BEWARE OF SCAMS

WORDS BY HAL MORRIS DATA BY CONSUMER SENTINEL AND THE IDENTITY THEFT DATA CLEARING HOUSE
BUST THE HUSTLE
Hi-tech scamsters are using increasingly sophisticated methods to defraud US companies out of millions of dollars each year. Safeguard your business by learning how to spot the warning signs and take action.

Scams, rip-offs and other fleecings-via phone, fax, email, snail mail, in the office or on the road-are smacking business people with greater frequency these days, hitting them up for millions of dollars a year. And it isn’t getting any better. Shady shenanigans are mounting daily.

Much of the activity is rooted in identity theft, which, according to latest figures available, accounted for a towering 42% of all fraud complaints to the Federal Trade Commission in 2003. That is up from 40% a year prior. Total losses from all reported fraud categories reached more than $400 million in 2003-and is on course to reach new records in 2005.

Some ways bad guys can nip you:

Phishing expeditions
Phishing-the mass email tactic scamsters employ to hook recipients, including businesses, to disclose personal and financial information-shows no signs of slowing and is becoming a significant problem. While many bogus emails swamping the Internet look like they originate from legitimate operations such as financial institutions, Internet service providers, online payment services and retail stores, evil-doers are now masquerading as a federal agency: The Federal Deposit Insurance Corp. The FDIC insures deposits at the nation’s 9,100 banks and savings associations.

As with prior phishing attacks, the latest phony emails, complete with FDIC logo, ask recipients to update information due to inactive accounts, fraud and other problems. Failure to do so, adds the message, will result in closure of the recipient’s bank account.

The email contains a link intended to lure the unsuspecting to a Website designed to duplicate an authentic FDIC page where respondents are asked to provide personal information such as their Social Security number, passwords and credit card and personal identification (PIN) numbers. Such information paves the way for identity theft culprits to deplete accounts.

About 19% of phishing attack email recipients have clicked on a link, estimates Gartner, Inc., which provides research and analysis on global information technology.

Counteraction: Receiver of the fraudulent email should not access the link or submit personal details. The FDIC (contact toll-free at 877-275-3342) recommends refraining from replying to any unsolicited request for sensitive information.

Cell phone voyeurs
Evildoers are utilizing these as high-tech tools to capture sensitive information in public areas. In restaurants, retail shops and bars, for example, rogue workers turn to the devices to snap images of credit cards for account names and numbers. Although the same information can be obtained by jotting down the essential data, cell phones with integrated digital cameras simplify the procedure and allow instant transmission of images to local or overseas confederates.

Ability to shoot video cell phone clips (now up to 30 seconds’ worth in new models)-and transmit that, too-gives the rogues a boost. A fraudster, for example, can pretend to be chatting on a cell phone while actually recording your personal identification number (PIN) being tapped into an automated teller machine. Automatic focus lens and zoom capability enhance snaring information which, in latest models, can be stored on removable memory cards.

Counteraction: Keep eyes on your credit card. Avoid giving it to someone who takes it out of sight for processing. Guard against a cell phone user shadowing you at an ATM by using, as a security measure, one hand to shield the other while typing in your PIN.

Outsourcing raises security fears
The trend of US companies’ offshore outsourcing of back-office and customer-assistance services to foreign lands adds a new element to the mounting identity theft problem. Some credit card statements and tax returns plus mortgage, bank, brokerage and insurance paperwork, for example, are now being processed overseas, mainly in India and the Philippines, where English, for many, is a second language.

Concern is increasing that shady eyes pose potential risks to the privacy and security of records containing highly sensitive personal and business financial information being fed to foreign sites. The Privacy Rights Clearinghouse, San Diego, California, points out that unlike in the US, no data protection laws are on the books in most countries where personal information is transmitted, processed and stored.

Counteraction: Ask your service provider for the location of processing and call centers. If activity is handled at an overseas point and the company cannot assure that security measures are in place there to prevent leaks in personal data, consider shifting to another provider-after asking the same questions.

Bogus software offers soar
Beware of the increasing number of emails or Websites that tout computer software at incredibly low prices. While some customers could receive working software, chances are an order will bring products that won’t work-or nothing at all.

Counterfeiters, using sophisticated methods, copy legitimate (sometimes stolen) software, package design, plastic wrapping and certificates of authenticity. Most operations are set up overseas, thus bypassing US law. There is little recourse for duped consumers.

What’s worse is that pirated software will sometimes contain viruses or Trojan Horse "back door” programs that later allow entry into your computer system-resulting in the loss of sensitive information and identity theft.

Counteraction: Red flags should be hoisted if $300 worth of software, for example, carries an usually low $25 price tag. Be suspicious of products that do not contain manuals, licensing, policies and warranties. Check out the software selling company through your local Better Business Bureau, state consumer protection agency or Federal Trade Commission.

Avoid fuzzy low-cost health plans
Phony health insurance promoters are preying on small business owners and individuals, offering low-cost coverage as a prime lure.

Unlicensed "health insurers” are becoming more widespread, promoting lofty benefits with premiums (often costing "only pennies a day”) as much as 50% below prevailing rates. Those who sign up, seeking to bypass skyrocketing insurance coverage, are left with hefty bills after discovering their premium payments have vaporized.

Warning signs

• A request to pay premium in cash or a year in advance.
• References to "benefits” rather than insurance; "contributions” instead of premiums and "consultant fees” in place of commissions.
• Need to join a "union” or "association” to obtain health coverage. Or payment of "dues” may be necessary prior to obtaining a policy.
• Agent, who is ill-informed on specifics and does not give precise responses to questions, lacks a commission schedule and bases rates on ability to pay.
• Product is touted as "fully insured, "fully funded” or "reinsured”, but the agent draws a blank when asked to identify carrier underwriting the product. If the name of so-called "insurer” is announced, it may have a familiar ring, often close to resembling a legitimate, established company.

Counteraction: Be skeptical of low rates. Carefully review all materials. Verify information. Read the fine print. Don’t be influenced by glossy, well-illustrated marketing literature or high-pressure sales pitches, including mentions of "it’s your last chance” or "apply immediately”. Seek references of other small businesses enrolled with the provider. Then obtain information from them on benefit payment history and claim turnaround time. Confirm via your state insurance department that product is being offered by a licensed insurance agent with a proven reliability record. Caution: Offerers of the plans often wrongly say federal law exempts state licensing.