Everyone knows what the oldest profession in the world is.  Well, the second oldest profession must be the con-artist.  There are always people who want to cut corners on the way to wealth.  And the shortest corner to cut is to take advantage of someone else.

20 years ago it was the sweepstakes scams that conned many elder Americans out of their nest eggs.  Then came the internet bubble and many scams moved online.  There were penny stock scams, where official looking newsletters would be spammed touting the rise of a new stock.  The promoters would pump up the price, then dump their shares before people realized that the stock was worthless.  Then there were the 1001 internet store in a box deals.  Some may have been legit, but were never a chance to make real money.   Next came the Multi-Level-Marketing scams, pyramid schemes for the 21st century.

There was a time, and not that long ago, that I couldn’t turn on my radio without hearing one ad or another for a debt settlement company.  The ads usually promised fast results and claimed to be operating on some Mandate from President Obama.  Many of these companies have now folded.  Chased out of the market by the few legitimate firms doing the work and by countless lawsuits.  Unfortunately, many legitimate firms were chased or nearly chased out of the market as well by these suits.  The settlement scams are still around, but not as numerous as before.  What they offer is attractive.  A way to get out of debt without you having to do all of the hard work, and avoiding bankruptcy.  You save money and pay this company fees (usually a lot and up front) and they will negotiate with your creditors, striking deals with the money you have in savings.  But, when you don’t pay your creditors, you will sometimes get sued.  Many of these companies would try to shuffle you on down the road when this happened.

So, what’s happened now that many of these companies folded up shop?  Did they go away and stop running their scams?  No.  Now they’re all trying to capitalize on the next bubble.  In this case it’s mortgage modifications and student loans.  These “services” charge large up front fees to basically gather your paperwork and submit it to other agencies.  They do no real negotiation on your behalf.  They just take whatever program is already out there (that you could take advantage of all by yourself) and they charge you for “guiding you” through the process.  Look, there is some value to that.  Unfortunately, these guys are charging a lot more than these services are worth and making huge promises to get you to pay.

There are agencies out there that can help you identify the worst of the scam artists, but you should also be careful.  Places like the Better Business Bureau have been accused of selling good ratings for donations.  Website forums are used by disgruntled competitors to disparage other companies.  One resource I’ve found to get some good news about these companies is a site called getoutofdebt.org.  The “Get Out of Debt Guy” as he’s called gathers news and stories from satisfied and dissatisfied former customers or clients and puts it all out there for you to judge for yourself.

I hadn’t intended to write about the Nigerian Lottery Scam, thinking that that scam had finally become so well known as to not be a problem anymore, but apparently, people still fall for it.  A recent client called me earlier this week, asking what her son should do.  He had received a cashier’s check and was supposed to send $40,000 of it to someone else.  He was supposed to keep another $30,000.  You see, he had been talking to this local man who was in Nigeria working for an oil company.  The story from here changes often, but it somehow involves a check showing up for a large amount.  The victim is supposed to deposit the check, then wait 2-3 days for it to “clear” and then mail some of it to Nigeria or sometimes even a local contact.

Well, if the check clears first, what’s the problem?  Right?  The problem is that the check DOESN’T clear.  Banks are required by law to make funds available within a few days after a check is deposited.  If the check is a forgery, it can sometimes take a few weeks for the bank to learn that.  Then what happens is the person who deposited the check, then mailed off half or more of it to the scammers gets hit with a massive claw back.

Lawyers are a target for this as well.  A lawyer in Maryland recently was contacted about collecting back child support.  He made some calls and sent a threatening letter and suddenly, the deadbeat dad coughs up a check for $50,000.  The lawyer deposits it in his trust account with money belonging to his other clients.  After the check “clears” he sends the money minus his fee to the waiting mother.  Two weeks later the check is returned as a counterfeit.  His Trust account was wiped out, his clients lost $40,000 and he was in serious trouble.

Scams are everywhere.  If it sounds too good to be true, it just might be.  Money doesn’t grow on trees or fall from the sky.  Promises of easy money, your heart’s desire, or the President designing a plan to get you out of debt; whatever the pitch, examine it carefully, do your homework.