Don’t be fooled by these 2 seemingly simple scams

Posted By David Pollino In Your Business,Your Finances | 4 Comments

“Can I use your credit rating to get a mortgage? With my rating, I can’t get it myself.”

Look of doubt on young man's bearded face as he listens to a peer, seen from behind. [1]“Let us put money in your bank, and we’ll give you a cut.”

They are different scenarios but have one thing in common: They’re both probably illegal. Both involve colluding with others to defraud a financial institution. Approaches like these could come to you from acquaintances or strangers, either in person, via email, or through social media.

Straw buying – risky all around

Straw buying is making a purchase on behalf of another person. Frequently, the real buyer has poor credit and cannot obtain financing for the purchase – perhaps a house or car — so they approach someone with better credit and ask that person, the straw buyer, to apply for the loan.

The loan is in the name of the straw buyer, with the real buyer promising to make all the repayments and possibly also compensating the straw buyer for the use of his or her credit.

If you are asked to borrow money on behalf of someone else, consider the risks. First, obtaining funds with intent to defraud the lender can land the perpetrators in jail. Second, you, as the straw buyer, may be held legally responsible for the debt you incurred on another’s behalf.

Don’t be tempted to enter into this kind of “deal.” Don’t let others use your hard-earned credit rating to gain finance fraudulently.

Card cracking – not what it’s cracked up to be

Offers to pay you for letting someone put money in your bank account most likely involve card cracking, which is illegal. Fraudsters put stolen or counterfeit checks in bank accounts belonging to others, and then quickly withdraw the funds before the bank detects the checks are phony. The accountholder colludes with the scammer for a cut of the proceeds.

As I discussed last summer [2], fraudsters often target younger people heading off to college or looking for their first job, frequently reaching out via social media. All the target is asked to do is provide his or her bank account information, such as account number and debit card PIN, or online log-in credentials.

Next the scammers usually withdraw the phony funds and give the accountholder nothing. The accountholder then has to deal with police and pay back potentially thousands of dollars to cover the losses.

Here’s a simple tip to avoid becoming a victim or unwitting accomplice: Never hand over your bank cards, PINs, or online banking credentials to anyone.

You can find more useful protection tips [3] and an infographic on card cracking [4] from the American Bankers Association.

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[2] As I discussed last summer:

[3] useful protection tips:

[4] infographic on card cracking:

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