Protect 14

JANUARY 2011

Inside This Issue . . .

EXERCISE CARE ON GYM MEMBERSHIPS OBAMACARE SCARES

TACKLING SUPERBOWL SCAMS COPIER CRISIS THIS MONTH IN PROTECT

Every year in every survey, the top New Yearʼs resolutions remain constant: spend more time with friends and family, get fit and lose weight, quit smoking and drinking, enjoy life more, reduce debt, get organized and learn something new. All noble goals. But let us suggest an addition to the perennial leaders. That is, protect yourselves and your loved ones from the scourge of identity theft that is sweeping the country. Itʼs critically important in 2011 and, frankly, easier than taming the bulge or putting down the fire sticks.

PROTECT can be part of the solution. PROTECT is a monthly newsletter to help you avoid becoming one of the 11 million Americans already victimized by identity theft. Each issue explains the latest crimes and scams and, most importantly, tell you how to protect yourself and loved ones. PROTECT is brought to you by the people who operate I.D. SHIELD 360, a leading service that helps shield you from the criminals determined to steal your most important possession – your identity.

THE REVERSE MORTGAGE TRAP EVERYTHING’S BIGGER IN TEXAS

EXERCISE CARE ABOUT

GYM MEMBERSHIPS

As the calendar turns to the New Year, many are making their annual “get in shape” resolutions — often by joining a gym. While most businesses are in the doldrums during January and February, health clubs see their best business of the year. Therefore, the early part of the year can be a great time to find a deal on a membership, as competition for customers result in some great discounts. But there are plenty of pitfalls, shady contracts, and outright scams to watch out for as well. An informed consumer is a protected consumer, so be prepared.

THE BEST PRICE Not all gyms are created equal. Many consumers will forgo their local “premium” gym because of exorbitant fees, not realizing there is a huge range of quality among lower priced gyms. A cutrate gym may have poor quality equipment, unsanitary conditions, or be overcrowded. Due diligence is key here: use word of mouth or Internet research before even visiting a gym.

There is a lot that can be hidden on a tour.

CONTRACTS Many if not most gym contracts are heavily weighted against the consumer. The ones to watch out for, however, arenʼt merely one-sided, they are deceptive. Avoid any contract that charges extra or unspecified fees for reasons ranging from club improvements to annual renewals. Assume you wonʼt be cutting your membership short – this is where most complaints about gyms stem from. Be prepared to pay penalties if you want out of your contract, or sign on with a gym with relaxed termination policies.

THE FULL EXPERIENCE Look for a gym that charges one price for all or at least most of its amenities. Donʼt assume you have access to classes, pools, or saunas unless explicitly stated in writing.

Many discount memberships have limited privileges, so get a clear idea of what you are signing up for.

ACCREDITATIONS Donʼt be swayed towards a gym based on accreditations, commendations, or certificates. The fitness industry is generally loose with accreditation standards for facilities and trainers, and many credentials can be purchased without qualifications.

While association memberships or recognitions shouldnʼt be seen as negatives, donʼt be oversold on them either.

MEMBERSHIP TRANSFERS Membership transfers are always fraudulent. In an increasingly common scam, con artists are taking to social networks and online classifieds with offers of steeply discounted memberships. Posing as a gym member who no longer uses their membership, but has already paid their yearly fees, the scammers offer the remainder of their privileges for a fraction of the normal cost. The scammer typically has activated a membership with a fraudulent credit card. Having paid the scammer directly, the victim is then turned away from the gym when the scammerʼs ruse is uncovered. Any gym membership requires signing a contract, which generally states memberships are non-transferable.

CONFUSION DRIVES OBAMACARE SCAMS

The national healthcare bill is now the law of the land but most of provisions do not take effect for years. That is not stopping a spate of “Obamacare scams” that are taking advantage of the confusion over the program and the fallout from the nasty national debate. So far, it is early in the process, say experts, and the scams are relatively unsophisticated.

Still, state insurance departments and the U.S. Health and Human Services Department are gearing up for a flood of new frauds. “Confusion is the scammerʼs best friend,” James Quiggle, of the Coalition Against Insurance Fraud, is quoted as stating. “It didnʼt take long for them to realize that the health care law was a new marketing opportunity.”

AMONG THE EARLY EMERGING PATTERN OF FRAUDS:

1. Selling insurance policies to the elderly that purport to protect them from the “death panels.”

2. Posing as government employees and taking downpayments to reserve your “Obamacare” coverage.

3. Telemarketing or emailing offers of “government healthcare reform insurance” that requires the victim to provide a bank account or credit card number.

4. Stating that the new law requires you to buy a specific policy or right now in order to be in compliance.

5. Offering people “one of the last spots” in the Obamacare plan from their state or locality.

6. Generally using the words “Obama” or “national healthcare” to promote or sell private insurance plans.

What can you do to avoid being a victim?

At this stage, the frauds tend to be simple so use your common sense. In particular: 1. Avoid insurers who use the term Obamacare; no such healthcare plan actually exists under that name.

2. Avoid insurers who say you must buy now to avoid fees, penalties or even prison.

3. Shun those who say they can expedite Medicaid or Medicare drug coverage rebates.

4. Before signing any agreement, verify that the insurer is government licensed.

5. Call your state insurance department or the Better Business Bureau if you have reason to be suspicious.

WATCH THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS WARNING ON OBAMACARE SCAMS

SLAM THE DOOR ON

RENTAL FRAUDS

As people increasingly list and search for rental properties online, there has been a surge in real estate rental frauds.

These scams fall into two obvious categories: you are a renter or you are an owner.

In the first scenario, you are looking for a rental in the online classifieds perhaps on Craigʼs List or another popular source.

When you respond to an ad that attracts you, the “property owner” turns out to be a scammer only pretending to have a property for rent. This phony landlord shows up at the property, shows you around, takes a deposit and flees. Alternatively, a fake landlord makes up some excuse for why he or she is out of town and cannot see you face-to-face, and asks you to mail a deposit or rent check to an out-of-town address or even a foreign country. You do so and, when you go to pick up the keys, you find out the scammer never owned the property and your money is gone.

In the second scenario, you have place to rent. Someone responds to your online listing. A scammy tenant takes the space and then re-rents it — sometimes multiple times — to other unsuspecting targets. Then they skip town with the deposit and perhaps the first monthʼs rent. Or, if the transaction is handled remotely, you agree on the rent and the scammer sends you a check. But itʼs for an amount “mistakenly” too high. You give him a cash refund for the difference and, by the time the check bounces, the thief is away with the cash. Similarly, the scammer give you a check for the rental, then says he has changed his mind, and you give him a cash refund only to find out later that his original check was bad.

There are several ways to avoid being a victim of these rental scams, most of which boil down to doing your homework.

If you are a renter: Ask to see the landlordʼs identification or ownership papers. Search local government websites for the rental propertyʼs address and make sure the name listed matches that of the landlord. If a property management company is managing the condo, home or community, call them and ask whether the person you're dealing with actually owns the property. In a gated community or a condominium, a rental application is usually required; be suspicious if there is none. Use search engines to look up and cross-reference the propertyʼs address, landlord name and phone number. Consider employing a real estate agent.

If you're an owner: Keep an eye on your property and do not leave it vacant for long periods of time. Change the locks frequently.

Ask potential tenants for references and check them. Verify a potential tenantʼs employment and run a credit check on potential tenants. Do not give tenants cash refunds until their own check has cleared. Search the internet for a potential tenantʼs name, phone number, and prior address. Do not rule our checking police records as well.

THE COPIER CRISIS

Not enough to worry about? Now thereʼs another piece of office equipment that can put your identity at risk. You may have cleansed your computer and shredded your documents, but the next threat is the copy machine. Not all copiers, mind you, but the new ones that contain hard drives that retain the images of every document they have ever copied. These hard drives can be accessible to an ambitious thief and, often, they are not wiped clean when a copier is re-sold or recycled.

In a recent report on CBS News, correspondent Armen Keteyian demonstrated how easy it is for these images, which often include sensitive information like Social Security numbers and medical records, to fall into the wrong hands. For the study, CBS and a software company cooperating in the story, purchased four old copiers from a warehouse in New Jersey and found tons sensitive data stored in the copiers.

The CBS investigate report has spread ripples through the professional security industry which had not previously taken the problem seriously. Now experts and public officials are beginning to weigh in.

Though copier-related identity theft is still in its infancy, here is what experts say you can do to protect yourself: • Find out if your company has one of the potentially offending copiers; with small and personal copiers you are probably safe but the big, new expensive ones are trouble.

• Find out if your company has a policy in place for deleting or scrubbing information off the hard drive on a regular basis; if not, lobby for such a policy or ask your employer to purchase security or encryption packages available for an extra charge.

• Ask these same questions at your local copy shop or franchise, which are likely to own such machines as well.

• Find somewhere else to copy sensitive information, perhaps investing in a personal copier or multi-functional business unit in your home.

WATCH THE ORIGINAL CBS REPORT

DON’T GET TACKLED BY

SUPERBOWL SCAMS

Attending a Super Bowl is a dream come true for an American sports fan — but for some, a trip to footballʼs biggest game becomes a nightmare. Preying on the overwhelming demand for tickets, unscrupulous travel companies and run of the mill scammers take advantage of hundreds of fans a year.

The classic scam, having conned fans for decades, is perpetrated by less-than-legitimate travel companies. With the promise of hotel accommodations close to the game, tickets, and airfare, many fans snap up all-in-one packages as a money-saving convenience. But many fans fail to read the fine print. In one scam, the ticket and hotel are included in the package, but the airfare has to be purchased through another, related company, which charges a hefty premium. In another common scam, the hotel advertised in the package is a “flea bag” 20 miles or more from the venue, and transportation to and from the game is available only through the agency at another fee.

Of course, the worst offenders are the ones who sell tickets they donʼt have. Some travel companies and ticket agencies are merely fronts, and trade in counterfeit tickets. Hundreds of fans are turned away from the game every year holding illegitimate tickets. For fans that travel great distances to attend the game, at great cost, being turned away at the gate is an incredibly maddening and humbling experience.

Online scams are growing quickly as well, in some cases supplanting the traditional package scams, at least in sheer numbers of attempts.

The script is typical of email phishing, and usually targets fans of the competing teams. An unsolicited email appears from a game sponsor, the NFL, or a local radio station. There is the promise of tickets, airfare, and often cash. All you have to do is cover some expenses, or divulge personal information for “verification.”

TO PROTECT AGAINST THE BAD GUYS, FOLLOW THESE TIPS:

1. Only deal with established, reputable travel companies. The internet has made it easier to check the companies out, but always take online ratings with a grain of salt – the ratings systems can be manipulated. Sites like yelp, ripoff report and traveladvisor can be of great help.

2. Pay by credit card. Never deal in checks, cash, and especially never think about wiring money.

A credit card offers several layers of protection and recourse, especially when dealing with travel purchases.

3. Donʼt assume the bold print in an ad is accurate. If the hotel is stated as “walking distance” from the venue, find out the location. If there is the promise of exclusive events and parties, find out the what, when and where. Scour the fine print and have everything clearly spelled out in writing.

4. Consult the Department of Transportation.

Responding to massive fraud after the 1994 World Cup and Superbowl, strict laws were put in place regulating the content, pricing, and ethics of sports travel package deals. www.dot.gov 5. When solicited online, never send money or information in response to an email, no matter how official it looks. Better yet, donʼt even respond.

Itʼs easy to let the excitement of attending the Americaʼs biggest sporting event cloud your judgement, especially if your team is making what seems a once-in-forever trip to the big game. Keep your wits, verify everything, and enjoy the game.

TRUE STORIES

EVERYTHING’S

BIGGER IN TEXAS

Cody Quincy Jones and Randy Ray Flaharty cruised the streets of San Antonio TX in a white Cadillac Escalade looking for the storage rooms of local hotels. Their perseverance paid off when they found boxes of monthly credit card receipts from previous hotel guests at the Emily Morgan. From these receipts, Jones and Flaharty manufactured credit cards, which they then used to buy $300,000 of merchandise in Texas, Oklahoma and Louisiana. Among the loot: televisions, all-terrain vehicles, tow trailers and other major purchases which were then resold or pawned. The 17,000 receipts stolen represent San Antonioʼs largest identity theft case, which extended to a “boiler room” manufacturing fake credit cards and a team of money launderers, all organized by ringleader Ruben “Hollywood” Costello (shown left). The police note that it took months for victims to find out about the theft of their identities. Assistant U.S. Attorney Tom McHugh comments: “When you look at these types of crimes, you may think the victim is the vendor or the credit card companies. What we see is that the person whose identity is stolen, his problems may go on for years.”

BANK THEFT

Dustin Alex Tschanz was arrested in Oregon for identity theft in connection with the fraudulent use of a credit card. Tschanz is alleged to have stolen a credit card from the Newberg OR branch of U.S. Bank, and then used the card to spend lavishly at retail stores. Police caught him based on a photo taken of him at an ATM at the U.S. Bank branch.

FEDERAL CASE An alleged hacker has been charged with breaking into Federal Reserve Bank of Cleveland computers. Lin Mun Poo was arrested shortly after arriving in the U.S. in October and was found to possess more than 400,000 credit and debit card numbers. Poo allegedly was behind a major hacking of the Federal Reserve Bank of Clevelandʼs computer network this past summer. He is said to have made a career of hacking into several federal credit unions and selling or trading information extracted from the computer servers of financial institutions, defense contractors and corporations.

MORTGAGE MAYHEM Former mortgage broker Brett Howard has pleaded to aggravated identify theft and fraud for using bank customersʼ stolen credit card numbers on a spending spree that included luxury purchases. Howard worked for HomeQuest

SKIM SCAM

Mortgage Network in Louisville KY. Among his purchases: a $2,900 suit at British Custom Tailors, an Apple computer and Godiva chocolates, as well as $700 worth of clothes from a department store and $900 worth of shoes from an online site. He is facing two years in prison and will be required to make restitution.

FACEBOOK FRAUD Police in Gladwin MI said a woman is facing identity theft charges after opening a Facebook account in someone elseʼs name. Investigators said Amanda Lynn Benton created a phony email account attached to the Facebook page, from which she wheedled personal information and data out of the victimʼs online “friends.”

Police say that Benton is a habitual offender; she had used a co-workerʼs financial information to obtain a mortgage from a new home last year.

Police arrested two men Tuesday night on suspicion of identity theft after they installed a skimming device and camera in an ATM in a shopping center. Illinois residents Boyan Salha and Stoyan Georgiev were arrested for stealing accounts and PINs using a skimming device from an ATM situated on a busy main street. They were found with computer files with account information, credit card skimmers and other evidence of identity theft. The two men attached a thin device to the card slot of the ATM and a camera above the keypad. Local police say that the skimming device was very thin and tightly covered over the slot while the camera was convincingly made to look like a light; both elements were professionally done and difficult to detect.

DONʼT PAY FOR

REVERSE MORTGAGE SCAMS

There are four major reverse mortgage scams: FEES FOR INFORMATION

The most common fraud is the

fake estate planner or consultant who offers nothing more than information on how to get a

reverse mortgage — and then

The FBI and the U.S. Department of Housing and Urban Development are urging consumers, especially senior citizens, to be vigilant when seeking reverse mortgage products. Reverse mortgages have increased more than 1,500 percent in the past decade because the concept is simple and appealing: homeowners allow a lien to be placed on their property in return for annuity-like payments on a regular basis — without the dislocation of selling the family home. Executed properly, the reverse mortgage is of great benefit to those at or near retirement age. But, as the FBI states, the popularity of these loans is “creating significant opportunities for fraud perpetrators.”

charges for the information. If a person says they will help you

find a reverse mortgage lender for a fee, be skeptical. The

federal government, through

HUD, provides the same facts

and services at no charge. There is abundant free information on the internet, too, and several

reputable books on the subject.

FORGERIES AND BLANKS

This frequent scam takes place when the loan paperwork

contains erroneous information or blanks, sometimes even in the loan amount itself. If the

lender pressures you to sign

documents that have blanks or incorrect information, cancel

the deal immediately. Unfinished documents create the chance for forgery, fraud, misdirected checks and other disasters.

UNOFFICIAL OFFICIALS

The most popular reverse mortgage is the Home Equity Conversion Mortgage (HECM), an official program of HUD. Neither HECMʼs program nor any other reverse mortgage programs is marketed directly to homeowners by government employees. Unscrupulous mortgage salesmen have been known to represent themselves as government representatives or volunteers for non-profit organizations. The solution: do not be timid about asking for verification from salespeople such as their home office location and phone number.

BUNDLING

A common tactic of scam artists is to bundle reverse mortgage financing with something else such as home improvements, annuities, risky investments, additional properties, living trusts or other estate planning products. If the company offering you a reverse mortgage

also wants to sell you other products such as insurance or annuities, be suspicious.

Especially if they want you to assign your reverse mortgage payments directly to sign for the services. It is likely that you're being scammed into a larger loan with higher fees, and the products and services you are buying are also costly.

The FBIʼs advice in this area is simple and succinct. Do not respond to unsolicited advertisements for reverse mortgages.

Do not sign anything that you do not fully understand or which is incomplete. Do not accept payment from individuals for a home you did not purchase or buy additional services related directly to the loan. Seek out your own reverse mortgage information.

CLICK HERE TO READ THE FTC’S FACTBOOK ON REVERSE MORTAGES