Scam Avoidance and Guidance

Check Overpayment Scams

Thinking of selling a car or another valuable item through an online auction or your newspaper's classified section? If so, the New Hampshire Attorney General wants you to know about check overpayment scams.

The scams work like this: Someone responds to your posting or ad and offers to use a cashier's check, personal check, or corporate check to pay for the item you're selling. At the last minute, the so-called buyer (or the buyer's "agent") comes up with a reason for writing the check for more than the purchase price and asks you to wire back the difference after you deposit the check. You deposit the check and wire the funds back to the "buyers." Later, the check bounces, leaving you liable for the entire amount.

The checks are counterfeit but good enough to fool unsuspecting bank tellers.

Here's how to avoid a check overpayment scam:

• Know who you're dealing with. In any transaction, independently confirm the buyer's name, street address, and telephone number.
• Don't accept a check for more than your selling price, no matter how tempting. Ask the buyer to write the check for the correct amount. If the buyer refuses to send the correct amount, return the check. Don't send the merchandise.
• Consider an alternative method of payment. As a seller, you can suggest an escrow service or online payment service. There may be a charge for an escrow service. If the buyer insists on using a particular escrow or online payment service you've never heard of, check it out. Visit its Web site, and read its terms of agreement and privacy policy. Call the customer service line. If there isn't one or if you call and can't get answers about the service' reliability, don't use the service. To learn more about escrow services and online payment systems, visit Federal Trade Commission's website.
• If you accept payment by check, ask for a check drawn on a local bank, or a bank with a local branch. That way, you can make a personal visit to make sure the check is valid. If that's not possible, call the bank where it was purchased and ask if the check is valid. Get the bank's phone number from directory assistance or an Internet site that you know and trust, not from the person who gave you the check.
• If the buyer insists that you wire back funds, end the transaction immediately. Legitimate buyers don't pressure you to send money by Western Union or a similar company. In addition, you have little recourse if there's a problem with a wire transaction.
• Resist any pressure to "act now." If the buyer's offer is good now, it should be good after the check clears the issuing bank.
• Throw away any offer that asks you to pay for a prize or a gift. If it's free or a gift, you shouldn't have to pay for it. Free is free.
• Resist the urge to enter foreign lotteries. Most foreign lottery solicitations are phony. What's more, it is illegal to play a foreign lottery through the mail or the telephone.

Contracts Disguised As A Check

How would you like to receive some free money? Sound too good to be true? – it is.

The New Hampshire Attorney General's Consumer Protection & Antitrust Bureau has received information that New Hampshire consumers are being sent checks in the mail, made payable to them, which they are being encouraged to cash or deposit. The amounts range anywhere from $2.50 to $15.00. What is the catch? By cashing or depositing these checks, a consumer obligates himself or herself to payments in the future, sometimes for many years, for some kind of membership or service, unless he or she cancels with the company which sent the check. The check is actually a contract to purchase services, magazines or other membership. By signing the check and cashing it, the consumer is accepting the terms of the contract.

Although the terms of the further monetary obligations are often disclosed in the paperwork received by the consumer, either in the letter or on the back side of the check, or both, many consumers do not thoroughly read all the documents they receive. Many consumers find themselves committing to a future monetary obligation that they are unaware of and which continues until they take some action to cancel it. Many consumers sign the check on the assumption it is a rebate for something they previously purchased. Sometimes a business will receive the check, and deposit it with other checks received that day.

Consumers are urged to carefully read everything they receive in the mail before taking advantage of these "too good to be true" offers.

Foreign Lottery Scams

t may happen at a time when you need it the most – a few days before Christmas, or when the bills are piling up; you open your mail and find a notice that you have won a sweepstakes lottery and it is for hundreds of thousands of dollars. The company has even sent you a check for $3,900 that looks and feels real. You look it over carefully, because you have heard about foreign lottery scams, but it does not appear to be drawn on a foreign bank. Is it too good to be true? The Consumer Protection & Antitrust Bureau of the New Hampshire Attorney General's Office strongly suggests that you Don't Cash That Check!

These foreign lottery solicitations are happening to consumers at an alarming rate. Each week the Consumer Protection & Antitrust Bureau receives telephone calls on its Consumer Hotline from consumers who receive notifications and checks like these and can not wait to go to their banks to cash the checks. Usually, the letter enclosing the check tells the consumer the check is to be used for processing fees, taxes, insurance and handling fees. They are telling you it is not your money, but they are asking you to put it in your account. Once the check is deposited into your account, the scammers now have access to your bank account. You do not have to wait long to use the money, but that does not mean the check is good. Under federal law, banks have to make the funds you deposit available within one to five days. But just because you can withdraw the money does not mean the check is good. It can take weeks for a fake check to be discovered and the check to bounce. The scenario usually goes like this: you spend the money; the scammer wants the money back to cover the so-called fees and stops payment on the check. Then, your account overdraws. Or, the check finally bounces and your account overdraws. Either way, your bank will charge you fees. The scammer may withdraw funds from your account at a later date and may overdraw your account again. Your bank may even sue you to recover the funds. No matter how this plays out, your life is turned suddenly upside down and whatever you have lost, you will most likely never recoup.

The Federal Trade Commission says law enforcement authorities are intercepting and destroying millions of foreign lottery mailings sent or delivered by the truckload into the US Consumers, lured by prospects of instant wealth, are responding to the solicitations that do get through to the tune of $120 million a year, according to the US Postal Inspection Service.

What you should know about foreign lotteries:

• If you play a foreign lottery – through the mail or over the telephone – you are violating federal law.
• There are no secret systems for winning foreign lotteries. Your chances of winning, more than the cost of your tickets, are slim to none.
• If you purchase one foreign lottery ticket, expect many more bogus offers for lottery or investment "opportunities." Your name will be placed on "sucker lists" that fraudulent telemarketers buy and sell.
• Keep your credit card and bank account numbers to yourself. Scam artists often ask for them during an unsolicited sales pitch.

The United States Postal Service says as a general proposition, sending lottery material through the mail is prohibited by federal law. This material includes, among other things, letters or circulars concerning a lottery, tickets or any paper claiming to represent tickets, chances or shares in a lottery, and payments to purchase any such tickets, chances, or shares.

Congress has enacted limited exemptions from this prohibition, including some which allow such material for a lottery conducted by a state of the United States to be mailed to addresses in that state. No exemption has been enacted which would make it lawful for a foreign lottery enterprise to use the US Mail, or cause it to be used, to operate, promote, or enter one of its lotteries.

The bottom line: Ignore all mail and phone solicitations for foreign lottery promotions. To file a complaint or to get free information on consumer issues, visit the Federal Trade Commission's website or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261, or call the New Hampshire Attorney General's Office of the Consumer Protection & Antitrust Bureau at 888-468-4454.