Income Tax Countdown - 1 Week To Go, 12 Scams To Watch For


Consumers who gave the federal government an interest-free loan for up to a year during 2007-2008 have undoubtedly filed for and may have even received their refund check by now.

Two words: Stop that!

There is absolutely no need for any consumer to receive a substantial income tax refund. Please consult with a tax professional if you are one of those people who consistently receive a refund. Many consumers we have talked with tell us that they view these refunds as "savings" and "found money" that they get every spring for big bills.

Nonsense.

That money is yours, and you received no interest or other compensation. Even if you receive a $1,200 refund, that means that you could have brought home an extra $100 each month during 2007. If you're carrying credit card or other debt and also receiving a refund, you've lost twice -- the government took more of your money without paying interest, and you paid interest on money you had borrowed.

Find an accountant or tax advisor.

For those of you who are waiting to file during the last 200 hours of the regular season, the Internal Revenue Service issued its "Dirty Dozen" list of scams targeting taxpayers. As befits any IRS document, there are too many words, so let's boil it down fast so you can get back to finding those receipts:

1. Phishing - This is the scam where you get email that looks like it's from one organization, but it really isn't. The solution is simple, especially with financial and other personal email. Open your browser and type the organization's address in, along with any extensions you found in the email.

2. Stimulus Payment Questions - You may have heard that you're due a check in May or June if you paid federal income tax in 2007. This so-called "stimulus" payment is automatic. You don't have to do anything, and you should run away from anyone who tells you they need information to process yours.

3. Frivolous Arguments - Very simply, you have to pay federal income taxes. If you don't, your tax professional will explain why. Verify that person's explanation with the IRS.

4. Fuel Tax Credit - Best left for professionals or the IRS Help Line. If you don't understand the intricacies, don't try at home with a calculator with keys sticky from Saturday morning pancake syrup.

5. Hiding Money Offshore - If you're in that financial demographic and reading this blog, have we got a deal for you. Write us. We'll help you invest wisely.

6. Avoiding Roth IRA Limits - Does the deal sound too good to be true? It probably is, especially if a financial consultant just told you that they can avoid the federal IRA limits.

7. Sending A "Corrected" W2 or 1099 - Yes, you're going to get caught. No, the people who work at the IRS are not that dumb. If you have a W2 that claims $X and you try lowering your taxes by submitting a "corrected" form, you will indeed face a form of corrections.

8. Abatement Requests - If you don't know, don't ask. If you're told you should, ask a second professional. (Are you sensing a theme?)

9. Tax Preparer Scams - There are good and bad people in every professional. A nice office or brand name from a national chain is meaningless. Check with your local or state government agencies before entrusting your financial future to a stranger.

10. Forming "Shell" Companies - Not the gas station, but a bogus corporate entity that lets you shift income around when it is really personally taxable. Yep, they know this one too.

11. Misuse of Trusts - There is a very legitimate financial need to use trusts in estate and financial planning. Be sure your financial planner and tax advisor are on the same page and understand. Don't unintentionally make a mistake by trusting someone who didn't know the full picture.

12. Charitable Donations - The IRS specifically singled out the notion of taxpayers disguising private school tuition payments as charitable donations. That's pretty slick and pretty stupid. Here is the deal on charity: read the rules. If you're not preparing your taxes, don't overstate the condition, original cost or value of items you've donated. Get a detailed receipt. Take pictures. Do what you need to do to prove your donation.

We're not tax or financial professionals. This is merely a synthesis of a news item the Internal Revenue Service shared with taxpayers. If you have questions or concerns, contact your local IRS office or talk with a tax professional.

Labels: IRS, scam, tax deadline, taxes

posted by George Bounacos at 9:15 AM | 0 comments
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  Senior Scam Halted In Time For Christmas

California's Attorney General and Insurance Commissioner wrapped up a long-running lawsuit in time for the Christmas holidays.

In announcing a $7.2 million settlement with multiple organizations, the California AG's office did what few do in such settlements. $5 million of the settlement will go to restitution with $1 million fines for two different companies.

The scam worked like this:

California officials said that the companies tricked senior citizens into buying annuities—long-term financial vehicles with high penalties for early withdrawal. The annuities offered the possibility of future payments, but only after a lengthy surrender penalty period. Because of their long window to mature, California officials said the investments were not typically suitable for senior citizens.

One of the companies, Family First Insurance, reportedly sent sales representatives, who were not authorized to practice law, to senior citizens’ homes to provide legal advice on estate planning. Those representatives naturally did not disclose that their ultimate goal was to sell annuities. After preparing the living trust documents the agents returned to the seniors’ homes—under the guise of acting as their financial or estate advisors—and induced the seniors to move their liquid assets into annuities.

Family First will be forced to cease operating according to California officials, who offered some solid advice for consumers in the wake of the problems.

* Consumers should be wary if someone claims to a trust expert, senior estate planner or paralegal, or to work with an attorney who is an expert in estate planning. These agents are not attorneys and not experts in living trusts. If seniors need assistance with preparing a trust or other estate plan, they should seek out their own attorney whose expertise is in estate planning.

* Be wary of free seminars or sales presentation on living trust services.

* Use caution if the representative asks for access to your personal financial information while setting up or updating an existing living trust. Agents use this ploy to ultimately pitch annuity investments.

* Some may also criticize existing investments, saying that these investments carry more risk than the annuity.

* And finally, a big warning bell should go off if someone does not discuss the drawbacks of a particular investment option.

Labels: California, consumer, financial, insurance, investment, scam

posted by George Bounacos at 10:50 AM | 0 comments
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  Chasing Your Domain Name

If you have bought a domain name to use on the web for business or personal reasons, you have undoubtedly seen what looks like a bill for renewal.

We are not singling out any one company yet, although there are three on our radar now. This "bill" is actually a renewal notice, and like the telephone "slamming" of the 1980s (when shady phone salespeople would switch your service to another carrier after deregulation), this is simply a scam. We try to look at things from a businessperson's point of view to be fair, but there is no good reason for this kind of program.

The envelope looks official, and is addressed to the person listed as the domain's administrative contact. Sometimes, there is a flag on the envelope to evoke officialdom. There is always a very professional, very business-like font and notice. If you don't read every line carefully, you might just think the letter is your registrar's notice.

Guess what? We have used four different registrars, including two of the nation's biggest, in the last four years. Not a single one ever sent us mail. They sent email -- that's how they communicate, being Internet companies and all.

Here is what will happen if you renew your domain registration through the mail with one of these companies:

1. You will lose your original registrar and switch to this new company.
2. You will be offered services you don't need like "domain submission".
   
3. You will overpay. You will overpay a lot.

This last point is especially troubling. In an offer we received at Consumer Help Web this week, we were offered the opportunity to renew one of our domain names for $35, and we didn't even have to send money now. That's lovely, except that our domain registrar already bills our credit card automatically, all our domains automatically renew and the wholesale cost of a "dot com" renewal is just over $6. We pay $6.99. Prices up to $9.99 are fine. After that, someone is making too much money for what is essentially a commodity.

So if you get a solicitation in the mail for a domain you bought to show of your family's photo album or write a blog, ignore the mail and contact the company you used to register your domain. Chances are good that you have already signed up for automatic renewal. Then take out your financial calendar or budget (you do have one, right?) and enter the domain renewal as an item 30 days before it is due to expire.

Sometimes the mail brings bad things. Domain renewal offers are one of them.

Labels: domain renewal, scam

posted by George Bounacos at 7:52 AM | 0 comments
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  SEC Gets Judge To Halt Alleged Ponzi Scheme

A federal judge in Sacramento has granted a government request temporarily halting the business activities of an alleged $25 million Ponzi scheme.

The Securities and Exchange Commission said that Secure Investment Services and its father-daughter owners Donald Neuhaus of Redding, California and Kimberley Snowden, sold a life insurance product to consumers that promised a 125 percent return. The consumers were mostly senior citizens whose payments were to be used to buy policies. Instead, the government agency says that Neuhaus and Snowden took $700,00 for themselves and that the company was "on the brink of collapse".

For some reason, Neuhaus is still listed as an agent of "National Policy Exchange" at his Redding, California address. National Policy promotes life insurance liquidation and lists 9 other representatives, many of whom use free email addresses at AOL or WebTV. National Policy Exchange was apparently not included in the SEC's actions, but continues to list Neuhaus as a representative. The California Secretary of State does not have a record for an LLC organization called "National Policy Exchange", but its records do show that "National Policy Purchase Company LLC" has a canceled incorporation as of May 4, 2006 due to "agent resign[ing]". It is possible that the company is incorporated elsewhere and doing business in California.

Labels: National Policy Exchange, Ponzi, scam, SEC, Secure Investment Services

posted by George Bounacos at 10:59 AM | 0 comments
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  FTC Shutters Telemarketer Selling Buyer, Travel Clubs

The Federal Trade Commission has stopped a Largo, Florida-based telemarketing scheme operated by Suntasia Marketing, Inc that it called "massive".

Suntasia used at least fifteen different business names to defraud consumers across the United States out of tens, and perhaps hundreds, of millions of dollars, the agency said. According to the FTC, when Suntasia’s telemarketers called consumers to offer supposedly “free” trial memberships in discount buyers and travel clubs, they deceived consumers into divulging their bank account information and later charged consumers without authorization for a series of negative option programs. With a negative option agreement, a company takes a consumer’s silence or failure to cancel as acceptance of the offer, and permission to bill them.

“The essence of this massive telemarketing scam was simple: trick people into giving out their checking account numbers, send them a brochure on a travel and buyers club, take money out of their bank accounts for as long as possible, and make it very difficult to cancel and get a refund,” said C. Steven Baker, Director of the FTC’s Midwest Region.

Consumers complained in near-record numbers about Suntasia’s practices. In total, the FTC collected and reviewed more than 5,000 formal consumer complaints against Suntasia that were submitted to various law enforcement agencies and the Better Business Bureau.

According to the FTC’s complaint, telemarketers typically began their sales pitch by indicating that they were calling in regard to the “banking account” of their “valued customers,” to make consumers believe that Suntasia was affiliated with their banks. The telemarketers explained that the consumers had been chosen to receive a series of “free gifts,” typically a combination of either “$100 in gas coupons,” “$400 in airlines savings vouchers,” or “two free nights of hotel accommodations.” Consumers were told that they could keep these gifts even if they ultimately canceled Suntasia’s negative option program. These gifts turned out to be laden with undisclosed conditions and restrictions that rendered them effectively worthless. Also, the FTC alleges that the defendants honored the “gift” vouchers only if consumers maintained enrollment in their programs, despite the telemarketers’ promises.

After offering the “free gifts,” Suntasia telemarketers quickly attempted to obtain consumers’ account numbers. They indicated that they needed to “verify” this information to confirm consumers’ eligibility to receive the gifts. Having already pretended to be affiliated with consumers’ banks, the telemarketers now purported to already possess consumers’ bank account numbers. They read consumers their publicly available bank routing numbers, and then asked consumers to “verify” the remainder of the account number from the bottom of a check. According to the FTC, many consumers disclosed their account numbers because they believed they were simply verifying information that the telemarketers already had. The FTC also alleges that consumers frequently thought their account number was being “verified” solely to confirm their eligibility to receive the free gifts, not to authorize any future charges to their accounts.

According to the FTC’s court documents, after consumers divulged their bank account number, the telemarketers quickly began recording a “verification,” asking consumers to repeat the account number they had just “provided.” At the end of the recording, Suntasia telemarketers quickly offered consumers two additional negative option programs, commonly referred to as “upsells.” The FTC alleges, however, that these “upsell” offers were presented in such a way that consumers did not realize they were being asked to authorize the purchase of additional products and services.

The FTC maintains that Suntasia never disclosed key information about its negative option programs. For instance, the telemarketers did not tell consumers the date that Suntasia’s charges would be debited from their accounts, or the telephone numbers consumers must call to cancel to avoid being charged. Nor did Suntasia tell consumers that they would be required to call three separate telephone numbers to cancel the initial program and the two “upsells.”

If Suntasia telemarketers did discuss the length of the free trial period, they represented that this period would begin only once consumers received program materials in the mail. The FTC alleges that Suntasia actually started consumers’ free trial periods on the date of the sales call, however, meaning that consumers often had little, if any, time to cancel Suntasia’s programs without being charged. According to the FTC’s complaint, some consumers did not receive any program mailings from Suntasia and thus had no opportunity to cancel before they were charged. In many instances, these consumers received their first notice of the trial memberships when the defendants began charging them. In other instances, consumers received the program mailings only a day or two before their accounts were to be charged. Suntasia did not provide any consumers with the free trial period that was promised in their telemarketing calls.

The package consumers received in the mail also disclosed, for the first time, the telephone number that consumers must call to cancel. Prior to receiving this package, consumers had no way to contact Suntasia to cancel or to ask questions. The FTC alleges that in some instances, Suntasia proceeded to charge the accounts of even those consumers who canceled its programs. In addition, if consumers successfully canceled one program, they were not told that they still may be charged for two other programs, or that they must call different telephone numbers to cancel each of those programs.

The FTC alleges that the defendants misrepresented their affiliation with consumers’ banks or other third parties, that they already had consumers’ account numbers, the starting point and length of the free trial period, that they would honor consumers’ cancellation requests, that consumers may easily cancel their participation in a program, and that consumers are entitled to keep and to use the promised free gifts even if they ultimately cancel the negative option program. The FTC also alleges that the defendants failed to disclose, or to disclose adequately, the following: that the consumer’s account would be charged unless the consumer takes affirmative action to avoid the charge, that consumer’s checking account information would be used to debit their bank accounts, the cost of the programs, the dates the consumers’ account would be charged, the dates that the trial period begins and ends, the specific steps consumers must take in order to cancel, including that consumers must cancel each of the programs by calling a separate telephone number, and the conditions and restrictions on the “free gift” vouchers that severely limit their value and usefulness.

The FTC also alleges that the defendants debited funds from consumers’ accounts without their express verifiable authorization and express informed consent, and that they did not clearly and conspicuously disclose that the purpose of their call was to sell goods or services and the nature of those goods or services, as required by the Telemarketing Sales Rule. The defendants also allegedly illegally purchased leads containing consumers’ unencrypted bank account numbers for use in telemarketing.

A Tampa court entered a temporary restraining order halting the allegedly deceptive scheme, freezing the assets of all defendants, and appointing a temporary receiver over the scheme’s corporate participants. According to the FTC, the scheme is run by nine interrelated companies that employ more than 700 people. The defendants charged are: FTN Promotions, Inc., doing business as Suntasia Inc., Suntasia Marketing, Inc., and Capital Vacations; Guardian Marketing Services Corp, doing business as Guardian Escrow Service; Strategia Marketing, LLC; Co-Compliance, LLC; JPW Consultants, Inc., doing business as Freedom Gold, Variety!, Credit Life, and Freedom Ring ULD; Travel Agents Direct, LLC, doing business as Travel Agents Go Direct, Florida Direct, and Lucid Long Distance; Agent’s Travel Network, Inc., doing business as Florida Passport; Bay Pines Travel, Inc.; Suntasia Properties, Inc.; Byron W. Wolf; Roy A. Eliasson; Alfred H. Wolf; Donald L. Booth; Jeffrey P. Wolf; and John Louis Smith II.

Labels: FTC, scam, Suntasia, telemarketing

posted by Consumer Help Web Editorial Team at 8:17 AM | 0 comments
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  Avoiding Home Repair Scams

Maryland Attorney General Douglas F. Gansler says it’s that time of year again when many consumers consider home improvement projects–and when scam artists may make the rounds. Springtime often brings out roving con artists who knock on people’s doors and offer to do work such as roofing, gutter cleaning, driveway paving or tree pruning. They sometimes appear in the aftermath of hailstorms or tornadoes, offering to repair storm damage. Some warning signs of a scam include:

• an offer of a reduced price because they’ve “just done a job nearby and have materials left over;”
• an offer of a “special” percentage off the repair without being clear about what the bottom-line price will be;
• no street address or telephone number, just a post office box or an answering service; and,
• a refusal to give a written estimate or contract.

Attorney General Gansler offered these tips for consumers who need work done on their homes:

• Get recommendations for contractors from satisfied friends and neighbors.
• Ask to see a contractor’s license, and get the license number and expiration date. In some states, contractors must display their home improvement license number on all of their home improvement contracts, trucks and advertisements.
• Call your local consumer protection agency to ask about any complaints filed against the company.
• Get references and check them to see if the work was done properly, on schedule, and within the contract price.
• Get estimates from at least two or three companies, especially for expensive repairs.

Labels: Gansler, home improvement, scam

posted by Consumer Help Web Editorial Team at 10:14 AM | 1 comments
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  Washington Settles With Movieland.com Over Pop-Ups

Washington State Attorney General Rob McKenna has announced a settlement with three California-based businesses that resolves allegations they installed software that took control of a consumer’s computer by launching aggressive and persistent pop-ups that demanded payment for a movie download service. The software was installed after users signed up for a seemingly anonymous free trial for the service.

“Under this settlement, Movieland.com and its associated companies agree to cease offering anonymous free trials to Washington consumers for their movie download service,” said Attorney General Rob McKenna “Additionally, the defendants must receive express consent from Washington consumers before installing any billing software on the user’s computer, disclose whether the software will cause any pop-ups and clearly state all important contract terms in any advertisement.”

The state filed its original lawsuit last summer following an investigation by the Attorney General’s Consumer Protection High-Tech Unit. The suit accused the following of violating Washington’s Computer Spyware and Consumer Protection acts: Digital Enterprises of West Hills, doing business as Movieland.com; AccessMedia Networks of Los Angeles; Innovative Networks of Woodland Hills; and Alchemy Communications of Los Angeles.

Allegations against Alchemy were subsequently dismissed and the state reached a stipulated agreement with the remaining defendants that was filed today in King County Superior Court. Two company officials, Digital Enterprises’ Easton A. Herd, and Alchemy’s Andrew M. Garroni, are also parties to the settlement, which does not include a finding or admission of wrongdoing.

The defendants agreed to pay a total of $50,000 to resolve the allegations. They also agreed to provisions that limit their business practices.

According to the state’s complaint, the defendants promoted a movie download service through Web sites including movieland.com, moviepass.tv and popcorn.net that offered consumers a free three-day trial. Billing software was then downloaded onto the personal computers of consumers who accepted the offer.

After the trial period, defendants remotely activated the billing software, causing a popup window to appear that indicated the trial period had expired. Consumers who clicked on a “Continue” link on the pop-up were then shown a 40-second video that recurred hourly and told them that they were legally obligated to purchase a subscription. A statement on the company’s Web site also indicated that failure to pay “may result in an escalation of collection proceedings that could have an adverse effect on your credit status.”

The Attorney General’s Office is offering a refund program for consumers who believe they have been subject to the defendants’ practices. Washington residents who believe they are eligible for a refund should file a complaint with the Attorney General’s Consumer Protection Division online at www.atg.wa.gov or call 1-800-551-4636 (number only available in-state) to request a complaint form.

Labels: movieland, scam, Washington

posted by Consumer Help Web Editorial Team at 6:22 AM | 0 comments
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  As Housing Crisis Looms, FDIC Warns Consumers About Common Scams

The Federal Deposit Insurance Corporation (FDIC) is alerting the public to questionable solicitations directed at homeowners. Consumers have contacted the FDIC with questions and complaints after receiving solicitations suggesting there is a "Community Reinvestment Act (CRA) Program" that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may imply that the FDIC endorses or supports the offers they contain.

These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home. The FDIC does not endorse or sponsor mortgage loan programs. In addition, the federal law known as the Community Reinvestment Act, or CRA, does not require programs as described in the solicitations, nor do such programs exist. The FDIC cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash as part of a "Community Reinvestment Act (CRA) Program."

The Community Reinvestment Act is a federal law that was enacted in 1977. It encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. The CRA does not entitle individuals to any grants or loans.

Consumers should be very suspicious of conducting business with lenders or mortgage brokers that make deceptive claims. Individuals who are considering taking out a loan using their house as security are urged to compare various programs. Comparing loan programs offered by a variety of different lenders can help consumers make a well-informed decision and

secure the best program to meet their needs. Useful information on shopping for home loans can be found on the FDIC's Web site at http://www.fdic.gov/consumers/looking/index.html.

Questions about these solicitations may be directed to the FDIC's toll-free Central Call Center at 1-877-275-3342 or 1-877-ASK-FDIC (1-800-925-4618 or 202-942-3147 for the hearing impaired). Questions may also be submitted to the FDIC's Web site using the Online Customer Assistance Form found at http://www2.fdic.gov/starsmail/index.html.

Labels: equity, FDIC, scam

posted by Consumer Help Web Editorial Team at 6:38 AM | 0 comments
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