Recently in Fraud Category

The east coast is still recovering from Hurricane Irene and Tropical Storm Lee, and other heavy rain events. The succession of storms and hurricanes this season have resulted in fleets of vehicles being inoperative from flood damage. Unscrupulous car dealers are notorious for turning around these flood damaged vehicles and selling them to unsuspecting buyers. As a result the National Insurance Crime Bureau has released this list of Flood Vehicle Fraud Prevention Tips.

Here is what they recommend:

• Select a reputable car dealer.
• Inspect the vehicle for water stains, mildew, sand or silt under the carpets, floor mats, headliner cloth and behind the dashboard.
• Check for recently shampooed carpet.
  Inspect the interior upholstery and door panels for fading.
• Check for rust on screws in the console or areas where water normally doesn't reach.
• Check for mud or grit in the spare tire compartment, alternator crevices, behind wiring harnesses, around the small recesses of starter motors, power steering pumps and relays.
• Check inside the seatbelt retractors by pulling the seatbelt all the way out and inspect for moisture, mildew or grime.
• Check door speakers as they will often be damaged due to flooding.
• Have a certified mechanic inspect the vehicle prior to purchasing it.
• Ask about the vehicle's history. Ask whether it was in any accidents or floods.
• Inspect the title and ownership papers for any potential or questionable salvage fraud.
• Conduct a title search of the vehicle.
• Look under the hood for signs of oxidation. Pull back rubber boots around electrical and mechanical connections for these indicators: Ferrous materials will show signs of rust, Copper will show a green patina.
• Aluminum and alloys will have a white powder and pitting.
• Trust your instincts: If you don't like the answers or the deal sounds too good to be true, walk away!

If you are concerned the vehicle you are looking at may have been declared salvage from flood damage, you may want to check out our previous post, Consumer alert: don't buy a flood-damaged car for specific ways to confirm this, such as researching your car's Vehicle Identification Number for a history report. Also if you discover a car dealer who is committing this type of fraud, make sure you inform the NICB at 800-TEL-NICB.

Even if you aren't shopping for a vehicle you should be concerned about the aggressive flooding this year. According to The Atlantic Oceanographic and Meteorological Laboratory the Atlantic Hurricane Season lasts until November 30th, meaning there is still a chance of even more flooding that could affect your car your home.

Take steps to protect your property. Your car insurance may cover more than you think but homeowners beware: flood damage is not covered by most homeowners policies, you would require special flood coverage. Contact your insurance agent to ensure that your vehicle and your home are protected against any future flood damage before it's too late.

U.S. identity fraud is at an all-time high, and recent reports indicate that college students are at particular risk for ID theft, partly because it often takes them twice as long to learn that they have been swindled. Studies show that most fraud begins occurring with a week from when the data is stolen. But because college kids are less likely to track banking and credit card activity on a routine and timely basis, the fraud often goes undetected longer.

Additional risks that make college students susceptible to ID theft:
So-called "friendly fraud" -- fraud perpetrated by friends and family -- accounts for one in seven fraud cases.

College students are very active on social media sites, and may unwittingly share more sensitive information than they realize.

To deter ID theft, experts offer the following tips:

• Monitor your financial accounts regularly


• Be cautious about sharing identifying information on social networking sites


• Learn how to recognize and be alert for phishing scams


• Use secure passwords and change them frequently


• Log out of your computer when you are not using it


• Keep your computer up to date with the latest spyware and anti-virus software

For more resources on identity fraud, see the Federal Trade Commission's Identity Theft Site and the FBI's e-scams & warnings page.

Identity Theft Insurance
You may want to consider Identity Theft Insurance, but first be sure you learn more about what it does and doesn't cover before you purchase - many people have misconceptions. Also, check to see how any existing coverage you have, such as Homeowners, might protect you. And do your homework before purchasing. Check The National Association of Insurance Commissioners Consumer Alert, which notes that while policies are available, they do not protect you from becoming a victim of identity theft and do not cover direct monetary losses incurred as result of identity theft. Rather, they insure you for any costs that might be incurred in reclaiming your identity, such as hiring an attorney, taking time from work, and any administrative costs such as the cost of phone calls or postage.

A step-dad who drowned his 3-year old girl in her backyard pool to collect her life insurance, a landlord who set fire fatal to one of his tenants while trying to cash in on property insurance, and a doctor who made a fortune running an illegal "pill mill" that resulted in 68 fatal overdoses ... these and a handful of other killers, liars and cheats make up the rogue's gallery that is the 2010 Insurance Fraud's Hall of Shame.

The Coalition Against Insurance Fraud compiles these lists annually, highlighting some of the worst and most egregious examples of fraud from the prior year - but they are just the tip of an estimated $80 billion dollar iceberg. Sometimes, fraudsters act alone. Other times, fraud is perpetrated by organized crime rings.

Consumer attitude to insurance fraud can be highly frustrating. Research by the Coalition Against Insurance Fraud reveals, "Two of five Americans want little or no punishment for insurance cheats; they blame the insurance industry for its fraud problems because they believe insurers are unfair." Many of those who tolerate insurance fraud wrongheadedly view it as a battle between an everyman David vs a large corporate Goliath. But the truth is far different ... it's more a battle between criminals and you. After all, it's not the insurance companies who take the hit: it is a crime you pay for - money from your pocket. Fraud and theft are business expenses that get factored into the costs that honest people pay for insurance.

The idea that insurance fraud is victimless is a common myth. Besides adding to the cost of insurance for every honest consumer and honest business, thousands suffer even more serious consequences: Every year, people are bilked out of life savings by illegal investment schemes; health is endangered when people are swindled by phony health policies; injured employees and their families suffer when businesses fail to carry legally mandated coverage, and innocent people are killed and maimed in arson and staged auto accident fraud schemes. See videos of common criminal fraud schemes.

If you have been a victim or insurance fraud or suspect insurance fraud, here are some ways to take action.

• Report to your state insurance authority. Many states have specific insurance fraud bureaus
• File a complaint online with the National Association of Insurance Commissioners.
• Notify the insurer - Insurance company fraud hot lines
• Call the National Insurance Crime Bureau Hot Line at 1-800-TEL-NICB (1-800-835-6422). Cell phone users can also text the keyword "FRAUD" and their tip to TIP411 (847411). Or drop an email. Tips can be anonymous.
• Check to see if an insurer or an agent is legit and licensed in your state: State Insurance departments.

Whether it's via new media like social networks or "old school" technology like your home phone, don't let your guard down. The FBI recently has issued warning about two scams that are surfacing.

Denial of service phone attacks
The FBI has issued a warning about a new phone scam which uses telephone denial-of-services (d.o.s.) attacks to overwhelm victims' cell phones and land lines with thousands of calls. This diversionary tactic ties up service to give criminals time to empty out the victim's bank or brokerage accounts. Prior to the phone attack, the criminal would have obtained the victim's bank account numbers and password, either via malware that the victim has inadvertently downloaded or via information the victim gave out on the phone or in response to e-mail phishing. The subsequent DOS attack serves both as a distraction, and also prevents a victim from calling to make account changes to protect their accounts.

Social networking scam: your friend is stranded
Scammers send notices to your Facebook or Twitter contact list posing as you and telling your contacts that you are stranded after a robbery (or some similar calamity) and that you need help quickly. Of course, the requested help is urgent and would be in the form of cash. To avoid being taken in by such a scam, be alert and aware and simply verify any pleas for help before acting on them. And if you think your account has been hacked and that false messages are being sent to your contacts, post a note on your page alerting your friends and family that your account may be compromised and to ignore any such messages.

To protect yourself from these and other scams, the FBI suggests:

• Implement security measures for all financial accounts by placing fraud alerts with the major credit bureaus if you believe they were targeted by a TDoS attack or other forms of fraud
• Use strong passwords for all financial accounts and change them regularly
• Obtain and review your annual credit report for fraudulent activity
• If you are a target of a TDoS attack, immediately contact your financial institutions, notify your telephone provider, and promptly report it to the IC3 website at: www.IC3.gov

Other resources

• FBI - Common Fraud Schemes
• FBI - New e-scams and warnings
• FBI details most difficult Internet scams
• Census and survey scams
• 2010 - Recent Scams - as reported by the NY Consumer Protection Bureau
• Tips to avoid e-mail phishing
• 10 tips for social networking safety
• Common scams and scam resources
• On Guard Online
• How to reduce the risk of online fraud
• Stay Safe Online