Schemes and scams abound in tough economy

Have you noticed signs around Spokane about home auctions each Sunday? No phone number is listed, just a non-functional Web site.

What about the “We Buy Houses” signs stuck in medians and scattered among the campaign signs? If you ever wondered about these offers, know that the Better Business Bureau tries to stay on top of them, even though most seem to have gone out of business in the past few months. Go to www.bbb.org and check them out.

In the current economic climate, offers in housing, credit, found money and working from home are just a few of the “interesting” focal areas at the BBB.

Housing

Back in the 1980s when I lived in Colorado Springs, Colo. – then the capital of home foreclosures – I saw all sorts of equity scams, home sales ripoffs and “sell your home by essay” offers. Well, we have one just beginning in Kootenai County. Here’s how it works:

The owners have a home and can’t sell it for what they need out of it, and so they decide to do an essay contest. They publicize the plan, letting contestants know the rules: submit a 1,500-word essay and a check for $150.

Once the owners receive 4,000 essays (or $600,000) they will turn the submission over to a college or high school class to select the best three or four. I am not clear on who makes the final decision, but one of the lucky writers then will own the home.

The owners will pay all the closing costs. When I spoke to them last week, I asked them a few important questions. Is the money going to be held in escrow? Who will have control of the money? What happens if you do not get 4,000 entries?

They assured me their attorney will handle the money and all application fees will be refunded if the magic number of 4,000 is not reached. If the plan works, they will buy another house and do the same thing with it. The owners really hope this becomes a job for them, but I’m not sure they understand that this process could take a long time, and that the costs involved probably will eat up most of the profit realized. I’m still not sure how they expect this venture to replace a regular job.

In the past I have seen these contests fail because too few people enter and the homeowner spends all the money so nobody gets a refund. I am aware that this kind of offer is used as a fundraising mechanism in many places, and I have actually seen it work – once. You just need to ask a lot of questions and be sure to verify who has control of the money. The money needs to be in an escrow account with no withdrawals.

Credit

We’ve started getting calls about offers to help you get your part of the stimulus package, or businesses being contacted by someone saying they are with Dun & Bradstreet, calling to help them improve the company credit score. The caller tells the business owner for a mere $500 they can improve their credit.

Stay away from both of these offers.

Found money

So you get a check in the mail, telling you about a prize you have won or asking you to be a super-secret shopper. There is always a request for you to put that check in your account and send part of it via a cashier’s check or Western Union.

The sneakiest one I have seen lately is the “secret shopper” scenario. They tell you not to let anyone know what you are doing when you go to wire the money because you are secretly checking out the services of Western Union.

Well, the real reason is if you tell Western Union they may try to stop you because it’s a scam. Western Union now asks all sorts of questions before you wire money because of so many scammers using the service to rip you off.

The last such letter brought to our office said they were a legitimate firm offering people ways to earn money from home and were listed with the BBB. True enough: The company has an F rating.

If you get a check in the mail and the sender wants you to send money, shred itor give it to your post office to deliver to the postal inspector and FBI.

Selling your gold

And what about cashing in and selling your gold? Everyone seems to want to help you turn that gold into cash, including a guy who set up in a hotel on Division Street in Spokane.

He spent the day looking at and buying gold, and writing people checks. Well, the checks bounced, the gold is gone and nobody can find the guy.

Work at home and other job offers

You can hardly drive around without seeing the signs. With a rough job market, the employment-related scams grow every day.

Craigslist is full of odd offers for jobs and products. Web site and classified listings are touting positions that do not exist. With the move from traditional daily newspaper classifieds to alternative forms of job listings, the screening that used to happen is gone.

Now anything goes, and that means job seekers need to be extra careful. If the “business” wants money from you, stop and check it out closely. If they want personal information before you ever set foot in the interview room, watch out: It could just be ID theft.

There are far too many offers out there just waiting to part you and your money. Educate yourself, and you will always come out ahead.