupee!

Bruce Watson — 2008-04-29T12:00:00+00:00

Filed under: College, Ripoffs and Scams, Fraud

A few years ago, at my 10th high school reunion, I was surprised and delighted to discover that my former Sex and Marriage teacher, a man that I particularly disliked, had been scammed by a 27-year old George Mason student and sometime porn star. Apparently the young man, Anoushirvan D. Fakhran, aka "Jonathan Taylor Spielberg," posed as Stephen Spielberg's nephew, claiming that he was doing research for a forthcoming movie. My former teacher, now the principal of the school, allowed the young man to attend classes, showed him around, and gave him numerous privileges that ordinary (read: paying) students were denied. Ultimately, "Jonathan" was discovered and my alma mater was massively humiliated. I think my former teacher was farmed out to another school.

Recently, I was reminded of this as Yale University suffered a similar scam. Akash Maharaj, formerly of Trinidad and Tobago, got into Yale with the help of a forged letter of recommendation from one of Yale's professors. This letter, combined with a forged Columbia transcript, made him look very impressive, and Yale welcomed him to the school, giving him $31,750 in financial aid. He also received $7400 in federal scholarships, $6739 in loans, and $900 from a federal work-study program. During his time at the school, he received a literary prize, found a boyfriend, and generally seemed to fit right in. Unfortunately, things soured with his boyfriend, who ended up ratting him out to the University. Not long after, his forgeries were discovered and it all came crashing down.

A large number of people seem to be surprised that Akash was able to deceive Yale. Personally, having spent the last ten years working in academia, I'm impressed that he was caught. At my university, most of the administrators had worked their way up from the ranks of the professoriate, with very questionable results. After all, while a Ph.D in chemistry may be very useful in the lab, it doesn't really prepare one for the rigors of funding battles, tenure fights, or even something as simple as ordering office supplies. Moreover, I've met very few Ph.Ds who were overburdened with an excess of common sense. Frankly, I'm amazed that things like this don't happen more often.

I think the real lesson here is aimed at the next generation of college students. Rather than worry about grades and extracurriculars, smart students will start developing forgery skills, the ability to lie outrageously, and the art of exaggerating their curricula vitae. Hopefully, they will also learn the most important lesson of all: if their hard work and deception pay off, they get into the schools of their dreams, and they somehow manage to convince someone else to pay for it, the key is to then play it smart. Keep your boyfriend happy!

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. He has never lied on a job application. In fact, as he told the folks at Walletpop, he is a former cosmonaut, winner of the 1998 All-Namibian Speed-Skating Championship, and a part-time international assassin.

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Incredibly cheap gas (at least if you're an Iraqi...)

Bruce Watson — 2008-04-22T14:30:00+00:00

Filed under: Travel, Fraud, Recession

Does anybody remember when U.S. Secretary of Defense Donald Rumsfeld and Deputy Secretary of Defense Paul Wolfowitz said that the war in Iraq would pay for itself? Specifically, their argument was that oil revenues in Iraq would easily pay for the cost of reconstruction, and that the bill wouldn't be laid on the American taxpayer.

Admittedly, this was five years ago, so it's understandable if our memories might be a little fuzzy on the issue. However, this was the running argument back in 2003.

Of course, this isn't how it's worked out, a fact that becomes crystal clear when we look at how much the U.S. military is paying for gas. Currently, American forces in Iraq are paying an average of $3.23 a gallon for their gasoline, diesel, and jet fuel. The Defense Energy Support Center, essentially the fuel wing of the Department of Defense, buys gasoline on the open market at prices ranging from $1.99 a gallon to $5.38 a gallon. They then set a fixed rate for the fuel; thus, as of April 4, American forces in Iraq were paying $3.51/gallon for diesel, $3.15/gallon for gasoline, and $3.04 for jet fuel.

It's also worth noting that Kuwait is selling fuel to the military at a steep discount. If the U.S. military was paying the full market rate, these prices would be a lot higher.

Even so, it doesn't seem like the U.S. military is paying all that much for gas, particularly when you compare these prices to the prices that U.S. consumers are paying at the pump. On the other hand, it's worth noting that Iraq is massively subsidizing gas prices for its citizens, to the extent that Iraqis are paying a mere $1.36 a gallon. Among other things, this means that the insurgents who are fighting against American soldiers are filling up their tanks for less than half the price that the American military is currently paying.

Apart from the fact that America is paying retail price for the fuel that it is using to support an oil-producing country, and apart from the fact that the oil producing country in question seems disinclined to help cover the fuel needs of what is supposedly a friendly force, it's worth noting that, at our current rate of consumption, the United States military is paying approximately $153 million a month just for fuel.

As April 15 recently passed, you might have wondered where your tax dollars were going. Well, now you know...

Economic stimulus scams have arrived!

Josh Smith — 2008-04-21T14:30:00+00:00

Filed under: Ripoffs and Scams, Tax, Fraud

This weekend I read in our local paper about an individual who almost got caught up in a scam to drain her bank account. The scammer was using the upcoming economic stimulus package to solicit personal and bank account info under the guise of the IRS.

Even though she had already provided the information she was lucky enough to change her bank account info before any funds were drained. The local IRS contact warned individuals that the IRS will not make contact via email and that scams like this are a common occurrence.

WalletPop producer Amey Stone had warned of the tax rebate scams before congress had even approved the stimulus package, but as May 2 approaches, the frequency of attempted rip-offs will only increase. The IRS already spent $42 million letting citizens know that the checks are coming, and the only requirement is to fill out a 2007 tax return. Despite the Super Bowl-sized campaign and nonstop news coverage it seems individuals are still falling for these scams.

I don't think I can put this any nicer, don't give out your personal information online! It is really that simple, if everyone stops answering these "demands" for banking info, the spammers and con artists will at the least have to move to a new medium. I understand that at times the emails appear to be legit now that the bad guys hired an English major to write them, but just delete it.If you are really concerned that the IRS is auditing you, withholding your rebate check or sleeping with your sister -- Call them. Same goes for banks, colleges, and any other entity trying to "confirm" some piece of personal information so that your account isn't shut down. When you do make the call, use the number on your membership card or local yellow pages, not the one in the email they sent you.

Remember, only you can prevent identity theft, well that and the IRS fixing its vulnerable computers, but mostly you.

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Giving people the keys to your internet castle

Tracy Coenen — 2008-04-17T11:30:00+00:00

Filed under: Ripoffs and Scams, Technology, Fraud

When you hear about a data breach at a credit card company or a retailer, do you immediately wonder why the company wasn't more careful with the information of the customers? I bet most people do. But as concerned as they are about others protecting their information, many people don't even take minimal steps to protect their own data.

A survey of 800 people in the U.S. and the U.K. found that 88% of people use one password for all of their online accounts. That's right... one. The implications of that are insane. If a hacker gets your information on one site, he can possibly get into every site you're on because he has that one password.I wonder if people consider how serious this is. While I think they recognize that criminals out there are trying to steal via the internet, I don't think they really take their own password security very seriously. Just as bad as the "one password" policy is when that password is something like the dog's name, a child's name and birthdate, or some other easy to guess variation.

It's best to have multiple passwords that you change often. The passwords should also be something obscure that can't be guessed or linked to you or your family . Include both numbers and letters in your password for added security. And don't keep them all on a sticky-note on your computer monitor. That's like leaving the front door of your house wide open while you're gone.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Citibank saves the day, refunds tv purchase for Sears shopper

Josh Smith — 2008-04-16T09:00:00+00:00

Filed under: Fraud, Consumer Complaints

Sometimes all it takes is a little pressure to get the wheels of a corporation moving. It turns out that shortly after the story of Tom, a Sears customer who was charged $1070 for a TV he never received, gained traction in the media, Mark Ennis, from the Presidential office at Citibank service contacted him. Mark had tried calling the Sears store where Tom purchased the TV but was given the same treatment Tom experienced. Undeterred Mark went "off script" and pulled the records for every Tom who purchased a TV on "Black Friday" in order to find out what went wrong on the order.

It turns out that just after the first TV was refunded, it was re-rung, resulting in the outstanding charge to Tom's Sears card. None of the individuals Tom spoke to over the past 4 months looked past the initial refund transaction to see what was really happening. If they had spent an additional 5 minutes investigating the billing issue, Tom's problems could have been solved months ago. Thankfully the story has a happy ending, Tom is getting a refund for his undelivered TV and some Sears employees will likely be getting a refresher course in customer service. That is if they aren't shown the door for this heinous neglect of customer service. Bravo to Mark for helping out the consumer and making extra effort along the way. We need more people like you in corporations.

Via Consumerist

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Sears won't issue refund for TV paid for but never delivered

Josh Smith — 2008-04-15T11:15:00+00:00

Filed under: Fraud, Consumer Complaints

Update; no thanks to Sears, Citibank officials have stepped in to resolve this dilemma. Read about it here:

Just in case you need another reason not to use a store branded credit card, a Sears card holder, Tom, is still waiting for a refund on a TV that he ordered last November at his local store. After finding out that Sears didn't have the specially priced TV he wanted in stock on Black Friday, the store agreed to order one for him. He went ahead and paid for the $1,070 TV with his store credit card.

The customer left for a week long vacation expecting to pick up his new TV upon his return. However the TV was still unavailable. At this point, he was able to negotiate a lower price on a similar TV by speaking with the manager, for which he also paid. He went home with his new TV to bask in its glow.

He soon found out that Sears had not refunded the original purchase price of $1,070 for the set he had purchased on Black Friday, a TV he has never taken delivery of. He has tried speaking to the manager at the local store as well as the customer support for his Sears card, but no one can seem to get their act together and issue a refund. Tom already disputed the charge with the "Disputes" department for his Sears Card but is consistently hung up on, as there is no hold queue for the department. Contacting the local manager has proved fruitless as well, as her phone rings continuously.

Right now the customer is out $1,070.74. It is ridiculous that no one at Sears can step outside the script to help resolve a major purchase for this man. To get closure he may find it necessary to take Sears to small claims court or to approach his State Attorney General.

In Ohio, for example, one can file a complaint online and sit back while the AG's office does all the heavy lifting for you. Tom might also call his local news team -- I am sure they have a "Call for Action" segment that this would fit into quite nicely.

He would have been well advised to use a major credit card instead of a store card for this purchase, so that he could better challenge this charge. Store cards are notorious for having high rates, and in this case have a vested interest in not helping him with the dispute.

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Justice Department vows crackdown on tax 'defiers'

Zac Bissonnette — 2008-04-09T09:30:00+00:00

Filed under: Ripoffs and Scams, Tax, Fraud

The high-profile prosecution of actor Wasley Snipes a few months before tax season was pretty clearly an effort to scare people into paying their taxes. It might have backfired given that Snipes got off pretty light, but the IRS and the Justice Department say they aren't backing down in their fight against tax cheats.

In a press release, Nathan J. Hochman, the Justice Department's Tax Division Assistant Attorney General, announced the "creation of a national tax defier initiative," According to the press release:

This initiative is aimed at stopping those tax defiers who do not meet their federal tax obligations and seek to transfer those obligations to their neighbor's back. The tax defier is not someone who has a legitimate or factual dispute about the amount of tax due ... The tax defier is someone who rejects the legal foundation of the tax system, despite decades of legal precedent upholding the system's constitutional and statutory validity, and who takes specific and concrete action to violate the law. It is this tax defier conduct, which results in fraudulent claims, frivolous returns and bogus schemes, that threatens the foundation of our tax system and must be vigorously countered.

You can read the press release for details on what exactly they plan to do. It contains lots of phrases like "strengthen and expand coordination," "Leverage expertise and resources," and "maximize our use of technology." When I hear government officials using language like that, I tend not to have a lot of confidence in their ability to get things done. But that's just me.

To learn about some of the frivolous arguments that cheats make to shirk taxes, check out this series from Tracy Coenen.

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Report says IRS computers are vulnerable to identity theft

Zac Bissonnette — 2008-04-08T19:00:00+00:00

Filed under: Ripoffs and Scams, Tax, Fraud

Because you really do need another reason to hate taxes and hate the IRS: A report from the office of the Treasury Inspector General for Tax Administration warns that taxpayer date stored with the IRS could be vulnerable to a disgruntled employee or even an outside hacker. A hacker could "gain full control of the IRS network," according to the report.

Holy schnikes!

So here's my question: if there were a massive data breach at the IRS and someone was able to "gain full control of the IRS network" and steal the identity of pretty much everyone (except survivalist freaks who live in log cabins and don't pay taxes), what would happen?

It's not too outside the realm of possibility either. Secretary of State Condoleezza Rice recently apologized to all three major presidential candidates after it was discovered that IRS workers had snooped into their tax records. It looks like we have a serious privacy problem over at the IRS -- and they don't exactly need to to give people more reasons to hate them.

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Mortgage fraud on the rise: who are the real losers?

Zac Bissonnette — 2008-04-07T10:30:00+00:00

Filed under: Real Estate, Ripoffs and Scams, Fraud

The FBI says that 2008 is shaping up to be a "record year" for mortgage fraud, with nearly 30,000 "suspicious activity reports" filed in the first half, compared with 46,000 for all of 2007.

According to the New York Times, "the biggest surge in federal law enforcement activity has focused on "fraud for profit" schemes, in which mortgage insiders - appraisers, real estate agents, loan officers, and lawyers - often work in teams. They falsely inflate a home's value, get a huge mortgage to buy it (usually using false identities), split the profits, and then disappear."

And then there are the more plain vanilla, less conspiratorial forms of mortgage fraud, including inflating income on loan applications, a practice that appears to have been encouraged at JPMorgan. The TowerGroup reports that lenders will lose about $2.5 billion to mortgage fraud this year.

As with many forms of crime, the victims of mortgage fraud included pretty much anyone who wasn't participating: banks have to increase fees to cover the cost of losses to fraud, and loans made to people who lied about their finances flushed funny money into the system, inflating property values and pricing many first-time home buyers out of the market. It's like trying to compete with Flinstones Chewables in a league where everyone else is on steroids. The extent to which mortgage fraud played a role in the housing bubble remains to be seen, but it's likely that fraud and lax lending practices were a substantial drivers of soaring home prices.

Another angle on this: because people used mortgage fraud to buy homes they couldn't really afford (If they could really afford them, there would have been no need to lie!), there's a good chance that many of the people who stand to benefit from plans to "help" homeowners facing foreclosures engaged in fraud to acquire their homes.

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Network marketing responsible for 20% of the world's millionaires?

Zac Bissonnette — 2008-03-22T09:00:00+00:00

Filed under: Ripoffs and Scams, Wealth, Fraud

On his website totalwellnessnetwork.com, Dr. Ladd McNamara extols the benefits of network marketing: "20% of all millionaires in the world made their fortune through the Network Marketing system," he writes.

But if 20% of the world's millionaires got that way through multi-level marketing, they also apparently go that way through tax evasion. In a paper titled Who Profits from Multi-Level Marketing? Prepares of Utah Tax Returns Have the Answer, Consumer Awareness Institute President Dr. Jon M. Taylor wrote about his interviews with tax preparers about multi-level marketing:

A manager of H&R Block in northern Utah, told me that during his 25 years of doing over 12,000 tax returns a year between he and his group, they could not remember a single client who had reported a significant profit over any appreciable period of time in MLM! ... And a tax software developer, who dealt with thousands of tax preparers across the country, said he had asked about 100 of them if they had ever seen a profit reported from MLM participation. None had. This was out of a total of over a million tax returns ...

He goes on to suggest that his investigation demonstrated that the only people making money in multi-level marketing seem to be those who live in cities where the companies are headquartered: founders, executives and others who got into the system early.

Dr. McNamara gives no citation for the 20% figure and while I can find plenty of similar claims on other recruiting websites, I can't find any reference to any study of any kind demonstrating the methodology behind that figure! Where does it come from? I have no idea. Even network marketing guru John Milton Fogg says the claim is bogus: "Twenty percent of all the millionaires in America were not created through network marketing. By most accounts, as many as 90 percent of them were created through real estate, 90 plus 20 equals 110, and that kind of math would get an F in any school ..."

Oh, another quick thing about Dr. McNamara: Back in May of 2007, the Fraud Discovery Institute reported that his medical license was revoked in Ohio for "fraud, deception and misrepresentation."

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Prevent a security breach from hurting you

Laura Moran — 2008-03-20T14:30:00+00:00

Filed under: Technology, Fraud

Fear not Hannaford customers, as long as you act quickly and responsibly, you can recover your financial future.

Supermarket chain Hannaford Bros. announced earlier this week that the company had experienced a security breach potentially exposing more than four million credit card numbers, debit card numbers and expiration dates. And while the supermarket chain says that it is working with credit and debit card companies to make things right, customers are probably wondering what kind of risk they face and what they need to do right now.

According to the Federal Trade Commission:

1. Place a Fraud alert on your credit report, and review your credit reports.

2.Close the accounts that you know, or believe, have been tampered with or opened fraudulently.

3. File a complaint with the FTC.

4. File a report with your local police or the police in the community where the identity theft took place.

Says Jay Foley, founder of the Identity Theft Resource Center:

"Any individuals who have been exposed need to close their accounts and get new cards. Credit card users can contact their providers and ask for the card to be canceled because of fraudulent activity. But, debit card users may have to cancel multiple accounts. If your debit card is attached to a checking account which is also linked to a savings account you will have to go to the bank and close both and set up new accounts. Credit cards will be canceled immediately and debit cards will be canceled as soon as the bank processes the request."

Says Jay Hopkins, a spokesperson for Visa:

"It is important for U.S. Visa consumer cardholders to know that they are protected against fraudulent purchases with Visa's zero liability fraud protection policy. As always, Visa encourages cardholders to regularly monitor their accounts and to notify their issuing bank promptly of any unusual activity. Additional consumer security tips are available at www.visa.com.

For more on what to do to prevent identity theft from happening to you, read my related article at Mainstreet.com, and check out WalletPop's coverage of the topic here.

Judge Judy tells eBay con artist where to go

Zac Bissonnette — 2008-03-20T09:00:00+00:00

Filed under: Ripoffs and Scams, Fraud

Doing some research on eBay scams tonight, I came across one of the best YouTube videos of all time -- Kelli Filkins appeared on Judge Judy to defend plaintiffs' claim that she had defrauded them on eBay by sending them a picture of a cell phone they paid $240 for. She claimed that the ad said it was for a picture only.

What ensued is possibly the greatest smackdown in the history of Judge Judy -- who tells Ms. Filkins that she is an "outrageous person" and tells her that "If you live to 120, you're not gonna be as smart as I am in one figure. You may weigh more, but you're not gonna be smarter than I am in one figure." Burn sauce!

Always nice to see the long arm of the law sticking it to a crook. I love Judge Judy.

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And you thought your lawyer was expensive!

Tracy Coenen — 2008-03-17T13:29:00+00:00

Filed under: Extracurriculars, Ripoffs and Scams, Fraud

Probably the worst part about pursuing a legal remedy to a problem is hiring a lawyer. It's not that they're not good. It's not that they don't help you win your case. It's that they're so darn expensive for the average person. With billing rates in the hundreds of dollars per hour, the cost to have an attorney go to court for you can rise quickly.

But companies with deep pockets find attorneys expensive too. Just as Sun-Times Media Group (formerly Hollinger International), the parent company of the Chicago Sun-Times and several smaller newspapers. The company reported numbers for 2007, and they weren't good.Contributing to the company's pain were legal fees and liabilities of almost $200 million related to related to former CEO Conrad Black, the man who is now in prison for a fraud that caused shareholders of Hollinger International to lose millions of dollars. Does that make you feel any better about the lawyer bill you recently paid? Probably not, because even bigger lawyer bills paid by your neighbors probably don't ease the pain when you're writing out a check to your attorney.

If lawyer fees have you down, don't look toward an "insurance" plan like Pre-Paid Legal. Those plans are more fluff than substance, and they play right into your fears of attorney bills that you can't afford. Unfortunately, the plans pay for very little real legal help when you need it most. So don't buy one of these bogus plans. You're much better off saving the money you would have spent on the plan and starting a rainy day fund to help you out if you ever do need to hire a lawyer.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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