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10/10/11

Weak Economy Is a Boom Time for Financial Scammers

Back in 2009, when Teresa Yeast's husband was laid off from the job he had held for 17 years, she began searching for ways to earn some money. But with two disabled children to care for, she knew she couldn't work outside the home.

One day Yeast (pictured, right), 45, noticed an ad in an area newspaper looking for people to work from home creating tiny pins shaped like angels out of beads and ribbon. When the same ad for Darling Angel Pins appeared in her local paper in Platea, Pa., she decided to investigate.

Online, she found an attractive, professional-looking website. "They advertised that they made donations to the American Cancer Society, autism groups, all these great causes, so of course I was drawn to that," she explains. "I thought it would be really great to get involved."

The money sounded good, too. "They told me they would pay me $2.50 for every pin I assembled for them, that I could make as many as I wanted, that they would sell them." All she had to do was mail the company a $500 deposit for the supplies. She'd then make a sample pin, submit it to the company for review and, once approved, begin production.

Yeast mailed her $500, received a box of supplies -- and became one of the millions of Americans victimized by financial scams.

Consumer fraud -- the intentional deceit of a consumer -- is nothing new, unfortunately. For decades there are have been scams related to mortgage loans, credit cards, employment opportunities, lotteries and identity theft, to name just a few. But in recent years, as the American economy has struggled with a high rate of unemployment, a collapsed housing market and a stubborn recession, scammers have seized on Americans' financial fears in new ways.

"There are a suite of scams that concentrate on people that suffer financially and we've really been going after those," says Steven Baker, director of the Midwest region of the Federal Trade Commission. "Certainly it's an increasing problem of people taking advantage of that suffering. It's really bad because you're holding on by your fingernails in the first place and then they steal what little money you have left."

In 2010 more than 1.3 million Americans complained of consumer fraud. And that's only the tip of the iceberg. Unlike Yeast, most don't speak up.

To view the full DailyFinance article, click here.