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Official links fraud to increased spending during holidays

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Kevin Hoffman
December 24, 2010
— It’s a bad economy for con artists, too.

And during the holiday season, when billions of dollars flood through the retail market, there’s no better time for recovery.


False charities, loan schemes and phony Internet connections have victimized shoppers this month, and several consumer protection agencies warn scammers will be working through the New Year.


“It’s a more active season,” said Randall Hoth, president and chief executive officer of Wisconsin’s Better Business Bureau. “More money is exchanging hands, and there’s more pressure on people to acquire extra money.”


Consumers are getting smarter, but so are con artists.


Hoth said through the end of the year, charity scams always become a hot topic. Scammers will take advantage of traditional giving by establishing fake charities that claim to need cash right away.


One of the biggest red flags is a charity claiming low overhead, giving 99 percent of revenue to the mission. Hoth said that’s impossible, and taking time to research the organization will easily determine whether it’s legitimate.


“Don’t succumb to a high emotional pitch,” he added. “Wisconsin is known for being very charitable, but give with your hearts, and use your head.”


More than 2,500 people in Wisconsin last year reported Internet crimes to the FBI, according to the bureau’s Internet Crimes Unit. Non-delivery of merchandise or payment was the cause of close to 20 percent of those scams.


The reported loss throughout the state was $4.9 million. With so many consumers taking advantage of Internet shopping and after-Christmas sales, Hoth said it’s sometimes difficult to distinguish between what’s safe and what’s not.


The key thing to watch when buying online is where the payment is being made, he said. If while paying for merchandise it transfers to an unfamiliar site, there might be a problem.


Using secure providers like Paypal is the safest route, he added.


Watch out for loan schemes, too. More people take out loans during the holidays, and two companies allegedly located in Wisconsin have scammed consumers across the nation out of nearly $10,000.


A woman from Trevor said Pillington Investments, which claims to be located in Milwaukee, approved her for a loan in October. However, the company first required a $1,400 advance fee before she could receive the money.


She sent the money, but the company never sent the loan.


“When I do (get through to Pillington, it’ll) always have some excuse as to why the money is not here,” she wrote in her complaint. “I know I should have followed my instincts and not have allowed this to happen, but I really needed the loan, and I though I was doing the right thing.”


It’s not all about scam artists, Hoth said. Consumers also must be wary of store practices.


Wisconsin’s Better Business Bureau has no authority over retailers’ return policies, he said. It’s important to read the fine print, and get something in writing from the store that indicates its standard practices.


Even New Year’s resolutions can put people in a bind. Promises like healthier living and weight loss can lead to traps like diet pill schemes and long-term contracts with fitness centers.


The solution is simple: Take time to read the fine print and ask questions.


Hoth said reporting unethical business practices or other consumer scams helps the state prevent more in the future.


“If consumers don’t report these things, then we have nothing for other people to look at,” he said. “That’s part of the battle. If we hear things, we can say, ‘Here’s another wrinkle we need to look at.’”


To learn more

For business profiles and information on the latest scams in Wisconsin, visit the Wisconsin Better Business Bureau at wisconsin.bbb.org.


Consumers with questions can call the organization at 1-800-273-1002.



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