Personal Finance 

Don’t Write Personal Checks

Last weekend, the Consumerist mentioned a story that fewer retailers were accepting personal checks this holiday season. They cited check fraud as the big reason for not accepting checks and I argue that check fraud is the big reason why many consumers should not write checks.

The personal check is one of the most insecure methods of payment.

Consider this test, I call it the internet safety test. If you took an image of a completely filled out of a check, how much of it would you have to black out before you’d feel comfortable posting it on the internet?

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New Bank Trojan Virus Steals Money

Trojan HorseFinjan, an internet security firm, has discovered a new Trojan horse virus that steals money from your account. Your typical phishing or virus will steal your login credentials and send it to a thief, who either sells it or empties your account. This new virus, called URLZone, will steal your credentials but also steal money from your account, all the while displaying a fake balance when you login. How much it steals depends on your much is available, it only steals enough not to trigger a bank’s fraud detection systems.

At the moment, URLZone can only infect Windows systems using Firefox, Internet Explorer 6, 7 & 8, or Opera web browsers. Computers are infected when you open an e-mail, click on a website distributing malware, or visit an infected website using one of those browsers. When you visit a targeted bank, and it’s thus far been limited to German banks, the trojan transfers money without you even knowing.

This is the first Trojan Finjan has come across that hijacks a victim’s browser session, steals the money while the victim is doing online banking, and then covers its tracks by modifying information displayed to the victim, all in real time, Ben-Itzhak [chief technology officer at Finjan] said.

This is scary.

Banking Trojan steals money from under your nose [CNet News]

(Photo: hendricksphotos)


Always Check Your Credit Card Statements

Credit card statementLast month I explained the importance of reviewing your finances regularly. Today, I want to amend that post and warn that you need to check your credit card statements every single month. Check in on your finances “regularly,” be it a month, a quarter, or semi-annually; check your statements every single month.

Here’s a harrowing tale of how Dan Godding, of Loveland, Colorado, is on the hook for $11,000 in fraudulent charges because he didn’t review his statement. Since he continued to make payments on the debt, and Bank of America’s fraud department failed to catch it, the charges are considered legitimate.

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Beware Charity Fraud

The Federal Trade Commission (FTC) recently sent me some information about some popular charity frauds going around lately.

I personally never respond to a solicitation. It could’ve come in the mail, through a phone call, or an email; I ignore them all. It’s not because I’m a heartless person and it’s not because I don’t trust the solicitation, it’s that I prefer to go directly to the charity. I don’t want to write a personal check and put it in the mail. I don’t want to give any sensitive information across the phone and I certainly don’t trust email, with all the scams and phishing attempts surrounding those. I know the charities we like to support and we generally go directly to their websites to donate.

However, given the tumble the stock market had over the last year, a lot of charities are turning to solicitations to get more donations because their trusts and endowments are hurting. This has opened up an opportunity for scammers and thieves, so the FTC has offered up some good information to help you combat that.

If you recently received a phone call from a “charity” and are considering donating money, I recommend you read the FTC’s Charity Fraud website for tips on how you can protect yourself and the people you’re helping. When you give money to a scammer, it only empowers them to keep on ripping people off. As more people get burned, they start avoiding charities and charities that support the people the scammer said he or she was collecting for. In the end, it’s the people you intended to help that get hurt the most.

I also wanted to spotlight two particularly poignant scams going on right now and how to protect them. The first involves scammers pretending to collect donations to support the troops, as in vets, active duty, or their families. The second is the result of an enforcement sweep of scammers that pretended to collect donations for police, firefighters, and veterans.

It’s great to help those who are in need, but not if the money is going into the pocket of a scammer.

 Personal Finance 

Long Confidence Tricks & Scams

TNT Leverage Show CastI’ve been watching a new TNT series called Leverage, a modern day Robin Hood-type story where a group of former criminals, led by an honest but troubled former insurance investigator; steal from criminals and give to the ordinary citizens that have been themselves wronged. It’s a fun little diversionary show and it’s introduced me to the names of several confidence tricks, or “cons.”

In the world of confidence tricks, there are short cons and long cons. Short cons are meant to take all the cash and valuables on your person. Long cons are more elaborate ruses designed to take more than what you have on you, they’re designed to take you for everything you have. In this article, we’ll just talk about the long cons because, well, they’re more interesting to talk about!

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Beware Stimulus Check Scams

Stimulus Checks!I went to a conference of internet marketers a few weeks ago and spent some time learning from some of the best and the brightest in the industry. One of the things I came away with was the prevalence of “stimulus check” related scams that were floating around the web. I don’t think any of the people attending were involved in pushing these offers because the general consensus was that if you were involved, it was only a matter of time before the FTC dropped the hammer and penalized you heavily for your involvement.

Well, surprise surprise, the FTC released a consumer alert warning consumers about stimulus scams:
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The Basics of Debit and Credit Cards Explained

Smiling Girl, Happy with Credit CardsWelcome to the second edition of the Foundation Series (learn more about the Foundation series), a series of posts that discusses the very basics of personal finance and hopes to set a “foundation” for a solid financial approach to life. This edition tackles a topic that so many of us are introduced to with little preparation, debit and credit cards.

Part of the reason why we don’t get a gentle introduction is because it’s not in the interests of credit card companies to educate its customers. They introduce cards when you’re most impressionable, like the first few days of college. They give you the terms and conditions in microprint and include dozens of pages, virtually assuring that you won’t read every word. They add in counterintuitive business practices, like universal default and double cycle billing, that appear to go against all conventional wisdom about borrowing. They do this not because they’re trying to screw you, they’re doing it because their responsibility is to the shareholders of their company and the almighty dollar. They’re not trying to bankrupt you, but many aren’t going to hold your hand and, let’s be honest, we’re all adults capable of making our own decisions.

I won’t hold your hand either (sorry! :)) but here’s a brief guide that should prepare you more than a hundred pages of 4 pt. font claiming to be terms and conditions!

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Mona Vie Scam? The Magical Acai Berry Juice Product

Mona Vie Acai Berry Juice ProductMona Vie. One of my friend’s wife was targeted to join Mona Vie. I’ve seen a lot of references to both Mona Vie and one of the components in its mixture, açaí, but never really looked into it. I knew that it smelled fishy, in part because its a classic multi-level marketing program, and that alone gives me reason to pause. However, I wanted to take an objective look at it, since there are a lot of MLMs out there and they can’t all be bad right?

Multi-Level Marketing / Pyramid Schemes

Only two words are needed to describe Mona Vie, the brand name of the juice: pyramid scheme. Mona Vie is a “standard multi-level marketing program,” commonly referred to as a pyramid scheme, that relies on people marketing their products. Every time you make a sale, you earn a commission. The people who recruited you, and the people who recruited that person (your “upline”) into the program will also earn a commission. If you recruit someone into the program (your “downline”), you will earn a commission on their sales. The classic pyramid scheme.

There’s is nothing inherently illegal or disreputable about multi-level marketing programs. They aren’t illegal in the sense that Ponzi Schemes are illegal , it’s just that most implementations of MLM programs only really benefit the people at the top of the pyramid. This is because many of these programs have quotas that members need to sell and, when they can’t, members often find themselves buying the products themselves just to meet quota. Anyway, enough with the generalities, what’s specifically scammy about Mona Vie?

Mona Vie Scam?

What’s this Açaí berry juice product? It’s supposed to jump all over the antioxidant health craze people have been clamoring all over and Açaí berries are a very good source of antioxidants (most dark colored berries are, like blackberries, raspberries, etc.); that part is legitimate. The drink itself is 19 juices blended together.

There are two parts of Mona Vie that are suspect. First, many agree that antioxidants are beneficial for you but Mona Vie makes some big promises such as improving cardiovascular health, improving joint function, etc. It claims that it can cure many ailments because it contains components that have been shown to address some of them. Nothing they say is a flat-out lie but it’s like saying you can do laps in a kiddie pool. Possible? Yes. Probable? Not really.

The second part that’s suspect is the fact that the stuff is $30-$40 a ~26 oz. bottle and proponents say you have to drink 2 oz. in the morning and 1 oz. in the evening. Simple math shows that each month you’ll have to spend $120-$170 on the juice, or $1,500-$2,000 a year. If you want the benefits of these types of juices, you can get it for much much less. Oh, and any distributor has to buy 4 bottles a month. Sure you can sell them, but what if you don’t? You’re always on the hook.

Other red flags? Their CEO and founder, Dallin Larsen, is a 20 year veteran of the MLM industry and the FDA recently shut down a similar juice product operation, Dynamic Essentials distributed Royal Tongan Limu juice, for illegal business practices. Hmmm…

Finally, check out the MonaVie compensation plan, courtesy of The Fraud Files blog. There are all sorts of crazy exceptions and rules. For example, you have two legs on your “downline,” but are only paid on commissions based on the shorter of the two. It gets really complicated, really quickly, and that certainly doesn’t bode well for people who sell the stuff.

The bottom line is that you’re overpaying for a product and, if you’re a distributor, you have to buy 4 bottles a month. Do you think it’s a scam? (this site, Purple Horror, documents a lot of Mona Vie’s shenanigans)

(Photo: wmode)

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