What is a Chain Letter?

This is another scam that keeps on returning with slight changes to appear to be something new and even legal, but if it looks like a duck, walks like a duck and quacks like a duck, it is most likely a duck and a chain letter is easy to spot unless you are blinded by greed.

At its most basic a chain letter involve you receiving a letter that contains the names of a number of people, often five.  You are asked to send a sum of money to the first person on the list, take his or her name off of the list, add your name to the list as the last person and send it to five more people with the same instructions.

The problem is not only are chain letters illegal, they are also doomed to failure as they will rather rapidly run out of people to participate.

Chain letters are sometimes disguised to resemble legitimate business operations and you may even be sent some inexpensive item as part of the scam to make it appear to be a legitimate business proposal.  However, it is easy to see that it is the pyramid that drives the chain letter and nothing of value is done to put oneself in a position to receive compensation.  A scam by any other name is still a scam.

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Never get involved with chain letters regardless of their format.

What is a Ponzi Scheme?

It worked for Charles Ponzi, it worked many years later for Bernie Madoff and it still works today.  This scam is as profitable as it is simple.  It is a classic pyramid scheme whereby you are promised returns that may appear too good to be true (and indeed that is the case), but you know of investors who have made incredible profits by investing with the scam artist.  The problem is that the money used to pay off early investors does not come from successful investing, but rather by paying the early investors with the money of later investors.  Usually there are no investments at all.

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If you are retaining the services of an investment advisor, make sure he or she is not acting both as your broker investment advisor and also the broker dealer.  By giving this kind of control of your money to a single person, you enhance the possibility of fraud.  Also, never invest in anything you do not truly understand.  This rule was broken by many intelligent people who invested with Bernie Madoff although they did not understand how his investment strategy worked.  Anyone who actually carefully evaluated Madoff’s investment strategy and the returns it provided would be able to see that it was a scam.

What is the Hitman Scam?

This scam keeps reoccurring around the country and people still are falling victim to it.  It starts when you receive an email from a purported hit man who informs you that he has been hired by someone you know to kill you.  However, the hit man then tells you that he will refrain from killing you if you pay him a sum of money.  In the past the amount has ranged from $80,000 to $150,000.  Not only is this a scam, but the FBI has traced many of these emails to Eastern Europe, far from where you may live.

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If you get one of these emails contact the FBI and the Internet Crime Complain Center at www.ic3.gov.

What is an Ebay scam?

The tremendous popularity of eBay, the Internet auction website has made it a frequent target of scammers.  One of the more common scams that keeps occurring involves the receipt by the victim of an email purporting to be from PayPal informing you that there has been a computer problem and that you need to log on to your account to confirm your personal information in order to keep your eBay account operational.  The link provided in the email to connect you to PayPal’s website is an excellent example of phishing because although the website to which you go to if you click on the link looks like eBay, it is a phony website that exists merely to harvest your personal information if you provide it to the scammer.

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If you ever get such an email and you are tempted to respond, merely contact eBay independently rather than by clicking on the address provided in the email.

What is Malware?

Malware is the term for malicious software that you unwittingly download on your computer when you click on links in emails from scammers or fall prey to phishing and download the program from a phony website to which you were lured in the belief that it was a legitimate website.

One of the most common and dangerous types of malware is the keystroke logging program which is often referred to as a Trojan horse.  Once this malware is installed on your computer, the scammer is able to access all of the information on your computer and can provide the scammer with access to your bank accounts, credit cards, brokerage accounts or any other information that is contained on your computer.

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Never click on links unless you are absolutely sure it is legitimate.  Also make sure you have an operating firewall on your computer and your computer security software is up to date.

What is Smishing?

Smishing is similar to phishing on your computer, but this time the scammers message comes as a text message on your cell phone.  Often it comes purportedly from your bank telling you that your account has been frozen and then asks you to provide personal information or your account will be frozen.  Smishing is also used by scammers, particularly during the holidays to appear to provide free coupons or free coupons.

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Never respond to a smishing message.  By so doing you only succeed in telling the scammer that you are out there.  Never provide personal information in response to a text message from anyone.  If you believe the message may be legitimate, contact the entity at a telephone number or website that you know is accurate.  Don’t download coupons from emails or text messages.  Again, if you think it may be legitimate, go to the website of the company that you know is legitimate and download the coupons there.

What is Vishing?

Vishing is a scam that takes advantage of Voice over Internet Protocol technology that permits you to make telephone calls through your computer instead of through a regular phone line.  When you use your computer to make a telephone call, your voice is converted into a digital signal that is transmitted over the Internet and then is converted to a regular telephone signal when it reaches the regular telephone you are calling.

Vishing occurs when a recorded phone message is sent by computers using Voice over Internet Protocol technology.  Often the message appears to be from your bank or credit card company informing you that the security of your account has been compromised and that you must provide confirming personal information to keep your account active.

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You will never receive a prerecorded message concerning the security of your account.  If you have any questions about your account’s security, call your bank or credit card company directly at a telephone number you know to be accurate.