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Educated and affluent = potential investing fraud victim

If you’re well-educated and affluent does that make you invulnerable to fraud? Hardly. If you’re willing to make high-risk investments to get high-return, there’s not only a target on your back, but experts say your personality types makes you susceptible to be taken.

“Most of us think of ourselves as invulnerable,” says Shoshana Lucich, of the recently opened Stanford University-based Research Center on the Prevention of Financial Fraud.

A really good con artist has the ability to get buy-in even from people who believe they know better.

“If it sounds too good to be true, you’re probably dealing with an amateur,” Lucich says, quoting Pat Huddleston of The Investor’s Watchdog.

The Bernie Madoff case is an extreme example, but an example nonetheless, of how even well-heeled people can shift their focus to the dollar signs and away from due diligence. Another is  the case of Raffaello Follieri, actress Anne Hathaway’s former boyfriend, who was convicted of ripping off a collection of wealthy victims, including investor Ron Burkle.

The institute, sponsored by the Stanford Center on Longevity and the Financial Industry Regulatory Authority’s Investor Education Foundation, is collecting information and encouraging the study of a variety of frauds, including investor fraud. An estimated $1.7 billion was lost to fraud in the U.S. in 2010. The institute is hosting a fraud summit in Washington, D.C. next month.

Lucich says fraud is a difficult area to get a handle on since a many victims deny being taken. That is widely attributed to their shame and disbelief.

Online privacy leaks worsen; “Do not track” gains steam

Are you being tracked right now? If you thought you were just browsing aimlessly, doing a little shopping or checking sports scores without identifying yourself, you could be mistaken about your level of privacy.

A new study from a Stanford University researcher has found that a lot of  the little bits and pieces of supposedly anonymous data being deposited by your web browser are actually being gathered and reassembled by dozens of companies and sold. And stopping that from happening takes more than a little bit of effort, helped by a growing movement for “do not track” legislation.

More companies know more about you than previously thought and stopping them from secretly building profiles of you is a lot harder than just pressing a button, researcher Jonathan Mayer says.

He adds:

“Click the local Home Depot ad and your email address gets handed to a dozen companies monitoring you. Your web browsing, past, present, and future, is now associated with your identity… Keep tabs on your favorite teams with Bleacher Report and you pass your full name to a dozen again. This isn’t a 1984-esque scaremongering hypothetical. This is what’s happening today.”

Mayer, of Stanford’s Computer Security Laboratory, says more than half of the sites surveyed share your information with other sites. As an example, he notes that  even when you’re on a typical commercial news site there will be multiple companies collecting information as a matter of course: including the site itself, a video delivery service, advertising networks and social networks.

Previously, privacy advocates suggested that opting out of so-called behavioral advertising was a means of avoiding having your online usage patterns tracked. But Mayer says that stopping targeted advertising doesn’t stop the data collection.

Consumers Union regulatory counsel Ioana Rusu says companies can not only find out who you are and where you’ve been, but also alter offers that you see based on nothing other than the websites you’ve visited — something that can paint a grossly distorted picture of someone. She cited the example of a credit card company that presented different offers to users based on their online profile.

What the Occupy Wall Street crowd should be saying

Are the thousands who have taken to the streets in the “Occupy Wall Street” (OWS) protests a bunch of anarchistic slackers or do they have a point?

If they’re protesting their personal financial situations or prospects for the American Dream, they have plenty to howl about, but the “99 percent” crowds could use some message management.

When I recently visited the Chicago OWS spin-off  in front of the Federal Reserve Bank, they were decrying everything from predator drones to corporations in general.  There were fewer than 100 people there, although their theme was similar to the New York demonstrations.

Instead of yelling at people ensconced behind financial district edifices, though, protesters could be making some more constructive demands. I’d like to humbly offer a few suggestions:

• Demand that big banks give ordinary citizens the same rates they receive from the Federal Reserve on loans. Borrowers can’t re-negotiate their college loans the way a big corporation or bank can, because they have access to interest rates that are nearly zero. Moreover, students can’t consolidate high-rate private loans with lower-rate federal borrowing, so the plums of high finance are out of their reach. Those who graduated from college may be staring down decades of paying off debt — an average of nearly $23,000 per student; those with professional degrees are wincing at six-figure burdens.
• Demand that Congress permit regular folks to discharge student debt in bankruptcy. It’s somewhat of a consolation that graduates can get lower payments based on sparse income or employment if they have federal loans, but they still have to repay those loans. If they file for bankruptcy, they can’t discharge those debts, which are like albatrosses. Not so with the megabanks, who not only received a multi-trillion-dollar bailout, but got the U.S. Treasury and Federal Reserve to buy their bad debt and toxic securities. There’s a solid reason why the delinquency rate for student loans is almost as high as credit cards.
• Demand that Congress pass a stimulus plan to create infrastructure, education, research and clean energy jobs instead of investing in two wars that three-quarters of the American electorate thinks are senseless. If the job market were robust, none of these protesters would have to worry. Like previous generations, they could work, pay off their debts and buy things like appliances, furniture and homes. They could afford to have children and provide them decent educations. That was the American Dream. The younger generation is not getting the job opportunities their parents or grandparents had. They are faced with average 15 percent unemployment. It’s much higher for minorities. Even if they can get a job, wages are depressed due to the recession and many are underemployed, working several jobs or are part-timers.
• Instead of targeting financial districts, focus on specific congressmen and senators blocking financial/bankruptcy reform and job creation.

Unless more people get in the face of politicians, one thing is certain: it will be continue to be a raw deal for the middle class. Now is the time for the protesters to take their demonstrations out of financial districts and into the offices of their elected representatives. All of this reminds me of when Ralph Waldo Emerson visited Henry David Thoreau in jail, who was imprisoned for not paying a poll tax. Emerson asked his friend why he was there. “Why are you not here?” Thoreau replied. Maybe we’re not quite on the streets today in spirit, but most of us were there some time ago in personal financial solidarity — whether we choose to admit it or not.

How to get a refund on your Reebok EasyTones

If you purchased a pair of Reebok shoes that promised to strengthen and tone your buttocks and legs just by wearing them, you might not be in better shape physically, but you could be in line to collect a few bucks.

Apparently you actually have to exercise to get fit. Who knew? The U.S. Federal Trade Commission Wednesday made it clear that wearing these Reeboks wouldn’t do the toning for you, so the company owes you money for suggesting they do.

The government says the Canton, Massachusetts-based apparel maker had no basis for claiming its EasyTone and RunTone shoes could help you strengthen and tighten your buttocks, calves and hamstrings up to 28 percent more than regular walking shoes. A report issued by the National Advertising Division of the Better Business Bureau earlier this year noted the study Reebok used to support its claims was rather limited in scope, with only five participants.

So, rather than fight it out with the feds, Reebok agreed to settle the charges lodged by the government. It said it would set aside $25 million to reimburse purchasers of EasyTone and RunTone sneakers and other footwear marketed with the suggestion that just wearing them would result in a physical benefit.

Consumers who purchased the shoes can go the Reebok settlement site to apply for a refund. David Vladeck, who heads the FTC’s Bureau of Consumer Protection, says it’s not clear yet how much each consumer would get in compensation.

“We want to get cash back in the hands of consumers as quickly as we can, but this process will take some time,” he says.

The final dollar amount of the refund will be based on how many of the buyers fill out the government form to get their money back.

Pets: How to avoid the pitfalls of puppy mills

Getting a family pet can be a wonderful experience — adding what amounts to another family member for the next 10 to 20 years. But those who choose their pet on impulse could find themselves with the unanticipated financial and emotional burden of dealing with a sickly animal or one with congenital defects.

Such is the risk of the so-called puppy mill pets: Dogs raised in large-scale, unsanitary, profit-focused breeding operations often are sick when they are sold. They may be blind, unable to lift their legs to go to the bathroom, or be suffering from heart defects or other ailments that will shorten their lives.

“What happens in those cases is you end up with enormous vet bills,” says Cori Menkin, who heads the ASPCA’s campaign against puppy mills. “It’s really unfortunate. Those are all things that are avoidable through responsible breeding.”

Most animal rights activists assocate pet stores with puppy mills, and say online sales operations are springing up, too. But The Pet Industry Joint Advisory Council, a trade group, says that it’s unfair to assume that all pet store animals come from the mills. “Pet stores are a legitimate source for puppies,” the group says. “As in any community, there are some transgressors who choose not to adhere to acceptable standards.”

Wherever you find them, getting a sick pet can be a heartbreak, and a budget buster.

The average cost to care for a small to medium healthy dog over its lifetime is between about $7,000 and $13,000 just for routine costs, from food to regular veterinary care, according to the Best Friends Animal Society. When an animal is sick, the costs can be that much of more.

Just ask David Mero, who adopted his dog from a shelter 14 years ago.  When Casey developed cancer two years later,  Mero was told she had one month to live. Like many pet owners, Mero was committed to doing whatever he could to help his dog survive her illnesses. That commitment – which he doesn’t regret – ended up costing more than $10,000, as Casey went through eight different surgeries over the last decade, surviving until recently.  ”She was part of the family,” he said.

Will new consumer protections improve U.S. air travel?

You don’t have to convince Scott Convery, a computer programmer from New York, that U.S. airline travelers could use some support.

He and his wife boarded a plane in Chicago this summer after attending a wedding and expected to be back at LaGuardia Airport by within two hours of their 12:40 p.m. departure. Just as they were approaching New York, the passengers were told weather issues would require them to go into a holding pattern, but they didn’t have the fuel to do that so they were going to land at Dulles International Airport outside Washington, D.C.

After landing at Dulles, about every 45 minutes, Convery said, the passengers were told the flight was on hold for another 45 minutes. The entire time, he said, the plane just sat there on the ground, with all the passengers still inside. Finally, after four hours on the ground, the plane headed back to New York and finally arrived after 9 p.m., eight hours after their departure. 

“We were just stuck in our seats. It was really, really unpleasant,” Convery says. “I’ve been flying forever and I’ve always heard about these stories. We could have taken the train and gotten home sooner.”

With the backdrop of airlines losing their passengers’ luggage and nightmarish tales of passengers like Convery’s of being trapped on airport tarmacs for hours, the federal government has instituted new consumer protections intended to help wary sky warriors.

“The Department of Transportation’s new passenger protections will help ensure that air travelers receive the respect they deserve before, during and after their flight,” U.S. Transportation Secretary Ray LaHood said, announcing the rules late last month.

What’s supposed to be different now speaks to how bad the situation can get:

How to avoid phony 9/11 charities

There truly is no honor among thieves.

When it comes to scams, the 10th anniversary of the Sept. 11 terrorist attack on the U.S. is just like any other tragedy that callous crooks have taken advantage of. Fact is, from the days following Sept. 11, 2001, thieves have been using the attacks to pocket your cash by either trying take advantage of interest in donating to help those affected or by trying to get money intended to help victims and their families.

More recently, the anniversary has spurred an increase in scams using the attacks as the hook. With the enormous growth in social networking over the past decade, that is where much of the new attempts to con you can be found.

“Unfortunately, we find that in times like these there are some really, really nasty people out there with ill intentions,” said Adam Levin, chairman and co-founder of Identity Theft 911, which provides identity theft and data breach education and resolution. He warns consumers to be careful of any online solicitations that say: ‘Click on here and see pictures and remember 9/11.’”

Because many of these scams spread through Facebook and Twitter, they aim to steal your personal information — including passwords. “A lot of this has to do with inserting malicious codes in computers,” Levin said.

He warned to be particularly leery of attempts to get you to upgrade your video or picture viewing software, especially when it’s in conjunction with supposedly seeing some images connected to Sept. 11.

Paula Fleming, vice president of the Better Business Bureau in Boston, said there has been a recent uptick in the interest in charities related to Sept. 11. She cautions potential donors to be sure they’re giving to a legitimate organization. “It is wise to be wary,” she said.

Six investment scams to avoid

Money is a powerful lure. Pretty much everyone wants more of it, and a whole lot of people want to get theirs by taking it from others. Investors are typically more savvy, but they’re targets nonetheless.

The North American Securities Administrators Association (NASAA) put together its annual list of “tricks and traps” for investors to avoid. For most, due diligence and skepticism is what stands between the investor and the scam.

Here are some of the scams to watch out for so you’re better prepared if one comes your way.

Real estate The beaten-down real estate market, with its abundant opportunities for real investors, has also spurred a growth in schemes tied to distressed properties. Earlier this year, Lawrence R. Hamel was convicted in federal court in Florida of a conspiracy that took $2.3 million from 39 investors around the country who thought their money was going to refurbish distressed properties that would then be sold for a profit. Authorities say Hamel didn’t buy properties and used the money from later investors to pay earlier investors in a Ponzi scheme.

Energy These scams are connected to the time-honored lure of buying into the big rewards that come with investing in oil and gas reserves. “Investors must realize the distinct possibility that they could lose their total investment in legitimate ventures. Energy investments tend to be poor alternatives for those planning for retirement and should be avoided by anyone who cannot afford to strike out when trying to strike it rich,” the NASAA warns.

Gold As the price of gold has risen, so has the temptation to get a piece of the action. That’s a powerful draw for a scam. There are a couple of variations in this arena, the NASAA says. One offers investors a chance to buy into a mine that had been closed with the promise of getting all their money back plus interest. Another involves marketing coins or nuggets that supposedly have a superior return. This summer, the operator of the Lake Worth, Florida-based Gold Bullion Exchange was accused of defrauding more than 1,400 investors of more than $25 million. Jamie Campany allegedly got investors to buy under a variation of margin financing, and collected commission and fees but never bought any bullion.

Promissory notes On the face of it, these seem like a good investment. After all, it’s on paper that you’re going to get a fat return on your investment. “Unregistered promissory notes are often covers for Ponzi schemes and other scams,” NASAA warns. Investors should check with their state regulator to determine whether a promissory note and the seller/borrower are properly registered. Former FBI agent Cary Alan Burdette pleaded guilty this summer to using promissory notes in a scheme that brought in more than $4 million.

ID theft protection services are not one-size-fits-all

With an unprecedented string of major data breaches this spring from Sony to Citi and many in between, identity theft protection services have a greater import than ever before. Data-theft victims have a far higher likelihood of being a victim of identity theft than do those whose data was not taken.

But what can protection services do for you if you have had your data stolen? And what can they do for you if you are not at risk from any specific data breach? The multitude of offerings claiming to help can be a confusing mish-mosh of good and bad that takes some work to sort through. And since the services typically cost $10-$20 a month, you should know what your investment buys you before you sign up.

“It’s very difficult for the consumer to really figure out what it is and what services they’re getting,” says Phil Blank, managing director of security risk and fraud for Javelin Strategy & Research, which released a new report on the offerings in the identity theft protection industry. The report says the industry will take in $3.5 billion this year from consumers. About 25 million people have credit monitoring subscriptions, according to Javelin.

Javelin found that more of the offerings were comprehensive — providing monitoring, protection and resolution assistance — and are now even being wrapped together with computer anti-virus tools. The report recommended the industry move to more standardized descriptions and focus less on hype and more on honesty when marketing their products.

The good news from Javelin’s study is that the field is rapidly evolving and adapting to the changing threats. “It’s important for the consumers to know that it’s not one-size-fits-all,” says Blank. “Security is a multi-layered approach.” Because the industry is still young there are new offerings and different approaches being tried all the time. Many services come with free trials that last two weeks to two months, and Blank suggests taking one for a test spin before subscribing.

One trend forecast in the report was the offering of minimal free identity theft services as a means of marketing. AllClearID offers a no-cost subscription (they don’t even ask for a credit card), that provides some basic protection but has none of the bells and whistles of the pricier offerings.

Even looking at just one company can take a little effort. Identity Guard, for example, has four different plans consumers can choose from. Some other popular brands are LifeLock, TrustedID and Privacy Guard. All three of the credit bureaus, Experian, Equifax and TransUnion also sell their own identity theft protection services.

Scam artists abound after Irene: How to keep your money dry

There is something about disasters that brings out the best in people — and the worst. Along with the Red Cross and National Guard, scam artists mobilize, too. They see opportunity in people’s misfortune.

“You’ve already been victimized by Mother Nature; don’t be victimized by an unscrupulous contractor,” cautioned Barbara Anthony, who heads Massachusetts’ Office of Consumer Affairs and Business Regulation. “People are vulnerable when they’ve been dealt a blow by a hurricane or a tornado.”

For those who have to deal with the aftermath of Hurricane Irene or know someone who does, beware the scams that are out there already or are certainly on their way. Even if you weren’t affected, but you just want to help, no worries, you’re a target, too.

In fact, post-disaster scams targeting people who want to be charitable got so bad in the aftermath of Hurricane Katrina that the federal government created the National Center for Disaster Fraud has a hotline just for reporting them: (866) 720-5721 or disaster@leo.gov.

Governors and attorneys general in just about every state that felt the brunt of Irene have issued warnings.

“Con artists pretending to be government officials have tried to steal personal information and money following other disasters,” North Carolina Attorney General Roy Cooper said, issuing a warning about con artists posing as government disaster aid officials.

Two of the most common ways storm victims are targeted relate to fixing storm-related damage: Home repairs and tree removal.