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Scam Alert

Charities, both phony and legitimate, fill our mailboxes with appeals this time of year, but a call to the Better Business Bureau or a visit to the Web site of the American Institute of Philanthropy can determine those that are legitimate. Most charity watchdog groups recommend that no more than 35 percent of a charity’s expenses go for fund-raising, so ask to see the organization’s IRS Form 990 if you have questions about how it spends the money it raises.

Avoid these scams
Scams are also on the rise, and especially during the holidays. A study conducted by AARP found that 26 percent of those surveyed had been the victim of a scam, but seniors aren’t the only ones targeted.

People who have seen their friends and neighbors making huge profits in real estate need to be wary of sales pitches for resort time-share units in Mexico or Central America. At the time you sign up, you may be promised an annual return of 9 percent or better, plus a guarantee the company will buy back the unit at the original purchase price within five years. The catch? The promised returns don’t materialize or the developer doesn’t have enough money to buy back the property.

People who leave jobs and convert large employer-sponsored retirement accounts into IRAs are often urged to set up self-directed IRAs in risky oil and natural-gas partnerships by an unknown promoter over the phone or Internet. While some partnerships offer big tax breaks, shady ones pop up when energy prices soar, so check out the company with securities’ regulators. Be especially wary of offshore or foreign oil and gas ventures, in which most wells are beyond the reach of state regulators.

The age of the Internet has fostered a new series of scams aimed at people seeking legitimate employment. The most obvious are those involving requests to “process” payments, usually by international companies that claim to have no other U.S. contacts, but end up ripping off their new employees who cash fraudulent checks or money orders.

Popular, too, are reshipping scams that involve a fraudulent employer asking a new employee to repackage and reship the goods to another address. It often turns out that the goods have been stolen, and the innocent victim is arrested for receiving stolen property when the package is backtracked to his or her property.

If they contact you
Be wary of any telephone callers who call and ask you to verify your Social Security number, credit card numbers, or bank accounts, especially if they’re promising to find or return money. They may claim to be affiliated with the FBI, IRS, the state or local district attorney’s office, or a public-advocacy office. Get their number and call back another day.

The same goes for e-mail. People are receiving numerous e-mails daily now from what appears to be a legitimate note from your credit card company, bank, or credit union telling you they have reason to believe your account has been compromised, asking that you verify your account information in order to protect your account. These “phishing” e-mails are fraudulent and may even have a link that takes you to a Web site that looks almost identical to that of your institution. Always contact your credit card company or bank using the phone number listed on monthly statements or card. It’s not safe to use the phone number on the e-mail as it may be that of the scam artist, set up to sound realistic.

In short, make it a practice not to verify or give out any information if you are contacted first.

Today, you have to be a much smarter consumer than you were 20 or 30 years ago, says Frank Abagnale, author of The Art of the Steal: How to Protect Yourself and Your Business from Fraud and a reformed thief himself: “You have to be careful where you go on the Internet, who you give information to, who you believe.”


There’s help available if you have questions whether a solicitation or proposition is legitimate.

North American Securities Administrators Association
(202) 737-0900

Federal Trade Commission
(877) 382-4357

American Institute of Philanthropy

Better Business Bureau of Central and Eastern Kentucky
(800) 866-1008

Better Business Bureau of Louisville,Western Kentucky, and Southern
(800) 388-2222

Charity Navigator
Tells you how wisely your donations are spent.

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