Frauds, Scams, and Ripoffs

Money Magically Appears In Your Bank Account  (4/02)

Heard on the Tom Martino "Troubleshooter:" show ca. April 17, 2002

Also part of the plot of the movie "Caught In The Act" starring Gregory Harrison.

You check your bank balance and there is a lot more money than you thought should be there. You call the bank and they say it is legitimate.

Mr. Martino says take that money and put it into another account or certificate of deposit at the bank.

But wait a minute!

First ask the bank to send you a breakdown of the deposit, whether it is cash or checks, and if possible the origin including bank ID numbers of the checks.

If you are sure the money is not yours and someone comes to you to claim the money, do not withdraw the money and do not write him a check. Instead send him to the bank to have the bank reverse the deposit. You don't want to "give the money back" voluntarily and later find that a check that was deposited into your account has bounced, which can happen a few months later.

If no one comes to claim the money quickly then you can transfer it to a separate account, still in your name for the time being. This way your social security number can be taken off and his social security number put on the account if someone else does come forward. Otherwise you will have to pay the tax on the interest that the money earned Alternative: ask the bank to do "backup tax withholding". Another alternative: Keep two percent of the money for yourself, which will pay the tax on the interest the money earns over the course of a year, and put the rest in the bank CD. You will have to remember to withdraw another two percent after a year before the CD renews itself.

Don't Drive That New Car Home Yet  (3/02)

Heard on the Tom Martino "Troubleshooter" radio talk show ca. March 21, 2002.

Someone bought a car and drove it home and started using it. A few days later the dealer calls and says the financing was not approved. So the dealer tells the buyer to either pay more or to bring back the car and forfeit his deposit for mileage and usage! Mr. Martino went on to say that there are a lot of dealers who resell the same car to more than one person this way and pocket the deposit each time.

The moral of the story is, don't drive the car home until after the financing is approved and the papers are signed. Also don't give the dealer the keys to your trade-in until everything is approved and the new car is prepped for you.

Once in a while the dealer names itself as the financier. A few car buyers have then forced the dealer to really be the financier, taking the monthly payments as described by the salesman. This requires an attorney. (Dealers don't like to really be the financier, almost always there is a bank or finance company behind the scenes.)

They Overpaid You Now They Want Some Back (10/01)

Heard on the Tom Martino "Troubleshooter" radio talk show ca. October 4, 2001:

A company deposited too much money "for a paycheck" in their bank account. The company then asked to have the excess sent back. Shortly after the victim sent back the "change" the original deposit, a certified check, turned out to be counterfeit and bounced. So the victim was out several thousand dollars in this case.

Here are the easy things to do:

1.  Try not to cash or deposit a check that is way over the amount you expect. But if someone owed me money and gave me a check for only a little over the amount owed to me, I would take the money and keep the change for a few months.

2.  If you do cash or deposit a check, you really need to wait 180 days (6 months) before giving any of it back. If a check bounces for ordinary reasons such as overdrawing the account, it will usually do so within two weeks, but a counterfeit check probably won't be caught for a few months. After six months, the person who caught the counterfeit would likely be held responsible instead of you because he should have caught it sooner. But this is not guaranteed.

3.  Do not cash checks or lottery tickets for people. Do not run other people's money through your bank account so they can have you send out your checks to pay their bills.

4.  If you are a merchant and accept credit cards, do not charge an amount to a customer's credit card for the purpose of handing him back cash. (This is a very tempting trap when the customer wants just half the cash and lets you "keep" the rest. This is money laundering. This is also not permitted by your credit card company.)

5.  Sometimes the scam begins as a deposit wired into your bank account. After you give permission for the bank to wire back the excess, the original amount is held to be an error and is taken out of your account. You need to deny permission to wire back the excess but instead have your bank and the sending bank figure out the correct amount to deposit, undo the original deposit, and make the correct deposit.

See, also, this discussion of on-line payments.

Car Rental Companies Pushing Unwanted Insurance  (9/01)

The way I will put it is that the car rental companies come up with the darndest ways to sell you extra insurance or collision waivers, etc.

Here is the excuse I got this past August 31, 2001 (Budget)

1. "Florida law requires that rental cars go out with insurance."

I decided to simply and quietly say I am declining all extra insurance coverage. They went so far as to ask me for proof of insurance on my car back at home, which I recommend you have a copy, and they even called my insurance agent!

They finally wrote the contract without insurance per my request.

Other excuses I have heard or have dreamed of:

2. "It is late and we can't reach your insurance company"

To which you simply reply (if that is what you want) "I wish to decline all extra coverages".

3. "We are entrusting a $25,000. piece of property [the car] with you."

To which you should NOT reply, "You made the reservation for X dollars per day and you advertise that collision coverage is optional. Tough, give me the car or refund my money even if it is Priceline!"

To which you should reply quietly (if you want to decline), "I wish to decline all extra coverages."

4. "You are responsible for any damage to the car and also for the time it is in the repair shop."

True. No problem for me. But use your own judgment to decide whether or not to purchase additional coverage. My credit card does pay for this "loss of use". Simply restate quietly that you are declining extra coverages, if that is what you want to do.

Always bring a copy of your reservation with the travel agent's phone number (Priceline is a travel agent and has such a number also) and if they refuse to give you the car, walk away from the counter and call the agent.

Note: If you do not have and use a credit card with a rental car collision benefit, AND you do not have your own car with collision insurance in place, I recommend accepting the rental company's collision coverage. Shop around for the best combined daily rate and collision waiver, do not use Priceline or Hotwire.

Note: If you do not have your own car with liability insurance in place and you don't have a credit card that offers rental car liability insurance, I recommend accepting the rental company's extra liability, sometimes called PAI.

Note: The rental company has the final say about giving you the car. You need to find out when the company really means it when they say you need insurance, as opposed to giving you a hard sell. You need to wait until they actually tell you point blank they won't give you the car. Then you should, if you need the car, go back to the end of the line (or wait a few minutes if there is no line) and rent the car.

However, if you have a reservation, you can say you are going to rent from someone else and hold them civillly liable for the difference in rate.

If you accept insurance you really didn't want, be sure to add the words "Under Protest" after your initials and after your signature.

They must shuttle you back to the airport free if they refuse to give you the car, but usually you won't do better with a different rental company at this time. Almost all other companies will charge you list price when you don't have a reservation.

If the rental company refuses to give you the car and honor the reservation, you may dispute charges by travel agennts and also companies like Hotwire or Priceline.

By the way I asked to see a copy of the "law that requires that rental cars go out with insurance" and they changed their story to say that the rental cars come with minimal liability insurance and above that I would be responsible.

Return to Travel Page

On Line Payments Scam  (4/01)

(Using BidPay, PayPal, I-Escrow, BillPoint, etc.)  Click Here.

In a Nutshell: If someone sends you money by mistake, don't send it back immediately.

(As of 11/02 PayPal has a "refund" procedure to undo incorrect payments you receive.)

Identity Theft  (7/00)

There are many web sites on this subject, and also major news sites such as have articles from time to time on it.

What identity theft is, briefly: Someone else steals your name, address, and social security number and applies for credit cards, loans, etc. in your name and you get billed for the charges. Or some imposter commits a crime and leaves your name and address at the scene so the police come after you.

Click here for our advice.

Unauthorized Phone Charge  (2/00)

Heard on Paul Harvey's News and Comments 2/28/00

When someone calls you, don't press buttons on your phone.

Prisoners have been know to call people at random and tell them to hit nine, zero, star on their phone. Then the prisoner can make a long distance call and charge it to your phone!

The code may be different for some phone companies.

Don't Yell "Mother" in the Supermarket

Most of us know that you don't have the freedom of speech to falsely yell "Fire" in a crowded theater. Here is a situation (seen in  Readers' Digest) where you should not yell "Mother" in a supermarket.

A young man was at the supermarket checkout. An older lady just up ahead turns around to him and says, "You look just like my son. I wish I could hear the sound of his voice again, could you please call out "Bye, mom!"? He does and she walks off with her groceries. Then the cashier says to the young man, "Your order comes to <some ungodly amount>". The young man says that something is wrong and the cashier replies, "Your mother said you would pay for her order!".

Ringing Phone Scam  (11/99)

(From Dateline NBC, Nov. 12, 1999)

A pay phone is ringing. You pick it up and hear just a dial tone. You were going to make a call anyway so you go ahead and dial. Later you see all kinds of unauthorized charges on your phone bill.

What you are supposed to do is hang up the phone, wait 15 seconds, and then make your call .

When you picked up the phone you were answering somebody's call and then they played a dial tone hoping you would punch in your calling card number and PIN which they record and then start using.

Another thing that can happen is you hear a voice "Please deposit so many dollars/cents for the last so many minutes", directed at the person who used the phone last. If you did not listen for a dial tone before depositing money you would be paying for the previous call and the call you are really dialing won't go through.

Credit Card Insurance Scam  (9/99)

The caller on the phone scares you telling you that a lost credit card will leave you with a big bill. False, you are limited to fifty dollars per credit card. But the caller on the phone tells you to buy insurance by charging that to your credit card. Two hundred dollars a year!

Don't buy it. Don't give out your credit card number to anyone who calls on the phone.

On Line Auction Scam  (7/99)

Seller beware on this one. You advertise something for sale, for example a rare Beanie Baby, or a video disk player, or a lawn mower, by auctioning it over the Internet. The bidding deadline comes up and you get excited. Then the winning bidder retracts his bid leaving a runner up bid much lower.

Yes there is a fraud going around that consists of just that. There are many variations, an example follows. One bidder puts in a low bid hoping to win the item at that price. His cohort puts in a really high bid to jam the auction and scare away intervening bidders. A few minutes before the auction ends the high bidder withdraws his bid.

Here is what you should do:

1.  (Most important) Refuse to sell the item at the low runner up bid price!

2.  Actually you should have some printed evidence of the high bid that was retracted. This is one reason why it is important to know how to "print screen" before buying or selling anything by computer.

3.  Offer to sell the item to the actual winning bidder for slightly less than, say 95% of, the highest attempted bid.

4.  Try to redo the auction.

Possession is nine tenths of the law. Therefore it is important to protect your rights by not delivering the merchandise promptly.

If you want to you can reply to the winner (when he e-mails you for payment and delivery information) that you will sell him the item for five percent less than the highest attempted bid. (Typically in a spirited competitive auction, bids advance in increments of about five percent.) If several high bids are retracted, you deduct five percent only once.) Tell him he has the first chance to buy the item at this price and you will re-auction the item if he chooses not to buy.

So the upset winning bidder claims the item is worth only what his winning bid is because that was the highest bid at the end. You counter by saying the item is worth the highest bid attempted because someone made such a bid.

So the auction company claims that frauds like are few and far between. You counter by saying the times the auction company has to let the seller withdraw freely are few and far between and that makes it easy for them to bend their rules for you.

So the auction company says that the retracted bid had a typographical error in the price. But the person who made the "typo" should not get away with hurting somebody else, the seller, by blocking most of the auction time span with the incorrect bid.

The auction jammed by a high bid that retracts is not a true auction. It is distorted by the fact the high bid makes it impossible for intervening lower bids to get registered. A live auctioneer would re-auction the item if the high bidder cannot or does not pay. The auction company does not have the right to allow scams to flourish under their rules. Therefore their rule requiring you to sell is null and void under these circumstances. You don't have to sell.

Any contract involving fraud cannot be enforced. Therefore neither the auction company nor the buyer can force you to sell under the circumstances described above. IMHO you are not required to prove fraud in a court of law but re-auctioning the item will probably give a true indication of the value of the item.

Incidentally most of the other large on line auction houses have published rules specifically disallow the jamming of auctions with high bids meant to be retracted. Sellers and buyers may quote from auction rules, even from a different auction house, when alleging fraud and refusing to complete transactions.

More on on-line auction fraud (subject to availability):


Gummed Up ATM Scam, seen on 20/20 or one of the similar TV shows.

Your card gets stuck in the machine, because some thief gummed up the slot. After you give up and go for help, the thief pulls out the card with a thin pair of pliers, uses your PIN number he videotaped from afar with a telephoto lens, and cleans out your bank account.


Do not punch in your PIN number until the machine asks for it. Thieves have been known (according to TV show) to put a sign on the machine telling you to type in your PIN number not once but even three times to get the card to come out. This gives their video camera a better view. If you see such a sign, don't use that ATM, it is probably a fake ATM.

Shield the buttons as you push them to enter your PIN number.

If your card gets stuck halfway out of the machine and you cannot retrieve it you are probably better off trying to push it back in and making the machine eat it by deliberately entering a wrong PIN.


Do you have friends or relatives in Kansas or Oklahoma (or anywhere else).who lost their homes to tornadoes?

If so please tell them not to rush too fast to rebuild.

In and around Oklahoma City (early May 1999) there are thousands of people trying to hire contractors to rebuild. Not everybody can be rebuild next month, lots of people are going to have to wait. There are some, actually lots of, lousy contractors out there as well. If all the good contractors are booked up, you may get a lousy contractor if you are not careful.

If you are ripped off by a lousy contractor, your home won't be finished when the money runs out.

The average person is not equipped to deal with rebuilding a home. Consider taking the insurance money, paying off the mortgage, and selling the empty lot. Then buy another home that is complete, later.

Having a home rebuilt is just as complicated as having a new home built in the first place. You the owner have to watchdog the contractor to be sure everything is done right. You have to come and inspect the property every day and you will have to take time off work quite often. Someone has to guard the materials and tools after the contractor leaves for the day. You should have it written in the contract that the contractor is responsible for security and loss of materials. Even buying a new house is easier, you are not responsible for paying anything until the house is completely finished.

You should supervise all of the payments, or better yet you write out the checks for materials and labor yourself. The amount of money paid out should be somewhat less than the value of work completed at all times, for example you pay for last week's work at the end of next week. If the contractor does not like this, turn him down and choose someone else. It is the contractor's responsibility, not yours, to advance the money to buy materials.

You really should have a lawyer help out with drawing up the contract although most people don't. Then they complain when something goes wrong.

Take advantage of emergency shelters as long as possible, this way you won't be paying rent.

For children in public school, assign chores related to rebuilding ahead of school obligations. In those districts where truant officers are active, you may have to send the kids to school but you have the right to pre-empt all homework and detentions. In the latter situation the kids will for all intents and purposes be auditing all their courses. Recovering from this storm is likely to take the rest of the school year all the way through summer if not longer. You may simply re-enroll them in the same grade second semester next year. For children in private school, see if relatives  or their friends can take them in while they finish the school year free of distractions.

Those of you who enjoy camping and fishing trips can set up a tent or a trailer on the property.

Don't Pay That Bill!

You get a bill in the mail or on your computer e-mail., "Your order for so many packages of such and such (vitamins, cassette tapes, etc.) has been confirmed". You don't recall ordering any.

Don't pay it. There are a lot of fraudulent people sending out phony bills.

There is a long distance number to call if you want to discuss it.

Don't call. The phone number might transfer to an expensive 900 number. Don't pay the bill either.

If you do receive unordered merchandise, you may keep it as a (free) gift. Alternatively you may charge for storage, return shipping, AND INSURANCE and return the merchandise INSURED only after the company pays you.

Do not pay anything. If you start making partial payments you may be forced to pay the rest because it looked like you agreed to pay. (The legal term is "acquiescence".)

Watchword for the month  (September 1998)

A lot of people buy a car and end up paying a lot more than they thought they should. All because the dealer can sneak in extra charges or inflated costs!

ABC News' 20/20 showed an article on this on September 16, 1998. Here are some examples of what 20/20 found.

1.  A car salesman forgot to give the buyer credit for the down payment. So the buyer ended up with bigger monthly payments to cover the larger amount borrowed and owed.

2.  A car salesman charged the buyer for accessories and options that normally come with the car at no extra charge.

3.  A car salesman filled in the numbers on the car loan contract stating the total amount borrowed and owed which was more than the buyer orally agreed on but when asked, the salesman could not explain where his inflated number came from.

This can happen anywhere you buy big ticket items with monthly payments -- furniture, TV sets, renting an apartment, and so on. How do you protect yourself?

1. Know the math so you can compute the numbers yourself. Bring someone along with you to help compute things. It is easy for the salesman to "make a mistake" and show a higher interest rate or more years or months worth of payments than you agreed on.

2. If the numbers on the contract don't agree with what you orally agreed upon, don't sign until the numbers are corrected or you change your mind and agree to buy the extra options and accessories.

3. Read everything in the contract before signing it. If you need to sign each copy of a contract, stop and read each copy, all pages front and back, before signing it. If you only have to sign once on the top copy and it carbon copies down to the bottom, you only have to read the top copy. Don't take the salesman's word that all the copies are the same. Read each one.

4. Take your time. If the salesman needs to hurry on to the next person's appointment, don't sign anything quickly. In fact you can insist on keeping him waiting while you read everything.

5. If you want to, ask to take home a copy of the contract to look at in the peace and quiet of your home. If the salesman won't let you, you probably should not be buying from him.

Watchword for the month (August 1998):

Calls to "area codes" 800, 888, 877, and 866 are free. If you think you were billed for one by your local telephone company, call them and register a dispute. Subtract that charge from your telephone bill and just pay the rest.

Do you know someone who declared personal bankruptcy? If so let him/her know that there are creditors -- finance companies, department stores -- that sucker them into repaying a debt they don't have to. They may be due a refund. More information on the way, watch this space!

More common scams.

Go to links to other consumer advice web sites.

Go to articles on other subjects.

All parts (c) Copyright 1998-2001, Allan W. Jayne, Jr. unless otherwise noted or origin otherwise stated.

Scam -- Home Equity Loan with High Fees (July 1998)

Don't take out a home equity loan with high fees or high interest rate unless you absolutely need to. There are a lot of scam loans out there with low monthly payments but sky high interest and fees.

We suggest not taking out a new loan to pay a hospital bill. Owe the hospital instead. If you lose your job or another emergency occurs, the hospital is more likely to cut you a break than a finance company.

Have someone go over the math with you before you take out a loan to pay off other debts with. Understand how much money you will have to pay with the new loan compared with just owing the old loans.

Scam -- Door To Door Repairman  (June 1998)  

Don't let strangers who call you or ring your doorbell do work on or inside your home. Scam artists collect money and do a shoddy job, or even dismantle furnaces and washing machines demanding money before they put it back together. Even if the person tells you something is dangerous and needs attention, don't let them in. Call somebody else, preferably someone a friend recommends, to get a second opinion

Scam -- The Bogus Bill  (May 1998)

Check to be sure that bill is valid before you pay it. There are scam artists who send you bills for merchandise, telephone calls, and services you never ordered, never received, never used or never heard of. Also do not send money to some stranger who names one of your relatives and says the money is needed to bail the relative out of jail.

Scam -- Call Me Back At This Number  (April '98)

I'll get right to the point. Don't call. Don't pay. At least think about it first.

You get a message on your answering machine with a long distance number to call back. Maybe the guy sounds angry. Maybe it is a bill collector. Maybe it is someone saying you have just won a prize. Maybe it is a preacher saying you will go to Hell as a sinner.

Maybe you get a scary looking screenful of information on your computer when you are on the Internet.

Almost always it is a scam.

Even if the debt sounds familiar, don't simply call them back. Don't send money. Don't give out your social secuirity number, your phone number, your bank account number, your credit card number.

Here are some things you can try:

1.  Call collect.

2.  Write a letter first. It does not have to be good grammar, the quicker you can write it the better. If you don't have an address, forget it, don't call directory assistance.

3.  At least find out what state or country the call is from. Don't call directory assistance, that costs you money. Beware, some long distance numbers to Canada or the Caribbean charge high 900 rates.

4.  Call the operator and ask for both the first minute and additional minute rate is but don't place the call. After thinking about it for a few minutes, if you really want to call, dial direct without operator assistance (or call collect). If you are billed a much higher rate you then have a case to pay only the rate quoted.

5.  Call him by direct dial, no operator involved. First thing after he answers, give him your number and tell him to call you right back. If he keeps talking and won't let you talk, turn the phone receiver around with the earpiece under your chin. Recite slowly three times "Please call me back at area code xxx number xxxxxxx". Then hang up.

6.  Do nothing. Sooner or later they will call you back when you are home and you can talk in person. Caution. if someone starts yelling at you over the phone, hang up immediately.

Scam -- The Obsolete Personal Computer (March '98)

You see an advertisement in a newspaper, "Beginner's PC" or "Starter PC". The ad goes on to mention that you can buy this inexpensive computer now and add on accessories later.

After you buy the PC and bring it home you find it won't run the programs and games you just bought in the same shopping trip. In fact it will never run those programs because there isn't enough space or connections or sockets inside to put the memory chips and other accessories.

So you end up having to buy a complete new modern PC and what you spent on the "starter PC" is totally wasted.

Hint: Try to see the PC running the actual programs you want to use before you buy it.

As of this writing, you need a Pentium or "586" processor and the ability to expand the memory to 32 megabytes and expand the hard disk storage to 2 Gigabytes (if not already).

As of this writing, I don't recommend a PC with a Motorola processor (Power PC, G-3, 68000, all Macintosh models) as your first PC. The number of people you can share programs and data with is much much smaller, and the programs and accessories tend to be more expensive. There is only one major company (Apple) manufacturing Motorola processor PC's so those machines can hardly be called standard.

Older "486" or even "386" PC's can still be useful if you run only older programs, programs that were sold when those PC's were sold. Yes you can still play games, and do word processing. But don't expect to share data and files with friends and co-workers and the computer will probably be unable to display some web sites if you go on the Internet with it.

Scam -- The Emergency Phone Call (Feb. '98)

Someone knocks on the door and asks to make a phone call. He says he will charge it to his own phone.

You don't trust him but he even tells you the number and lets you dial it. You do that, the operator says the charge is accepted and then you hand him the receiver.

Two months later you see the charge on your phone bill. You call the phone company and the operator says the person charged it to a bogus number so the phone company moved the charge to your bill.

Also the operator says that the phone company does not always actually check to be sure someone accepts the charge at the number it is billed to.

Furthermore the call costs five dollars for the first minute while if you dialed it directly it would have only costed twenty five cents.

Moral of the story, don't let strangers use your phone. Yielding a party line in an emergency does not mean letting someone into your house. It only means you must hang up so phone circuits can be made available for others calling from a different phone.

Perhaps some people will be delayed in getting medical attention or delayed in getting the fire in their house put out all because they couldn't get to a phone. But I suppose (have not proven) that if the first thing you say to the operator is "this is an emergency" the call has to be put through with no charge.

Scam -- The Modeling Agency (Jan. '98)

You answered an ad in the paper, Models Wanted, No Experience Necessary.

I'll tell you the secret right now:

Don't pay money. Don't buy anything.

Don't sign anything you don't understand.

This is not a fashion modeling agency. Instead it is a photography studio.

They want you to do photo shooting sessions and pay big money. They want to make a portfolio of photographs for you. More big money out of your pocket.

They may say you look handsome/beautiful even if in reality they think you don't. They want to encourage you to do the photo sessions and pay them money.

They do not promise to find you any modeling jobs. If you are lucky get a modeling job, chances are it is doing poses for an advertising flyer such as Bradlees or Sears. Very little pay for you. You probably won't get enough modeling to even pay for your photographs.

Don't agree to pay anything other than a small entrance fee, say ten dollars. Don't sign papers without spending a day to review them. If they want money, turn around and walk out the door. If they won't let you take home papers to review before you sign, turn around and walk out the door.

Get your own camera and take your own pictures if you want. You can even use one of those disposable cameras.

Other web sites with information on frauds, scams, and consumer advice:

Tom Martino (talk show host)
(you must register, no charge, to see the par;t with listener and web user comments)

Clark Howard (talk show host)

Large collection of articles on common scams and hints on how to avoid them.

Buying or leasing a car, checking a used car

WCVB-TV Buyer Beware stories with reporter Susan Wornick

WCVB-TV Financial Advice with reporter Mark Mills

(Above web sites subject to availability.)

Contact us

All parts (c) Copyright 1998-2002, Allan W. Jayne, Jr. unless otherwise noted or origin otherwise stated.

If you would like to contribute an idea for our web page, please send us an e-mail. Sorry, but due to the volume of e-mail we cannot reply personally to all inquiries.