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.

Read | Permalink | Email this | Linking Blogs | Comments

Changing cell phone plans? Beware of pro-rating!

Josh Smith — 2008-05-13T12:00:00+00:00

Filed under: Ripoffs and Scams, Technology

Last month I shared my quest to save money by reviewing our cell phone bill. I found that we could get unlimited texting on all of our lines without any increase in our monthly rate. This was a huge deal since my sister was as familiar with text overages as the Cookie Monster is with cookies! Due to the amount of texts already sent I decided to do something I should have avoided, I switched plans mid billing cycle. Most places this wouldn't be a huge deal, but Verizon's billing system is arranged to maximize confusion for users and profit for the company.

Since the switch occurred mid month Verizon pro-rated the text message plan on my sister's phone. Normally this means I get some money refunded and it only appears that I was ripped off on the bill. This time however was different. Even though the plan she was on was for 1,500 text messages and we switched to an unlimited plan Verizon decided that the allotment of messages at the time we switched was 913, which just happened to be 403 below what she had already sent resulting in a huge overage.Verizon's unique billing method of refunding $6 only to charge $40 for text message overages is ridiculous! I ended up getting the money refunded after a 20 minute phone call Saturday night. Thankfully the customer service rep I spoke to was kind enough to "pull some strings" and reverse the charge even though the billing system was supposedly in the right. Lessons learned from this adventure include, don't switch your cell phone plan mid month and if Verizon ever screws up your bill restitution is only a phone call away.

Do you have any cell phone billing horror stories? How much do you need to be over-billed to call up and demand money back?

Permalink | Email this | Linking Blogs | Comments

House in foreclosure? Set it on fire!

Tracy Coenen — 2008-05-13T11:00:00+00:00

Filed under: Home, Insurance, Ripoffs and Scams

News reports say that as the number of mortgage foreclosures increases, so do the number of "suspicious" fires. When the fire occurs mere days before a homeowner will be forced to leave their house due to foreclosure, it obviously creates suspicion.

Some homeowners do it to get revenge on the mortgage company or bank. Others do it thinking that they will collect insurance money that can be used to prevent the foreclosure. Check out this video on setting houses on fire, especially in areas with higher rates of foreclosure.

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.

Permalink | Email this | Linking Blogs | Comments

JetBlue flyer sues after being made to sit on toilet

Zac Bissonnette — 2008-05-13T08:00:00+00:00

Filed under: Ripoffs and Scams, Travel

The Associated Press lead tells you pretty much everything you need to know:

A New York City man is suing JetBlue Airways Corp. for more than $2 million because he says a pilot made him give up his seat to a flight attendant and sit on the toilet for more than three hours on a flight from California.

Manhattanite Gokhan Mutlu is suing the budget airline after the pilot told him to vacate his seat and "go hang out in the bathroom" for 90 minutes because the flight attendant had complained that her seat was uncomfortable, according to court papers. When the plane hit turbulence and the pilot directed passengers to return to their seats, "the plaintiff had no seat to return to, sitting on a toilet stool with no seat belts," according to his suit. That could've gotten messy!

This was one of those stories that's so ridiculous I can't think of anything to say. Perhaps JetBlue, which prides itself on its no-frills service with low prices, should begin offering discounted fares for passengers willing to sit on the toilet.

If the allegations outlined in the lawsuit are even remotely accurate, some people at JetBlue definitely need to lose their jobs.

Read | Permalink | Email this | Linking Blogs | Comments

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.

Letting prisoners out early to save money is not the answer

Tracy Coenen — 2008-05-07T17:00:00+00:00

Filed under: Ripoffs and Scams, Saving

With budgets stretched thin, several states are considering letting inmates out of prison early to save money. Even though they may be more likely to commit new crimes, politicians are saying the cost of those crimes is far less than the cost to keep the prisoners locked up.

One argument in favor of letting prisoners out early suggests that those in prison for things like "minor drug offenses" aren't a danger to society and should not have been locked up in the first place. That's a nice thing to say, but where's the proof that there are people in prison "only" for "minor" drug offenses?

Where I come from, you have to commit an awful lot of crimes to actually end up in prison. And that minor drug offense? The only way it's going to get you into prison here is if you've already got a double digit rap sheet. As a former probation officer, I can't tell you how many times I've seen judges try everything they could to avoid sentencing a criminal to prison.

Let's not forget that prisons exist for two primary reasons: To punish offenders and to protect society. If it's getting too expensive to house prisoners, then maybe we need to look at ways to reduce the costs with lower cost meals and control of spending on extras for the inmates. And maybe we can put the prisoners to work doing things that will earn some money for the prison system to help pay their own way.

No one likes to admit it, but prisons are a necessary reality for our society. We have violent offenders who don't deserve to be living in society with the rest of us. We have non-violent offenders who also need to be sent a message that their behavior is not tolerated in a civilized society. Crime deterrence and our safety should come first, and governments should look for other cost-saving measures before they start opening the prison doors. Freeing inmates early should be the absolute last resort.

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.

Read | Permalink | Email this | Linking Blogs | Comments

Credit card disputes: Get your money back

Tracy Coenen — 2008-05-07T13:00:00+00:00

Filed under: Cards, Ripoffs and Scams

Consumers have rights when it comes to fraudulent credit card charges or charges for products and services that aren't what they paid for. The key to successfully challenging a charge is in knowing what to say and who to tell. That sounds elementary, right? Except Consumer Reports is saying that many consumers don't know their rights or how to enforce them.

Small dollar amounts are easy to dispute and resolve, as it's estimated that it costs a credit card company $25 for each charge it must investigate. This means they're likely to give refunds for small amounts without much work. It would cost more to investigate than to just give you your money. The credit card company also has to weigh the risk that you will close your account if your matter isn't resolved. They lose money when you do that.

Here are a few key points about your credit card: Report suspicions of credit card immediately to stop the harm. Most billing problems need to be disputed in writing, and many credit card companies don't recognize e-mail as "in writing." The credit card company must receive your letter within 60 days from the statement date, so don't wait. Include with your letter all copies of supporting documentation to help prove your claim.
Some of the most common billing disputes include: Unauthorized charges, which can often spring up because of an automatic charge that you've attempted to cancel, such as internet service. Failure to credit your account for returned items is common, so make sure you hang onto your receipt to prove the return. Issues with the quality of merchandise are harder to dispute, because once you've "accepted" the goods, many credit card companies won't give you a refund for low quality items.

A retail client of mine never successfully defended a claim by a credit card holder, even with all documentation intact. This suggests to me that consumers may have the upper hand in credit card disputes, so it pays to take the time to dispute bad charges and get your money back.

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.

Read | Permalink | Email this | Linking Blogs | Comments

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).

Read | Permalink | Email this | Linking Blogs | Comments

Is LifeLock identity theft protection really a rip-off?

Tracy Coenen — 2008-05-05T19:00:00+00:00

Filed under: Ripoffs and Scams

When I first heard about LifeLock last year, I was very intrigued by its service. I was especially interested in how it advertised the services: With the company's CEO telling everyone his social security number.

The company "guarantees" that your identity will never be stolen, and it offers a "$1,000,000 Service Guarantee." If you sign up for LifeLock, it will set up fraud alerts for you with each of the three credit bureaus. It will also have your name removed from pre-approved credit card offers and junk mail lists, and it has the credit bureaus each send you a credit report once a year.

LifeLock has a WalletLock service to help you if you lose your wallet. It will help cancel accounts and help you if your credit cards are used fraudulently. And if your identity is ever stolen while you're using LifeLock, it says it will hire lawyers and investigators to help "recover your good name."

Sounds good, right?

Here's the main problem with this service: Most of what it offers can be accomplished on your own for free. All it takes is a few phone calls, and you're done. Why would you pay a monthly fee of $10 for these things which you can do for free on your own? (The company suggests that customers like the convenience of having someone else do it for them.)

But there's a bigger issue, and the plaintiff's lawyers have gotten a hold of this one. The $1,000,000 guarantee isn't exactly what it sounds like. The company says it will pay to you repair your credit if your identity is stolen, yet the class action suit says that the actual service guarantee says LifeLock will only pay for expenses resulting from a defect in its service.

The lawsuit also says that the LifeLock CEO's identity is currently being used by about 20 identity thieves. If this is true, I can only suspect that it's more lucrative to advertise his social security number than protect his identity. It's apparently made him a lot of money.

The bottom line with this lawsuit? The attorneys say that the company is basically offering a worthless service with a worthless guarantee. And the more I look at what LifeLock is offering, the more I tend to agree.

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.

How much do you want to earn each month as an Herbalife distributor?

Zac Bissonnette — 2008-05-05T13:00:00+00:00

Filed under: Entrepreneurship, Ripoffs and Scams

Over on BloggingStocks, I've written about Barry Minkow's allegations of fraud at multi-level marketing giant Herbalife.

Here on WalletPop, I thought it might be worth taking a look at Herbalife -- especially its recruiting tactics -- from the personal finance perspective.

On the Herbalife webpage, there's a form you can fill out to receive more information about becoming an Herbalife distributor. Among the questions:

How much would you like to earn monthly?
An extra $500
An extra $1,000
An extra $2,000
The sky's the limit!

Well who couldn't use an extra $500 a month? But a better question is: What are your chances of earning an extra $500 each month as an Herbalife distributor? The company's statement of average gross compensation (PDF) tells the story.

Only around 25% of Herbalife distributors reach the rank of "Supervisor" or higher, which qualifies them to earn commissions on their sales volume and the sales volume of those they sponsor. Of that 25% that reach "Supervisor" or higher, 87.5% are supervisors, with average annual earnings of $549. That's $45.75 per month. Another 5.8% are at the "World Team" earnings level, with average annual earnings of $4,219. That's getting better, but still about $150 below the minimum amount you could check off under how much you'd like to earn monthly on Herbalife's questionnaire.

Think about it: only 6.6% of "leaders" fall into a category reflecting average earnings of more than $500 per month. And only 25% of all distributors reach any of the "leader" categories. So the chances of a distributor earning "an extra $500" per month are about 1.65%!

Is it misleading to make "an extra $500" the lowest dollar level on the questionnaire when the chances of reaching that level are only slightly higher than the chances of any given newborn turning out to be a genius? It sure seems like it to me.

Read | Permalink | Email this | Linking Blogs | Comments

Beware of misleading car ads -- how can a price not include the down payment?

Zac Bissonnette — 2008-05-05T09:00:00+00:00

Filed under: Ripoffs and Scams, Transportation

You don't have to look very far to find instances of blatantly misleading but still legal advertising in the automotive industry. Even though most dealers clearly disclose how the deal works, the result is that car ads are obfuscatory and require very careful reading.

My favorite (or least favorite) example of deliberately confusing car advertising is the ol' "price reflects down payment and/or trade-in."

Here's an example of how this works in action. Sutherlin Nissan of Fort Myers advertises a 2003 Corvette priced at $24,988, with the caveat (in much smaller print) that "all prices are after your $2000 down payment."

Think about that. This dealer (and many, many other dealers that use the same tactics) are telling you that the car costs $24,988, not including another $2,000. Wouldn't it be more forthright to just say that the car costs $26,988? To my knowledge, the car industry is the only business that uses this tactic. Can you imagine if the flyer for the grocery store advertised "99 CENT VITAMIN WATER!" with an asterisk indicating that "price advertised does not include the other 50 cents that you have to pay for the drink"?

I know that these companies aren't doing anything illegal in their advertising. But to me, it's misleading enough that I wouldn't even consider buying from that dealer.

Permalink | Email this | Linking Blogs | Comments

God wants your tax rebate check

Tracy Coenen — 2008-05-02T16:30:00+00:00

Filed under: Ripoffs and Scams, Tax

According to Pastor Steve Munsey on Trinity Broadcasting Network (TBN) in the clip below, God apparently created "...seed in their hand with their income tax." And apparently we should give that income tax money straight to Pastor Munsey. He says you can "start giving your way out of trouble." Give Pastor Munsey money, get out of trouble. Sounds good to me! Where do I send the check?

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.

Read | Permalink | Email this | Linking Blogs | Comments

What are you really getting with those 'legal insurance' plans?

Tracy Coenen — 2008-05-02T13:00:00+00:00

Filed under: Insurance, Ripoffs and Scams

PrePaid Legal Services and companies like it sell plans that are billed as "legal insurance." These plans supposedly help the average consumer received "free" legal services in many cases, and discounted services in other cases. They're often marketed as offering help to the "little guy" who might otherwise not be able to afford a lawyer.

The truth? These plans offer very little real help to consumers. Many types of cases are excluded under the plans, so you won't be receiving any "free" services related to them. If you do happen to qualify for services, you'll find out quickly that the services are very limited and are mostly only for time spent on trial. Many hours of legal services will be needed prior to the trial, but most of this is excluded from the plans, and plan participants will have to pay out of their pockets for those services.

More details in this video. (Disclosure: I was paid by Fraud Discovery Institute to help research the issues raised in this video.)

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.

Read | Permalink | Email this | Linking Blogs | Comments

Economic stimulus stimulating lots of fraud

Julie Tilsner — 2008-05-02T10:30:00+00:00

Filed under: Ripoffs and Scams, Tax, Wealth

The economy isn't the only thing getting a (alleged) boost from the government's economic stimulus checks, being sent out to taxpayers beginning this past week. The political windfall is also stimulating a lot of creative fraud as well.

According to story on MarketWatch, scammers are calling and emailing consumers posing as the IRS or the Social Security Administration. The callers tell consumers they need detailed bank account information or Social Security numbers in order to process their economic stimulus checks. Those consumers who fall for the scam and reveal this information are then subject to identity theft.

The story recommends some steps consumers can take to prevent getting so scammed.

Don't ever give out personal information such as bank account numbers, Social Security number or Mother's Maiden name to unsolicited callers.

Keep in mind that the IRS will NEVER call you in regards to the stimulus package. The Social Security Administration is unlikely to call you out of the blue, either. Also, remember that you'll only get a check if you filed a tax return this year.

Don't click on any links in unsolicited emails -- they may take you to a fraudulent site. Fraudsters these days can create very sophisticated websites that look almost like the real thing. Once there, they will prompt you for information. Don't give it out. If you want to go to the actual IRS site, go to www.irs.gov.

If someone calls you and says they're from a government agency, hang up, and call the agency yourself. The FTC keeps a list of government agencies and contact numbers here.

If you filed a tax return this year, be patient -- the check is in the mail, as they say. Wondering when you'll get yours? Check here to find out.

The key to a successful financial fraud: Believability

Tracy Coenen — 2008-05-02T09:30:00+00:00

Filed under: Ripoffs and Scams

Ask any white collar criminal (past or present) and they will likely tell you that one of the main factors in getting away with their crimes (at least for a while) was the believability factor. Above all else, those in the position to be ripped off had to believe in the white collar criminal.

So it goes without saying that Charles Ray Fuller may not have much of a future in white collar crime. This 21-year-old went into a Texas bank a couple of weeks ago and tried to cash a fraudulent check. He was doing well. He walked into the bank. He smiled. He presented the check.

And the bank teller immediately doubted his honesty. The reason? A little detail such as the fact that the check was made out for $360 billion dollars. Yes, with a "b." You see, banks don't typically have people waltz in off the street and try to cash checks for hundreds of billions of dollars. Sure enough, the check was made out to someone other than Mr. Fuller, and was not authorized by the holder of the checking account.

So Mr. Fuller failed White Collar Crime 101 by not being even a little bit close to believable. Even better? At the time he was committing this little crime, he was (allegedly) carrying both a gun and marijuana. I think even the street crimes experts would be ashamed of him for this one.

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.

Read | Permalink | Email this | Linking Blogs | Comments

Is your odometer cheating you?

Josh Smith — 2008-04-30T17:00:00+00:00

Filed under: Ripoffs and Scams, Transportation

Back in 2004 a lawyer in Arkansas found out that his odometer wasn't calculating mileage correctly on his Honda minivan. His tests found out that the odometer was off by 5%, so for every 100 miles his minivan would rack up 105 miles. This may seem like small change, but as Bankrate.com points out, even a 5% error can end your new car's warranty up 1000 miles early! The problem only gets worse when you have a car with a 100,000 mile warranty.

The last time you want to be without a warranty is when your vehicle rolls over 100,000, especially not when you really have 5,000 miles left on your warranty. At this point in your car's life it is much more likely to need expensive repairs which would have normally been covered under warranty. You'll appreciate having checked out the calibration of your odometer when your engine or transmission goes out at 100,007 miles.

Finding out if your odometer is quietly eating away at your warranty is really easy, just grab a friend and head to your closest federal highway. All you need to do is measure your odometer against the mile markers, use some of your mathematical skills and viola, you know how far off your odometer is. Bankrate has several steps to take in the event your odometer is skimming cash from your wallet. Thankfully most odometers are computer controlled, and can be fixed at your local dealer.

When we bought our most recent car we made sure that the car didn't have any odometer fraud, but we didn't even think to check that it was recording correctly. It looks like we have a project for our next road trip, especially since we purchased a power-train warranty with the vehicle.

Read | Permalink | Email this | Linking Blogs | Comments

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.

Read | Permalink | Email this | Linking Blogs | Comments

Mortgage Confidential: Will a higher rate give me more tax write-offs?

David Reed — 2008-04-28T15:30:00+00:00

Filed under: Real Estate, Ripoffs and Scams, Investing, Mortgage Confidential

Mortgage expert David Reed invites Walletpop readers to ask him questions about real estate financing. leave your questions in the comment section of this post.

Q: David -- I've been asked by Freepoint to refinance with them. This company claims that I would build up wealth by investing the difference in my equity with them, getting an interest only loan. They state that having equity in your home is not good because someone can sue you and have a claim on your equity. After several years, one would have enough money to pay off their mortgage if they desired. I would like to get advice on this. They said the higher interest would be a tax write off and I would be investing the equity and getting a higher return. Please advise. Thank you. - Helen

A: Helen -- Don't return their phone calls. I don't know who that company is, and while I'm sure they're a fine organization, I'm not comfortable. I see three big problems with this "pitch" which used to be very popular among mortgage loan officers yet seems to be falling by the wayside.

Build wealth by investing the different in equity with them
Having equity in your home isn't good because someone can sue you
The higher interest would be a tax write off

Sheesh. And I thought loan officers like that were out of business or selling cars or something.

Build wealth: Sure. The math always works with their calculators that show how much money you'd be making if you invested XX amount over XX number of years. Okay, fine. Which stocks? Which mutual funds? For how long? And how do they know any of this? The fact is that they don't, and you can bet your bottom dollar (if you have one by the time these folks get through with you) you'll be signing a horde of disclaimers saying that there are no guarantees. And you can still invest money each month any way you want without such a plan.

Equity isn't good. Since when? Since when all those people over the past few years tried to sell their house but couldn't because they didn't have any equity? Personally I think equity is darned good, especially when you have it and no house payment. Yeah, yeah, I know. If push came to shove then you use the proceeds from your investments to bail you out. Right. That apparently went down really well in places like Miami, San Diego and Detroit. And people can sue you all they want but that doesn't mean they can take your house

The higher interest is a better tax write-off. This is the hilarious one. If that were true, then why not take a mortgage with a 99% interest rate so you can take advantage of the higher mortgage interest deduction? These guys are some real Einsteins.

The fact is that people like these folks really don't care about you or your situation, they want to do two things: Strip the equity out of your home via a refinance so they can make money on your mortgage (with a higher loan amount, by the way, so they can make even more money off of you) and make commissions on investments they make on your behalf. I know this is only my opinion, but such pitches -- and they are pitches -- (and I'll just bet their "loan officers" are trained to read a script), make me sick to my stomach. -- David

Real estate finance expert David Reed is president of CD REED Mortgage Bankers in Austin, TX and author of Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You and Mortgages 101: Quick Answers to over 250 Critical Questions About Your Home Loan.

Read | Permalink | Email this | Linking Blogs | Comments

Consumers defrauded by telemarketers can file claims

Tracy Coenen — 2008-04-27T12:30:00+00:00

Filed under: Ripoffs and Scams

Wachovia Bank has entered into a settlement agreement with the Office of the Comptroller of the Currency (OCC) to pay restitution to consumers who were defrauded by certain telemarketers and third party payment processors. The companies that defrauded consumers included Payment Processing Center, LLC, FTN Promotions, Inc. dba Suntasia, Inc., Netchex Corp., and Your Money Access LLC, and related companies.

After an 18-month investigation, the OCC determined that the companies were getting bank account information over the phone and withdrawing funds from the accounts without authorization. The telemarketers had very a very high number of their transactions returned by the consumers as unauthorized. This high rate should have alerted the bank that these account holders were engaging in fraudulent transactions. Wachovia is believed to have participated in these fraudulent schemes because it profited from the fees collected on the telemarketers' accounts and transactions.Wachovia will pay out a maximum of $125 million, but is hoping for less if fewer consumers file claims. Consumers who have already been reimbursed for their losses cannot collect any additional money through this process. The bank also has to give $8.9 million to consumer education programs for the elderly, and must pay a $10 million civil penalty to the U.S. Treasury.

So all told, Wachovia will be on the hook for about $144 million at the most. That's about 2% of the company's profits of $6.3 billion in 2007. Is that a fair price to pay for looking the other way when consumers were being defrauded?

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.