The Connection Between Recession and Crime Rates

National Consumer Protection Week is all about helping people identify and defend themselves against fraud and scams. Over the past few years, the rising rates of identity theft and fraud have been somewhat mitigated by growing consumer awareness.

But now, as we enter what looks to be a recession, there are new risks to consider. Periods of economic downturn commonly bring with them increased crime rates. The 1989 recession led to higher crime rates in New York and other cities. Alcoholism and drug use are also thought to increase in a recession. This is particularly worrisome because, there is often a tie between drug use (especially Methamphetamines) and identity theft.

Could a recession this year mean an increase in financial fraud and identity theft rates along with other crime rates? The 1989 recession predated the boom in technology driven financial fraud and the 2002 recession was fairly minor, so there isn't much of a precedent. Since this downturn is particularly tied to the financial industry, it could be especially easy for consumers to fall for loan and credit scams. What do you think will happen?

Opinion Polls & Market Research

National Consumer Protection Week next year may be even more important.

Emily Davidson – A former TransUnion insider and a member of Credit.com's expert team. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

10 Easy Things you Can Do to Prevent Fraud after National Consumer Protection Week Ends

National Consumer Protection Week 2007 officially comes to an end tomorrow. We've had a great week on CreditBloggers.com talking about the different scams and frauds that are out there. Now, let's conclude the week with a list of 10 simple things anyone can do to prevent fraud. This list was compiled by our team of credit experts as part of our National Consumer Protection Week materials:

1. Put a shredder in your kitchen. A recent Staples study found that most junk mail ends up in the kitchen trash, not in the office. Make sure that all your credit card statements and other sensitive mail are shredded before being thrown away.
2. Don’t pay money to get money. The most common scams right now involve asking consumers to wire money in order to supposedly get a larger amount in return.  Credit.com posted a warning about one of these scams surrounding loan offers a few months ago.
3. Opt-out of pre-approved offers.  Call 888-5-OPT-OUT or go online to OptOutPrescreen.com to dramatically reduce the number of credit card offers you receive in the mail.  For any you do receive, shred them immediately.
4. Check your credit reports regularly. It bears repeating; it’s a crucial step to guard against identity theft. Order your free annual reports at www.annualcreditreport.com or sign up for a monitoring program that scans your credit data automatically.
5. Help relatives check their credit, too. Children and the elderly are often targeted for scams. You can check your children’s credit reports by contacting the credit bureaus’ fraud offices. And you can lend your internet expertise to help elderly relatives check their credit data online.
6. Know thy scams.  Become aware of frequent fraud offenses. For a quick cheat sheet on the top ten scams of 2006, visit ConsumerAffairs.com. 
7. Protect your home computer.  Install security software to foil identity thieves against high-tech viruses and spyware.
8. Audit your information. Check your desk at work, home office, and online accounts for potential security risks. Data stored in emails and unlocked files could be exposing you to fraudsters. Try to reset your online passwords regularly.
9. Investigate online. If something seems suspicious to you, see if\ you can find some information about the company or offer online before deciding to proceed. Reliable companies should have plenty of records online and should be easy to contact in person.
10. Report close calls. The FTC tracks consumer fraud complaints and uses this database to assist law enforcement around the world. If you are contacted by a fraudster, add your report to this library of data.

Have a great weekend! We'll see you back here on Monday when we resume our normal blogging on debt issues, credit scores, loans, credit cards, personal finance and more!

Vote for the Worst Credit Criminal of the Year

We've been talking all week about the most common and heinous scams of 2006. As we near the end of National Consumer Protection Week, let's see who gets your vote for the worst credit criminal of 2006. In our definition, credit criminals are the scammers, con artists and general bottom-feeders who try to steal from innocent consumers using deception. Cast your vote today!

Get Free Opinion Polls

Don't see your pick for the worst credit criminal on this list? Share your nomination for the worst of the worst in the comments section below.

Women are More Concerned About Identity Theft than Men

A new survey released today by the National Crime Prevention Council (the McGruff folks) has found that identity theft once again the top crime concern for Americans. The National Consumer Protection Week report also found that:

• More women (66%) than men (47%) see identity theft as a major problem.
• Identity theft outranks concerns over other crimes including credit card fraud, burglary & robbery, but most consumers are not taking immediate steps to prevent it.
• 14% reported that they had been a victim of identity theft at some point and 24% knew someone who had been a victim.
• The African American community seems to experience more identity theft than other groups. 31% reported being victims and 45% knew someone who had been a victim.

I find that point about women being more concerned over identity theft than men particularly interesting. I wonder if it has to do with the fact that a women usually hold primary responsibility for the financial activities of their families. If so, good job! Keep crunching those numbers and shredding those statements, ladies.

What about your household? Who takes responsibility for your family's finances and identity theft prevention measures? 

True Story of a PayPal Phishing Victim

Earlier in our National Consumer Protection Week coverage we posted some information from PayPal's security director about phishing scams. Now, let's hear the other side of the story. Suzanne wrote in this morning with a true story of what it is like to fall prey to PayPal phishing scammers:

I was the victim of a "spoof" email, allegedly from PayPal.  It started out innocently enough; the email was on PayPal stationery, and asked to update my account information.

Naturally, I did so, giving out my credit card number (with expiration date and "back of the card" information), bank routing and account numbers, etc.

The next day, I received a bona fide email from PayPal, indicating that my screen name had been changed!  I was dumbfounded, and called immediately to inquire about the change.  They gave me a purely idiotic Yahoo screen name, and informed me that I had been "spoofed."

I sweated out the night, and went to my bank first thing the next morning to cancel my account and open a new one. When I got home, I called my credit card company, and numerous charges had been made THAT DAY on the card.  I explained my situation, and they agreed to cancel that account and issue me a new card.  Thank goodness I was not liable for those charges!

It just seems that it's too easy for hackers (or whatever they are) to get private and confidential information on the Internet.  I just wish there were some way to verify what is a real email from a real entity that one deals with.  But - the hackers are smarter than we are...

Just thought I'd vent on one, twice-widowed, woman on Social Security Disability, who cannot afford to be a victim this way.

- Suzanne W.

Unfortunately, there is no simple way to distinguish what is a "real" email these days. You can sometimes find clues in the from name or the landing page it takes you to, but phishers are getting too smarter every day. The best rule is to never respond to an email asking you to "update your account information," especially if it is supposedly coming from PayPal or eBay. If you think the email message may be valid, don't click on the links but instead type in the URL in a new browser window yourself and then login.

Do you have a fraud or scam story to share for National Consumer Protection Week? Send us an email at tidbits@credit.com.

Top 10 Consumer Complaints of 2006 & What We Can Do About Them

I confess to having something of a fascination with top ten lists, as pointless as so many of them are. No doubt it stems from all those late nights I spend laughing at David Letterman's topics and quips. But the latest top ten list, released today by the Federal Trade Commission, is no laughing matter. It's the top ten consumer complaints of 2006, and it couldn't have come out at a better time – right smack in the middle of National Consumer Protection Week!

Identity theft tops the list...for the seventh year in a row. Thirty-six percent of the 674,354 complaints the FTC received in 2006 fell into the identity theft category. That should be no surprise to folks who regularly read CreditBloggers, where Emily Davidson and Adam Levin keep us on top of the problems and risks caused by each major security breach and hacking success. The advice they share with us here on how we can protect our identities is priceless.

I was simply going to present the whole FTC top ten list in all it's glory here, but  decided that's not enough – certainly not this week. So I decided to share the FTC's top ten list in a way it might actually be of some use to you! I added in links to key FTC documents (and a few others) that will help you contend with these frequent consumer complaints if they should happen to plague you:

   

Rank	Categories	Complaints	%
1	Identity Theft	246,035	36%
2	Shop-at-Home /Catalog Sales	26,995	7%
3	Prizes/Sweepstakes & Lotteries	24,587	7%
4	Internet & Computer Complaints	41,243	6%
5	Internet Auctions	32,832	5%
6	Foreign Money Offers	20,411	3%
7	Advanced-Fee Loans & Credit Repair	10,857	2%
8	Magazines & Buyers Clubs	8,924	1%
9	Telephone Services	8,165	1%
10	Health Care	7,467	1%

Runners-up include:

• Business Opportunities & Work-at-Home Plans
• Travel, Vacations, & Timeshares
• Office Supplies and Services
• Grants: Scholarships/Educational & Non-Educational
• Employment Agencies/Job Counselors / Overseas Work
• Investments

COMPLAIN!
Taken together, the 674,354 complaints from 2006 cost consumers over $1.1 billion. That seems like a drop in the bucket to me – especially when compared to estimates I've seen for the cost of some specific scams. For example, it's well known that we lose over $40 billion a year to telemarketing fraud alone.

And as for the number of complaints...compare the 674,354 the FTC received to the 580 million votes that were cast during last year's American Idol season. There is something wrong with this picture!

The FTC is encouraging us to let it know when we have something to complain about. Every complaint that's filed will be put into a secure database that over 1,600 law enforcement agencies can access. You can register your complaint online or via a toll-free number: 877-FTC-HELP.

Let's tell the FTC about every fraud and consumer rip-off we see. Let's make how we're treated as important as who the next American Idol is.

Victim of Lottery Fraud Speaks Out

We received a detailed story from a victim of lottery fraud by email yesterday. Lottery fraud was named as the #1 scam of 2006 by ConsumerAffairs.com and was profiled on CreditBloggers.com earlier this week. The following is a true story from one victim. His case involves both basic lottery fraud and check cashing scams:

Around March of last year, I received a check in the mail for $4,950 along with a letter saying I won the lottery and should contact a person by phone. I was so excited because I had played out of state lotteries int he past. I called the number and spoke to someone who informed me that I had won $150,000.

However, I had to deposit the check that I received in order to receive the remaining balance. And there was a a fee of $2,500 that had to be sent via Money Gram instead of Western Union. I went to the bank that I had been with for over 15 years and deposited the check and withdrew the funds. Once I got back home, the guy called and said that there was another fee I had to pay before I would receive another check for $18,000.  I went to Money Gram and sent another $2,500.

The next day, I received a check via UPS. He called and said that there was one more final fee and I needed to mail it right away. I started questioning all the fees at this time. Meanwhile, my bank called me and informed me that the check I deposited was good but that the money did not belong to me. Prior to obtaining this information from the bank, I gave some of the money I thought I "won" to family members. The bank went into my savings and took back most of money, leaving my savings in the red. I contacted the FBI and filed a complaint but haven't hear anything.

To make a long story short, this was a scam! I still owe my bank approximately $10,000.

What a terrible situation. I wonder how many of these fraud incidents could be prevented if money wiring services took the time to warn their customers about scams. Recently Western Union  took the good step of adding a brief fraud alert on their website.

Do you have a fraud story to share or a question to ask for National Consumer Protection Week? Send us an email at tidbits@credit.com.

True Stories From Scam Victims

For National Consumer Protection Week, we've solicited stories from our readers who had experiences with fraud in the past. Unfortunately, we've received many replies. I hope that by posting their stories, we can prevent others from falling victim to these scams. Let's start with stories of advanced-fee loan scams:   

I encountered an advanced-fee loan scam and they got me for $408.00. They called themselves "Prudent Financial Services" and used the phone number 1-800-765-7402. Please warn others. I was in no position to lose money and consequently lost my place to live.
      - Sheri S. 

We just had the same experience with Matrix Financial or Matrix Finance out of Minneapolis, Minnesota. They said in order to secure our loan that we would have to wire them $1,899.99 in three payments as security. When we did this, they then said we needed to wire them an additional $799.00 for insurance. After this they wanted another $300 and some dollars which we did not send. I don't know who to contact to try to get our money back or if it will be possible to even get it back we thought they were a good loan company but found out the hard way they were not.
      - Deb K.

I am a victim of advanced-fee loan fraud from FairView Financial. I have given them $1,300 dollars. I have filed a complaint with the BBB but to no avail, I have not gotten anything from them. I am so glad to hear that you have found out about this company. I hope they get what they deserved for doing what they have done. As a result of this, I have been in worse financial difficulty.
     - Tanya J.

If you are a victim of advanced-fee loan fraud, it is important to immediately report the incident to the FTC and to PhoneBusters in Canada (because funds are usually sent to Canada).  Victims can also try filing a police report, a claim with the FBI internet crime center and a complaint with the BBB. Letters to your state attorney general, local media and consumer advocacy groups like ConsumerAffairs.com can also help spread the word about this damaging scam.

If you have a fraud or scam story you would like to share, please email us at tidbits@credit.com or post in the comments section below.

How to Stop Data Breaches: Crunching the Numbers on 2006 Cases

Data breach incidents were all over the news in 2006. From the loss of 26 million veteran records on a laptop (later recovered) in May to the recent news about potentially millions of TJ Maxx customer payment data being accessed by hackers, it's been a big year for data breaches. National Consumer Protection Week is a perfect time to take a closer look.

Privacy Rights Clearinghouse has put together a detailed chronology of all the data breaches since February 2005 and has used this information to analyze exactly what is happening to our private data. I've reformatted their basic chart to make it easier to read (click to see it full size):

There are some amazing disparities here in how consumer data was lost between different sources. Businesses and medical offices are most likely to expose consumer data through laptop theft. While the military and government loses data through what Privacy Rights calls "human/software incompetence." And more than half of university data breach cases involved hackers.

I'm not a data security expert by any stretch of the imagination, but even I can see that there are some very important lessons to be learned from this analysis:

• Business - DO NOT LET SENSITIVE DATA BE STORED ON OFFSITE LAPTOPS!!! According to Privacy Rights, 55% of laptops involved in data breaches were stolen outside the office. To make matters worse, only 6% of the stolen laptops protected the data with encryption or passwords. 
  
  This isn't exactly rocket science, folks. Solid encryption software or encrypted USB thumb drives are available for about $30 online.  The best advice here is to not store any sensitive data on laptops. If you absolutely must, invest in encryption and privacy solutions to ensure it will be safe. You can read more about laptop security online.
  
  
• Government & Military - I don't know exactly what Privacy Rights considers to be in the "human/software incompetence" category but I am sure that it includes posting sensitive data on publicly available websites, failing to shred documents before throwing them away and discarding computers without erasing hard drives. All three of these goofs led to data breach incidents in the public sector in 2006. Government agencies should follow a set of strict rules for storing, security and safely destroying the vast amounts of data they manage. The new recommendations made after the VA data breach in May are a start, but they are not mandatory.
  
  
• Universities and Colleges - It is time to get very serious about protecting your data from hackers. Most colleges these days have their own computer science departments that teach this stuff, so there is no excuse. Start by hiring some extremely bright security guys to implement airtight data protection systems including firewalls and encryption. Then sign up for audits from HackerSafe to make sure there are no vulnerabilities. And, of course, DO NOT use Social Security numbers as student ID's.
  
  
• Medical Offices - Like businesses, medical centers should also put an absolute stop to storing sensitive data on laptop computers. And all patient data should be encrypted, no exceptions.  Medical offices almost always deal with large volumes of Social Security numbers and should be especially careful about how this data is stored. It would be even better if medical providers and insurance companies would stop using SSNs as patient identifiers altogether. As medical providers slowly join us in the digital age, companies like IBM are putting together platforms that help address security concerns and support HIPAA compliance. HIPAA security regulations include strict rules concerning data safeguards but there isn't enough enforcement to ensure that the complicated protections are really in place.

Just reviewing this information has made me extremely nervous about the safety of my own personal data. Do you work for a business, government agency, university or health care provider that has great data security? Terrible data security? Are you an IT or security expert who has advice to share? Post your feedback in the comments section below.   

Teach Teens About Online Safety

MySpace is the 6th most popular website in the world according to Alexa.com. With more than 100 million accounts and about 230,000 new registrations a day, there are probably only a handful of teens in America without their own profile.

However, sites like Xanga, MySpace, Blogger, LiveJournal and Facebook that allow users to post personal information about themselves can be prime targets for fraud. Teens may post sensitive data such as their addresses, phone numbers, license plates, scans of credit cards, photos of driver's licenses on publicly available websites. Or they may be contacted directly by scammers through email and IM addresses posted online.

It is important to talk to teens in your life about how to use the internet safely,  avoid fraud and thwart other criminals. The site, 2 SMRT 4U, is a great place to start. Hayden Panettiere, from NBC's Heroes, is the spokesperson and the site features free ringtones, IM icons and a form to order a free 2 SMRT 4U silver ring. The campaign is a joint program from the US Postal Inspection Service and the National Center for Missing & Exploited Children. Other resources include:

• MySpace's Safety Tips
• SafeTeens.com
• Comcast's Security Center
• WiredSafety.com
• The Federal Trade Commission

These sites all offer helpful tips and ideas for talking to your teens about how to protect their privacy online. Use National Consumer Protection Week as your reason to start up a conversation about online safety today! 

Who Do you Trust? The Post Office or Your Bank?

National Consumer Protection Week has me thinking once again about they way consumer data is  handled by government agencies and businesses. It seems like we are asked to share or protect our sensitive data nearly every day. Just yesterday, I chose to share my credit card information with an online retailer and decided to shred a stack of old pay stubs that were printed with my Social Security number. These simple choices about who to trust and where our data is safe are made almost subconsciously.

Are you comfortable sharing your data with health care offices? Banks? Government agencies? Tax preparers? Credit card issuers? Relatives? Schools? Employers? These levels of trust can be hard to quantify. Luckily, we have the Pomenon Institute and their regular reports on consumer privacy and security trust to give us detailed insight.

Just this morning, the US Postal Service announced that they were once again named as the number one government agency Americans trust to protect their privacy. This is the third year that the Ponemon Institute study has given the US Postal Service the top spot. The report found that:

• The US Postal Service received an 83% trust approval rate and was one of only a few agencies able to improve their satisfaction and trust scores this year.
• The average trust score for the 60 government agencies included in the survey was 47%.

Those numbers are really impressive! The US Postal Service does do an excellent job of keeping our sensitive mail safe from tampering and delivered on time. And the US Postal Inspection Service does a lot to educate consumers about fraud and security.

Now let's compare this to the trust levels reported for consumer banks. A 2006, Ponemon Institute report looked at privacy trust levels for retail banks in the US and found that:

• There has recently been an 8% decline in people who had "very high" levels of confidence in their banks since 2004.
• 12% of respondents said they received a privacy breach notification over the past 12 months. A major increase from 5% in 2004.
• 63% of consumers feel as safe banking online as in-person. This figure dropped 11% from 2003.

Those are some significant drops in consumer trust over the last few years. Frankly, it is not at all surprising with the recent attention given to data breaches at large financial institutions. Data breach cases in 2006 at Bank of America, Premier Bank, West Shore Bank, FirstBank, Sovereign Bank, US Bank, M&T Bank, Mercantile Potomac Bank, Wells Fargo and People's Bank, have justified drops in consumer trust.

What do you think? Do you have more trust in the US Postal Service or your bank? Why? Share your feedback in the comments section below!

Anti-Fraud Information from PayPal

Anyone with an email account knows that phishing is one of the most common fraud tactics used by online criminals these days. And of those billions of phishing emails, almost 75% of the scam messages pretend to be from "eBay" or "PayPal." Just this morning, I deleted about 30 very authentic looking eBay messages from my personal email account.

Unfortunately, there isn't much eBay and PayPal can do to stop their brand names from being a target. Both sites have posted detailed fraud centers that explain phishing and other common scams that affect online auction users. PayPal has recently revamped their security site and it has a lot of good information for even non-PayPal users. For National Consumer Protection Week, PayPal interviewed their security executive and posted a short video on YouTube. Click on the image below to watch Larry Friedberg's four minute interview:

I wish Larry's advice in this clip had gone a little further than "just think." I'm sure his experience in the anti-fraud world has taught him juicier tips than that.  But it is still an interesting look at what PayPal is doing to stop phishing and other scams.

Did you receive a fake eBay or PayPal message in your inbox this morning? You can report the spoofed email to eBay here or forward it to PayPal's security office at spoof@paypal.com. 

Meet the Scam: International Lottery Fraud

Welcome to National Consumer Protection Week! Credit.com and CreditBloggers.com are joining with the Federal Trade Commission to educate consumers about fraud and scams. One of the features we're going to do this week is "Meet the Scam," where we profile the most common fraud crimes. Today's scam was named the #1 fraud crime of 2006 by ConsumerAffairs.com. That's right, its the Fake Lottery! Let's take a closer look:

Name: Lottery Scam

The Pitch: The fraudsters contact potential victims by letter, email and phone saying that they've won a large cash prize in an international lottery. All the victim needs to do is send a release fee and pay the applicable taxes to receive their windfall.

Samples: Fraudaid.com has an extensive library of lottery scam letters and emails.

The Results:  The amount of money lost to this scam varies between hundred to tens of thousands of dollars depending on the victim. In one case, an elderly Kansas man lost $300,000 to the scam over four years.

Location: The fraudsters are assumed to be Canadian since the money is wired to Canada in most cases.

Prevention: Remember first that if you never bought a lottery ticket, it isn't likely that you won the lottery. And always be extremely suspicious about contacts that want you to wire money overseas. This is a common tactic used by fraudsters because the money is very hard to trace. As nice as it would be to win the lottery, it pays more to be extremely cynical of this scam.

Solution: This growing scam seems to be getting the most attention from Canadian law enforcement and anti-fraud agency, PhoneBusters. Reports to US agencies are often ignored due to "jurisdiction issues." A government task force for investigating this type of international scam would help with stopping fraudsters on this side of the border. Also, if money wiring companies such as Western Union provided more assistance to consumers dealing with fraud.

Have you been contacted by lottery scammers? Or were you a victim of this scam? Share your stories and tips in the comments section below or by email to tidbits@credit.com.