Scams!

Sep 16

In the internet age there many people trying to separate you from your money. But there have always been scammers and they always rely on the same tactics. In this program from 2007 hear from scam prevention expert Doug Shadel s a former investigator with the Attorney General's Office and victims of scams. Be forewarned!

Transcript - (note, I gave this A.I. transcript a once over but I recommend double checking the audio file. And let me know if find discrepancies so I can fix them here.

Ross Reynolds

(00:01) This is KUOW 94.9 Seattle, I'm Ross Reynolds, and it's Wednesday, May 30, 2007. The conversation is scams.

Scammer on phone

(00:10) The coin is worth $4,640. That's what it's worth, and that's why I even sent you out the free book, because I wanted to show you that. And we got it at the estate sale, and we got it way below value. I sent it out to you for only $3,100.

Ross Reynolds

(00:29) Did you ever get a call like that? Did you ever bite? Have you been scammed? Do you feel now that you should have seen it coming?

(00:36) Were there telltale signs you ignored? What advice can you give others so they won't be victims? Have you ever perpetrated a scam? What techniques did you use?

(00:47) How did you spot a likely victim? What kind of person did you avoid trying to scam? We're at 206-543-5869. That's 206-543-5869.

(00:58) I realize it might be a little embarrassing to talk about the time you were scammed, but think of it in terms of helping out others so they won't become the same victim that you were. It's toll-free, 1-800-289-5869, or write to us. Conversation at KUOW.org. Got questions about scams?

(01:18) Well, our guest might be able to help you. Doug Shadel is the AARP Washington State Director, and he's a former investigator with the Attorney General's Office. He's been with AARP for the last 10 years, and he's written a book about persuasion called Weapons of Fraud. Doug, thanks for joining us.

Doug Shadel

(01:35) My pleasure, Ross.

Ross Reynolds

(01:36) Have you ever been scammed, Doug?

Doug Shadel

(01:38) Have I ever been scammed?

Ross Reynolds

(01:39) Yeah.

Doug Shadel

(01:40) That's a good question. There was a door-to-door salesman one time who I bought from that just kind of charmed me, yeah. But I'm pretty on guard about it in general.

Ross Reynolds

(01:50) So the salesman never delivered the goods?

Doug Shadel

(01:54) Well, I think it was a little bit overpriced, but it was just one of those. impulse purchases. I think this is the big myth about fraud and scams, is that it can't happen to me. In fact, there's a whole body of literature called the illusion of invulnerability, which is that it can happen to somebody else, but it can't happen to me.

(02:11) And those of us in the fraud prevention business, that is one of our biggest challenges, is to persuade people that actually it can happen to anyone.

Ross Reynolds

(02:18) Doug, give me a for instance of a really clever scam that took in a real savvy person.

Doug Shadel

(02:25) um... yeah well i think there's a whole variety of you know one of the one of the messages of weapons of fraud is that i could give you example after example of but you know gold coin scams just don't the one you just heard there on the at the open was a very common gold coin scam where people call up and they'll say uh... you know this point is trading at thirty one hundred dollars but i can't i can give it to you for half price and it's going to be worth twice that in the future they're just at times change and economic conditions change the scams change what doesn't seem to

(02:57) change are the psychological tactics that are employed. So in that tape that you just ran, they're using a ploy we call comparison, which is, you know, I got this at a really reduced price. Normally I would be selling it for $4,000, but I'm only going to sell it to you for $3,100. And by the way, I didn't even take a sales commission, which is a tactic called reciprocity, right, which is I'm doing something for you, not taking a sales commission.

(03:21) The least you can do is buy my coin.

Ross Reynolds

(03:23) I'm such a good guy, or in that case, I'm such a good woman, that I'm going to not take my commission just for you.

Doug Shadel

(03:30) That's right. For your benefit. What she didn't tell you is that she probably paid $300 for the coin she was now giving you at a discount for $3,100.

Ross Reynolds

(03:36) You do this workshop at AARP, you've been doing it around the state, and I was fascinated just by reading about it, because you do a test, you give people a test on financial literacy, and what did you learn from that?

Doug Shadel

(03:47) It's interesting. Our hypothesis going into these, we've done this study twice now. We did it for the NASD, the North American Security Dealers, last summer, and then we replicated it again in Washington State this year. you would make one would make the assumption that uh...

(04:01) people who are victims of fraud are not as financially literate as those who are not victims right that's a normal but the natural assumption to make sure so we took a cut a group of people who we knew had been victimized by investment fraud and a group that we knew had not been victimized we asked him a series of behavioral questions and these financial literacy questions and what we found is that not only did the victims not do poorly, they did better than the non-victims. They actually outscored the non-victims in financial literacy. So when it comes to understanding the nuts and bolts, you know, what's the difference between a stock and a bond and what about compound interest and all that, victims of fraud actually do better.

(04:40) And the same finding was true a year ago. This time, though, in Washington state, we added a series of questions to try and gauge what we're calling persuasion literacy, for lack of a better term. And this is where you give them a series of statements that a salesman might say and ask them how interested on a scale of one to seven they might be. Well, the correct answer is one, meaning I'm not at all interested.

(05:01) Because the line you just gave me is a red flag for fraud, something like, the worst you could do is a 50% return, and some people are getting up to 110%, right? What we found there, our hypothesis is that maybe victims aren't as smart financially, in terms of financial literacy. But they may not be as good at identifying persuasion.

Ross Reynolds

(05:20) I want to get back to that, this whole idea of persuasion literacy. But this test, I just find fascinating. The people who had been victims of scams scored higher on your test of financial literacy. Is that to say that a little knowledge is a dangerous thing?

Doug Shadel

(05:33) Well, first of all, both groups flunked the test.

Ross Reynolds

(05:36) OK.

Doug Shadel

(05:36) Right. So we have to do better in just in terms of our general understanding. of financial markets. And the reason it's so important is because there is this huge shift going on now in who's responsible for your financial future.

(05:50) You know, defined pension plans are going away, Social Security needs to be fixed. So right now, everyone is an investor. You know, you've got to get a 401k, you've got to learn this stuff. So everyone is vulnerable to this.

(06:01) This is one reason why AARP is focusing on it. But yeah, that's right. They did better, but both groups flunked. And what we're saying is, that if all you do is teach the nuts and bolts of finances, the difference between a stock and a bond, and you don't teach anything about persuasion, how people sell, that's like teaching a poker player the difference between full house and a flush,

(06:22) and nothing about bluffing, you know what I mean?

Ross Reynolds

(06:24) It also sounds as though the persuader could sort of rely on the fact that someone has a little bit of basic knowledge to dress up their persuasion.

Doug Shadel

(06:33) Absolutely right. That's an excellent point. There's a tactic we talk about in Weapons of Fraud called the expert snare, where the reinforces what the victim knows. I don't have to tell you about the gold coin market, you know all about it.

(06:46) And you like being the expert, so that means You're not going to ask tough questions, because if you ask tough questions, that might reveal that you're not an expert.

Ross Reynolds

(06:53) Well, that's a really good point, because sometimes we don't want to ask a question because we don't want to reveal that we don't know something that's going on. It feels weird. You feel as though we're going to be asking a stupid question. But certainly when it comes to putting down your money, there aren't too many stupid questions you could possibly ask.

(07:09) If you just joined us, Doug Shadel is with us. He's the author of a book about persuasion, The Weapons of Fraud. We're going to talk a little bit more about the idea of persuasion, literacy, and phantom fixation and social proof and affinity fraud and all kinds of scams and techniques for scams that are out there. We're at 206-543-5869.

(07:27) That's 206-543-5869. Maybe you've got a question for Doug, or maybe you're willing to call up and tell us about a scam that you fell for. analyzing it now, what you learned from falling for that scam. It's also toll-free, 1-800-289-5869.

(07:45) Let's go to Fred. Fred's with us today up on Capitol Hill. Fred, what happened to you?

Speaker 17

(07:51) Well, Ross, I'm a pretty skeptical guy. I'm from New York, and I've never been scammed in my entire life, but a couple weeks ago, I took my parents down to the Pike Place Market, and I was pulling into a parking lot on First Avenue, right next to the market, and a very helpful guy pointed me towards a parking spot, gave me all the hand motions and everything, and rolled down my window and he said, it's $10 to park here for an hour, and I gave him $20, and he took my money and ran away.

Ross Reynolds

(08:28) So he was just a guy standing there?

Speaker 17

(08:31) He was just a guy standing there, just a freelancer.

Ross Reynolds

(08:34) What was there about his affect that made you think that he was official?

Speaker 17

(08:38) He was just very businesslike and seemed to be really interested in helping, and he also had a big wad of cash. that he pulled out of his pocket and that he was flashing around.

Ross Reynolds

(08:54) Ah, so how could this guy be? He's obviously someone who takes money. He's got money.

Speaker 17

(08:57) Right, exactly.

Ross Reynolds

(08:59) Interesting. Hey, Fred, thanks for your phone call. You bet. So watch out for that guy down at the Pike Place Market.

(09:04) The appearance of affluence may reassure someone that you're not pulling something over on them.

Doug Shadel

(09:09) Well, actually, that's a fascinating example, because it's more about ... It could be that, but it also is playing a role that you accept. In this case, an authority role. I'm in charge of this parking lot, and I've got the wad of cash, just like the other people.

(09:23) And there was an experiment they did in New York City 20 years ago, where a guy dressed up like a police officer and stood in front of a parking meter, and everybody who walked by said, hey, buddy, put a dime in the parking meter. Eighty percent of the people put a dime in the parking meter. Why? Because he was dressed up like a police officer.

(09:39) And we are trained, it is a cultural norm, to accept and obey authority. That same guy went back out dressed up like a regular guy and went to the same parking meter, and everybody who walked by did the same thing, and only 20 percent complied. This is called, you know, the norm of authority, that we have this rule in our head. If somebody's official-looking, I'm going to respond to them.

Ross Reynolds

(09:58) Yeah. Let's go to Russell. Russell's listening to us today in the Seward Park neighborhood. If you just tuned in, we're asking you to tell us about that time that you got scammed and what you learned from it.

(10:08) But Russell, you avoided a scam?

Speaker 10

(10:11) Narrowly. Very narrowly. What happened? I was a graduate student in Charleston, South Carolina.

(10:17) and uh... as a graduate student of limited means i guess that inflated me in some ways for making uh... a mistake on a huge scale uh... because of my uh...

(10:27) available at that i was called by a charity and in this case it was a fireman's charity and coincidentally my wife who was nine months pregnant at the time uh... basically had her life saved by some firemen who came to our house after a nine one one call so i was uniquely vulnerable to a request or a solicitation from a fireman's charity. But in speaking with them, I had just learned earlier about the concept of asking how much of a donation actually goes towards the charity in question. And so when these folks called, I sort of asked some probing questions about how much of the donation would go to the charity, and whether they would be willing to send me some printed material, or whether they would allow me to kind of contemplate my donation and call

(11:13) back. And they were very resistant to any of those proposals, and were sort of doing the hard sell on making a cash donation immediately.

Ross Reynolds

(11:23) So those legitimate questions were rebuffed, and right away, red flags went up.

Speaker 10

(11:28) Exactly. And even still, I had a hard time resisting, because even though I couldn't make a $100,000 venture capital investment, I surely could cough up $50 for the fireman who saved my wife's life. And as it turned out, the very next day, there was a huge expose on the news about this particular charity. uh...

(11:47) that was blanketing the area and uh... my intuition proved to be correct and uh... but when it comes to a charity you know sometimes it's uh... It's a little bit more difficult to resist than the, this is too good to be true kind of proposal.

Ross Reynolds

(12:02) Absolutely. Russell, thanks very much for your phone call. I mean, sometimes we can be taken in because we're subject to greed, and other times we can be taken in because maybe we think we're doing a good thing. People can prey on all kinds of emotional vulnerabilities that we have.

(12:16) We're going to take a short break in a moment, but here's another kind of fraud and scam. An anonymous conversationalist wrote to us recently, we're in the process of unraveling five-plus years $25,000 plus of fraudulent bookkeeping in our smallish business. We hear from the bank, our lawyer, and friends to whom we tell this story. It's not at all uncommon.

(12:35) Also, these cases are often settled outside of court, and the bookkeeper can go on without an official record to further fraudulent bookkeeping with a new employer. More about frauds and scams after the break and more of our conversation with Doug Shadel, the AARP Washington State Director. They've been doing workshops around the state. This is KUOW 94.9 Seattle.

(12:56) I'm Ross Reynolds.

Scammer on phone

(13:00) It's 19 minutes past one. Tell us about the time that you were scammed and what you learned. Call 206-543-5869 or write us at conversation at KUOW.org.

Speaker 2

(13:13) I'm Lisa Mullins. Few Asians hold top positions in American business. A young Korean studying at Princeton thinks he knows why.

Speaker 21

(13:20) Tooting your own horn or, you know, standing and talking to people at a party, it's sort of not the traditional Asian thing.

Speaker 2

(13:27) He made a film about the clash of Asian values and American corporate culture. Our story next time on The World.

Scammer on phone

(13:35) The World starts at three today.

Speaker 20

(13:39) Interested in donating your vehicle to an organization you believe in? It's easy to make a contribution that supports KUOW. For more information, call 877-KUOW-CARS or visit KUOW.org.

Scammer on phone

(13:54) It's 82 degrees and rising. It's 20 minutes past 1 at KUOW.

Ross Reynolds

(14:00) I'm Ross Reynolds, and it's Wednesday, May 30, 2007. This is KUOW 94.9 Seattle. The conversation is scams.

Smammer

(14:09) If you don't want to make up your mind right now, that's where I come in. I will make up your mind for you.

Ross Reynolds

(14:16) Another example of a scam. These were tape recordings collected by AARP. They studied the types of scams that were used, the techniques that were used, and they're doing an all-out effort to try to advise people about how to stay away from them. That's what we're trying to do today also.

(14:31) We're at 206-543-5869. Have you ever been scammed? Have you ever perpetrated a scam? In a few minutes, we're going to hear from someone who called us last time we talked about this and described in detail how he perpetrated a scam.

(14:46) Maybe it was a staged auto accident. Maybe it was a street scam like Fred from New York told us about, the guy who asked for $10 so he could park his car. Maybe it was a fake scholarship or a bogus timeshare or fraud which took place within your business or your organization or the classic pyramid scheme. Doug Shadel is the AARP Washington State Director And he has written a book about persuasion called Weapons of Fraud.

(15:12) You have broken out broad categories of fraud, and some of them fascinated me. One of them was called social proof. Give me an example of how that scam works.

Doug Shadel

(15:22) Social proof. Well, a lot of these have application just in the general world of marketing. So social proof is this rule we have in our head that if everybody is doing something, then it must be good. Um, so one manifestation in the legitimate business world is the sign on McDonald's that says billions and billions of hamburgers sold.

(15:38) Well, if billions and billions of people have bought hamburgers, it must be good, right? Um, the fraudulent manifestation of that is just people, you know, the con artist will call you up and say, oh, the phone is ringing off the hook. I don't have too many of these units left. Everybody in the world wants this.

(15:54) And that creates this urgency in your mind. It tells your gut to panic. And you almost don't even remember what it is after a while, because it's just like, well, if everybody is doing it. And you know, every year there's a toy, the Cabbage Patch doll or whatever it is, and I'm not saying this is intentionally done, but where they run out because there's so much incredible demand for it.

(16:15) So it's really just showing incredible demand for something. And what it does, all of these tactics put what con artists call the ether over the victim. And this is what they call it. It's not a technical term.

(16:25) It's just a clouded thinking, all of these persuasion tactics. So everybody's doing this. I've got to have it. I've got to have it.

(16:32) And you're not thinking clearly. But the real question is, do I want it or need it? You know?

Ross Reynolds

(16:36) Right. A little bit later in the program, we're going to hear about an issue that's come up in Washington state. It has to do with whether the home inspectors should be licensed And we're going to hear from a home inspector on that. But one of the things to watch out for is unlicensed individuals, people who are out there purporting to have some qualifications that they don't really have.

(16:57) That sounds like a tough one, Doug, because sometimes it's hard to evaluate the credentials of someone not knowing how someone is credentialed.

Doug Shadel

(17:04) Yeah, that's a really good point. We've been dealing with this issue in the domain of investments because the securities regulators will tell you they've never worked on a fraud case where both the broker involved and the product being sold were registered with a government agency, where both of those are true. And in our survey that we just did, when we asked people, did you check out the broker before you hired him? Only 33% of the state of Washington said they ever did that, that they ever asked any questions.

(17:31) And we asked, why didn't you? Almost half of them said, it's because I trust my broker. So you've got to trust someone.

Ross Reynolds

(17:39) Right, right. And sometimes it's you don't know what question to ask. It says broker on your card, so what do I ask you?

Doug Shadel

(17:46) Well, a lot of the times, what we saw with this, and you were mentioning affinity fraud, it almost gets to the point where these brokers have such a close relationship with their client base. A victim that came to our last event, Dick Mansfield, who talked about having a 20-year relationship with his broker. But then the broker got into financial trouble and started selling this, what ended up being an out-and-out fraud, claiming that you could get 4% a month interest and all this other stuff, right? So even if the broker is registered, if the product is not registered, that can be a problem, too.

Ross Reynolds

(18:19) We talked about this a couple years ago in the conversation, and a caller who identified himself as James called in, he told us he'd scammed and defrauded people. I asked him how he did it.

Scammer James

(18:31) Well, for the most part, I've gathered information on people from different resources on the internet. I have used even peer-to-peer applications to get into people's computers. under the pretense, of course, of downloading music or videos or anything like that. And a lot of times, people just aren't very aware of how they're opening themselves up for their information to be exploited.

(19:02) And I have exploited that information in many, many varied ways.

Ross Reynolds

(19:07) What kind of ways have you used that information?

Scammer James

(19:09) I've gotten into people's bank accounts. I've gotten identification in their names. I'll open up accounts, you know, pretty much the whole plethora of new 21st century scams or cons, whichever is the going term right now.

Ross Reynolds

(19:28) So you rip people off?

Scammer James

(19:30) For the most part, yeah, I'd be the first to admit that.

Ross Reynolds

(19:33) And why do you do it?

Scammer James

(19:35) It used to be a challenge, a motivation, but for me now, it's probably I've done it for so long that I honestly think I'm having a very hard time going straight, although I maintain a job I've always made. It was always sort of my hobby, I guess you could say.

Ross Reynolds

(20:00) Is James your real name, by the way?

Scammer James

(20:02) No, it's really the name that I'm using right now, to be honest.

Ross Reynolds

(20:07) How can we protect ourselves from you?

Scammer James

(20:09) To be honest, people should be very cognizant of what sort of information especially for a person like me, that they allow the world to see. I mean, peer-to-peer applications, things like public information that is freely available. Even some of the customer service reps I've encountered were not trained properly. I mean, I've gotten hotel rooms for free.

(20:38) I mean, a lot of times it's the personnel training and maybe in our society, I guess, There has to be some sort of level of freedom, but I think maybe with that trade-off, you open yourself up more. So unless you close yourself up and turn your computer off and never go outside, it's really hard these days to protect yourself against an individual like me.

Ross Reynolds

(21:02) the man who called himself James, who called in the last time we did a scam show and purported to be a scammer. Doug Shadel's with us. He's the AARP Washington State Director. Putting for a side, for a moment, the fact that the man who called himself James may have been scamming us by saying he was a scammer.

(21:19) Let's assume he really was. Doug, do you have any comment on that?

Doug Shadel

(21:21) I was thinking the same thing. How do we know he was really a scammer?

Ross Reynolds

(21:24) Exactly.

Doug Shadel

(21:24) But what he said, there are kernels of truth to what he said, as with all good scam artists, which kind of persuades me he was. But, you know, the whole business of getting personal information. This is something people don't realize, that we used to say, you know, just don't give out your credit card number. But I've interviewed dozens of former con men, and especially like the investment ones, will say, the first two or three conversations I have, I'm not selling anything.

(21:50) I'm a receiver of information. I'm asking questions. I'm asking them about their lives and about their grandchildren, where they worked, and I'm doing that so that I can... It's like casing the joint.

(22:00) It's like a robber goes into a camera store, looks where all the guards are at the cameras. Well, this is the equivalent of it for a con man, is to find out what their emotional Achilles heel is at their hot buttons. Then they pull off their... It's called profiling, right?

(22:13) Then they pull off their shell from this arsenal of persuasion tactics, just the right one that will fit.

Ross Reynolds

(22:18) When you've interviewed these dozens of con men, I'm sure there are as many different kinds of con men as there are a wide variety of motives, but is there anything common among the ones that you talk to, Doug?

Doug Shadel

(22:30) Well, one of the main things I think they have in common, believe it or not, is the ability to get inside the head of the other. And I'm not saying empathy, because I don't think they have empathy. If you had empathy, you wouldn't do what you're doing. It's like they have this sort of non-emotional ability to get inside the head of a person, like someone with empathy would, but without the empathy.

(22:53) That's what makes them particularly dangerous.

Ross Reynolds

(22:56) Let's go downtown to Mike. We're at 206-543-5869. This is The Conversation, and the topic today is scams and frauds, and have you been a victim of one, and what have you learned from going through that experience? Or maybe a friend or a family member has been victimized.

(23:13) Doug, Mike, thanks for joining us. What do you got to say?

Speaker 14

(23:16) Well, guys, listen, I wish you would have been with me in Florida last week, as I try to keep a friend from making a really big mistake. uh... in doug what i especially appreciate is your description of the the psychological aspect of how these scams work up bottom line here's what's up um... there are supposedly these super secret financial trade then only a few people in europe know how to do it if you put up a hundred thousand dollars you're going to get a hundred thousand dollars in interest back in three months and you know it's just it's clearly so

(23:46) so bogus, but I have a friend who's about ready to bite in on this, and are there resources that you could recommend that I could put in his face that would, you know, open his eyes to, you know, he's going to lose his $100,000? Doug?

Doug Shadel

(24:01) Yes. I would go to this There's a bird opening to tell us you can get the copy of weapons of fraud for free We offer this as a free service. You can go to our website AARP org Slash wa and and you can order one and just get a copy of this book It's got audio files of con men giving the same pitches. He's probably just heard and And the interesting thing you said about it, this whole question that there's a secret way to make money, one of the questions in our recent survey is, because we had heard that too, why would somebody get 5% a year return on an investment

(24:33) and then somebody convince them they can get 5% a month and they believe it? There are some people who just believe, they have this worldview that there's an easy way to make money and a hard way, and a select few do it the easy way, and we don't. We're on the outside doing it the hard way. We surveyed people and asked them that question.

(24:49) Do you believe in this statement that there's an easy way to make money and a hard way, and only a select few can do it the easy way? Because that's the pitch, right? And way more of the victims held that worldview than the non-victims. Something like 70% of our victim population in the survey held that worldview versus less than half for the other.

(25:08) So if that's your worldview and somebody comes along and says, I know it doesn't make any sense. Why could I possibly get 50% a year return? That's because we're like a bank, right? And we're going to give you, you're going to tap into this European banking system somehow.

(25:21) And the other thing is you listen to that and you say, how could someone be so stupid or naive? Well, that's because we're not inside the situation. They are being subjected to these persuasion tactics. The ether comes down.

(25:33) We're standing on the outside, and if you're on the outside looking in, you think they're crazy. But if you were in that situation, having all of those persuasion tactics being directed towards you, that's why they do it.

Ross Reynolds

(25:46) Doug, give Mike one piece of advice, one thing he should say to his friend in Florida who he fears is about to lose his money.

Doug Shadel

(25:53) Why are they calling you with the opportunity? If you can make that much money, why aren't they just going and getting it themselves?

Ross Reynolds

(25:58) That's a good one. Does that help, Mike?

Speaker 14

(26:01) game, you know, they're not promising 50%, they're promising 100% return, which is just ludicrous. Yet people buy into this stuff. Is this a real common scam going on all over the country right now?

Doug Shadel

(26:12) Absolutely it is. And, you know, someone was telling me this the other day, and I thought this was a good way to look at it. Returns on investments, the reason that you get a certain return, you know, the stock market, the average return has been 11% for the last 80 years. That's another thing you could tell them, by the way.

(26:29) So anything that's over that standard return, and one of the things that's hardest to deal with are these stories about computer technology people who start a company in their garage, and then they sell the company for $1.5 billion two years later, and it really happens, right? Every con man in town starts pointing to that example and saying, we're the next Google, we're the next Microsoft, we're the next whatever. And so it is sort of like these heuristics. You want a shortcut to wealth, Some people do get wealthy overnight, but it's the vast minority.

Ross Reynolds

(27:01) And sometimes it's in a black box. Mike, thanks for your phone call. You know, there are these things called hedge funds, and hedge funds are very secretive about where they put their investments, and sometimes they're out there touting huge rates of return on investments. They appear to be legitimate, although they do occasionally crash and burn.

(27:20) I would think something like that, that is real, would be great for people who want to pull off scams. They can sort of intimate that they're like that.

Doug Shadel

(27:28) Absolutely right. If you chase rate, you chase risk, right? I mean, the higher the interest rate, the higher the return, the more ridiculous it is, the riskier it is, period, no matter what anyone says.

Ross Reynolds

(27:39) We got this from David who writes, I used to be an investigator with the Employee Benefit Security Administration at the U.S. Department of Labor. Before I worked there, I had no idea how common 401k fraud is. Employers are required to send money they withhold from employee paychecks within a certain time frame. However, many times an employer will not send the employee's money on time or even at all.

(28:02) since many, many people don't follow their 401k accounts. An employer can use this money as a no-interest loan or to increase their profits. David writes, if someone suspects this has taken place, they should contact their local Employee Benefit Security Administration office. And there's a number here, 206-553-4246.

(28:22) I hadn't heard of that one before.

Doug Shadel

(28:23) I hadn't either. That's a good tip.

Ross Reynolds

(28:24) That's 206-553-4246. That money flowing through, you might not notice, is sitting in someone else's account when it should be in yours. Mary's listening to us today on Mercer Island. Mary, thanks for taking the time to call the conversation.

(28:38) Were you subject to a scam?

Mary from Mercer Island

(28:40) Yeah, I was. I had a small business with three employees and a friend who was creating a product. I had a retail business ask me if I'd be willing to go into partnership and sell, via phone orders, catalog sales. this line of jewelry that he was making.

(28:57) So we set up our little business separate from mine. And I had to get credit card processing from a bank. And my bank and none of the local banks would give it to me because this was a brand new business. And they all said, well, after a year in business, we'll offer you reasonably priced credit card processing.

(29:15) So I called everywhere I could think of. And I couldn't find anyone that would take a brand new business like that that was phone sales, that was catalog sales only. So then I was approached by someone that I assumed I had called, but it turns out I hadn't, a company called LeaseCom. And the salesman said, well, we can offer you a three-year contract at this rate and 6% of the growth processed.

Ross Reynolds

(29:39) So it looked good, but what happened?

Mary from Mercer Island

(29:41) Well, he said, well, I said, no, I can only take a one-year contract because I don't know if this is going to go. So he said, well, I have to go to my supervisor. He came back with a contract. about three days later and said, well, my supervisor said we can take a chance and give you the one-year contract.

(29:57) So I signed the contract. It was a very simple document and he was handwriting in. So we wrote it in for one year for 12 months and $37 a month plus 6% of the gross processed. And after I signed it, he took it back and changed the one in the 12 months to a 42-month contract.

Ross Reynolds

(30:17) Really?

Mary from Mercer Island

(30:18) And the $37 a month became $237.

Ross Reynolds

(30:22) Now, did you complain to the supervisors or the people around the place?

Mary from Mercer Island

(30:26) I did, and actually a friend who runs a big company told me, call the president of the company.

Ross Reynolds

(30:31) And did you get out of it?

Mary from Mercer Island

(30:32) I eventually did, but they were operating in 15 different states under 15 different names.

Ross Reynolds

(30:38) So you think that kind of corruption might have gone right to the top?

Mary from Mercer Island

(30:41) It went straight to the top, because the fine print that I didn't notice was that any disputes had to be prosecuted in the state of Massachusetts.

Ross Reynolds

(30:52) Some for ourselves. Mary, thanks very much for that example. And Doug, that small print about where disputes need to be determined is important, isn't it?

Doug Shadel

(31:00) Yeah, it is. I mean, it's easier to say than to do. But, you know, reading privacy agreements, reading agreements before clicking on computers. We did a campaign last year with Microsoft where we were I'm preaching this too, about reading the privacy statement.

(31:16) Everything you do on the computer is tracked. I realize that's not what the lady was just talking about, but it just brings to mind this whole question of It is worth the time to read the fine print, and also to have a lawyer check out things if you're entering into some kind of new business arrangement. And obviously the red flag there was the guy handwriting out the contract.

Ross Reynolds

(31:34) Absolutely. Hey, Doug, thank you so much for taking the time to talk to us today. We really appreciate it. My pleasure.

(31:39) Doug Shadel is the AARP Washington State Director. He's written a book called Weapons of Fraud, and he was just telling us that you can pick that up by going to the AARP website. Tell us again the URL for that, Doug. I think he went away, but we'll find out that for you.

(31:53) This is the Conversation on KUOW. When we return, more of your stories of frauds that you have experienced, scams that you have gone through, and maybe if you are someone who does that, you could tell us how you do it. 206-543-5869, 1-800-289-5869. Or write to us.

(32:13) Our email address is conversation at KUOW.org. I'm Ross Reynolds.

Scammer on phone

(32:29) 22 minutes to two at KUOW. There's more conversation ahead. Tell us about your worst or favorite scam at 206-543-5869 or conversation at KUOW.org.

Speaker 7

(32:43) Next time on The Beat, Seattle Symphony conductor Gerard Schwartz shares his personal connections to music from Romania, Poland, Hungary, and the Czech Republic featured in the Symphony's Central Europe Music Festival. We also learn how music is breaking the bonds of digital rights management. The Beat, weekdays at 2 on KUOW.

Scammer on phone

(33:02) And then at 3 o'clock, why so few Asians hold top positions in American business. That's On the World, ahead on KUOW.

Speaker 2

(33:11) I'm Lisa Mullins. Around the world, by every measure, America's reputation and image has never been so poor.

Speaker 25

(33:17) Americans are now seen as greedy, rude, not necessarily truthful.

Speaker 23

(33:22) I find it hurtful that a majority of the world despise the United States.

Speaker 2

(33:27) From Turkey to Venezuela, we examine the vehemence of anti-American sentiment. Next, I'm on the changing world from the BBC and PRI.

Scammer on phone

(33:36) You'll hear that tonight at 10 o'clock on KUOW.

Speaker 3

(33:39) Support for KUOW comes from SAS. Scandinavian Airlines Economy Extra offers a separate cabin, additional legroom, and other extras on flights to Europe. More details online at flysas.com slash US. Scandinavian Airlines, what makes you fly?

Ross Reynolds

(34:00) KUOW 94.9 Seattle. I'm Ross Reynolds. It's Wednesday, May 30th, 2007. The conversation is scams.

Scammer on phone

(34:09) What company is it? Don't worry about all that. I'll give you that information later because it's obviously getting too confusing now.

Ross Reynolds

(34:16) That was one of the more intense recordings AARP released. That guy goes on to harangue this older woman mercilessly, and just some of the ways, some of the psychological weapons that scammers will use. We got this email to conversation at kuow.org, and I'd like to hear your stories at 206-543-5869. Here's how this story goes.

(34:41) One day, I was driving in my neighborhood Wallingford. Three guys pulled up behind me in a pickup. They offered to fix the dents in my car, cheap. I pulled over and they gave me a verbal estimate for $700, which later became $900.

(34:53) Long story short, they used my tools in my driveway, basically just smeared some Bondo into the dents and gave it a rough sanding. Nothing was fixed, of course. The Bondo came off a week or two later when I hit a bump in the road. What suckered me in was how pushy and persuasive the main guy was.

(35:10) He even followed me to the bank to get cash to pay him on the spot. While they were working on my car, they also sold two more jobs to my neighbors, who have never treated me the same since. Sometimes we think we know better, and that's when we have to watch out. Let's go to Eric listening to us today in the Central District.

(35:28) And Eric, you want to tell us about something called curb stoning?

Eric in Central District

(35:31) Yeah. Hi, Ross. I just want to thank you for doing the show, because I think this scam called curb stoning is actually quite common in Washington. I think it's important that people know to look for it if they're looking to buy a used car.

Ross Reynolds

(35:42) What is it?

Eric in Central District

(35:43) Well, basically what it is and what happened to me is these car sellers will post a car on Craigslist or another source, which is where I found it on Craigslist. And then you go look at the car, but it's not at their house. I guess that's one key indication that there might be a curb stoner. And basically what they've done is they've taken an old car and they've bought it and they fixed it up in a few key places where you look for the brakes or clean the engine.

(36:07) Basically, when you pop the hood and look to see if it looks all right, they fix those things up. Then they commonly roll a lot of miles off the odometer. In my case, the guy had rolled 80,000 miles off the digital odometer.

Ross Reynolds

(36:21) How did you find that out?

Eric in Central District

(36:24) Well, I guess in my rush to buy a car, because oftentimes you need a car quickly and there's a lot of competition for good used cars out there. I actually hadn't run the report on it, but when I got back to my house, I realized that some of the stories he was telling didn't add up, and I ran the car through Carfax, and it showed that in fact it had had $80,000 rolled off of it.

Ross Reynolds

(36:47) Was that in time, or had you already bought it by then, Eric?

Eric in Central District

(36:50) No, it was too late. I'd already bought it, but I did follow up with the police, who then directed me to the Attorney General, and they will not prosecute. in cases where it's a person-to-person deal. If it's a dealership that's doing it, they will go after them.

Ross Reynolds

(37:05) We're going to have to ask Rob McKenna about that. The Attorney General's coming in on Thursday. We'll have to ask him what the deal is with that.

Eric in Central District

(37:12) I'd appreciate that, because apparently it's quite common, and there's a lot of lip service paid to it, that it is a common problem. But they will do absolutely nothing for you. I figure about $2,000.

Ross Reynolds

(37:22) Is the car drivable? I mean, can you still use it?

Eric in Central District

(37:25) You know, it's actually been great. I call it the mystery machine because I don't really know what the history of it is or where it's been, but it's been a terrific car, actually, so I can't complain about that part.

Ross Reynolds

(37:34) Eric, thanks for your call.

Eric in Central District

(37:35) Thanks, Ross.

Ross Reynolds

(37:36) Curbstoning. Never heard of that before, but someone who wants to sell you their car, but they can't show it at their house. A few things to watch out for. Beth is listening to us today in the Magnolia neighborhood.

(37:47) Beth, what scam did you fall prey to?

Beth in Magnolia

(37:50) Well, I was in the market for a coffee table. I was moving into a new home and was not finding what I was looking for and ended up at this small little store in Seattle. I ended up talking to a very sympathetic salesperson who, when I told him I was just not finding the kind of coffee table I wanted, he even produced a picture from a magazine. Now they said, well, I can make you a coffee table like that.

(38:17) I've got all these, you know, contacts and suppliers and things. And I've got a metal guy. I've got a glass guy. And anyway, long story short, I gave him a sizable deposit and never saw my money, never saw the table.

(38:31) He ended up just kind of disappearing. And when I called the store, they had actually told me that it had happened to several of their customers, but they wouldn't give me any more details. And I was just kind of left on my own.

Ross Reynolds

(38:45) That's weird. Like, the store didn't know anything about this? They sort of disavowed any responsibility?

Beth in Magnolia

(38:49) I think they figured it out and fired him. I think they were just afraid that there were other customers that this maybe had happened to were going to go after the store.

Ross Reynolds

(39:01) Well, I think you should.

Beth in Magnolia

(39:03) Well, there was nothing written. I mean, I wrote this employee attack. Because he had to give it to the suppliers who were fashioning this coffee table for me. So I really stupidly entered into the whole thing and didn't have a paper thing with the store's name on it.

Ross Reynolds

(39:22) I gotta say, having this guy working at the store probably conveyed some credibility about him.

Beth in Magnolia

(39:28) Yeah, I just... that's exactly what I thought.

Ross Reynolds

(39:31) And I would think the store would kind of stand up for that, even though they might have been scammed by him, too. I'm a little surprised that they didn't offer you some help on that.

Beth in Magnolia

(39:38) Yeah, I'm very surprised. In fact, I've seen them, and I think they're thriving, and they're opening another location, so it really... that gets me even more.

Ross Reynolds

(39:46) I don't blame you. Beth, thanks for your phone call. Let's go to Snoqualmie, where we've got Guy on the line. Guy, good afternoon.

Guy from Snoqualmie

(39:53) Hi, how are you doing?

Ross Reynolds

(39:53) You fell for the toner scam?

Guy from Snoqualmie

(39:56) Yeah. Yeah. It's really common. I had become sort of the acting office manager and my job in New York and people called up and said, you're due for your order and to get you at the rate that you always got it out.

(40:07) We got to have that in within a certain amount of time. And turns out it was like 10 times what this stuff is supposed to cost. I had never ordered it before. And we ordered it and I just would get checks approved, like in batches from my boss.

(40:19) And he signed off on it and turns out way, way inflated. The weird part is they actually sent the stuff. So it wasn't like a complete scam in that way, but apparently it's a really common thing. I'm sure it has a name.

Ross Reynolds

(40:30) We got another email about that very same thing, Guy. I think it's pretty common, the toner scam, where you'll get called up and pressured into buying something, told that the price is going to go up, and if you don't know what prices are, it's hard for you to make an evaluation. So were there any repercussions for you at your job?

Guy from Snoqualmie

(40:46) No, not really. I mean, it was just a little embarrassing. My boss was fine with it. I just wanted to say one other thing, too.

(40:53) Sure. You know, I live on the 90th corridor, and you get, you know, coming from New York, you get people approaching you all the time, and they get it out here, like in North Bend. People come up to you, and they have these really long-winded, elaborate stories like this. This one's stuck in Spokane, and I had to come over here.

(41:06) I ran out of gas, and I have found a really useful tool. It sounds a little cold, but just saying, can you cut to the chase? Are you asking me for money? And just asking it really clearly, like, oh, no, no, no, no.

(41:15) And then, are you asking me for money? And they say, yes. And it's sad, because, you know, that's preying on your good nature. I do want to help somebody who's actually in distress, but, you know, after a while, you get a gut feeling about what the scam is.

Ross Reynolds

(41:28) Boy, I pity the person who actually is stranded somewhere, had an arrest stop in Snoqualmie, who lost their wallet, because no one, everybody's really skeptical of that one.

Guy from Snoqualmie

(41:38) Look, I have jump-started people. I have found people's wallets. I've found dogs that were microchipped, and I love doing all that. It's almost like they have an instinct to go up to people.

(41:48) want to be good Samaritans or something. But I have found that to be, to cut through that, as you guys are calling it, the ether, to just say, are you asking me for money?

Ross Reynolds

(41:55) Thanks for your call, and thanks for your advice. Cut to the chase with them. David is listening to us today in Bellevue, and he wanted to tell us about the search engine optimization scam. David, what's that?

David Bellevue

(42:08) Well, it's where I got a cold call on the telephone from someone who saw that I had recently opened a new website, which was important to my business, and they call up and they say, hey, if you pay us $4,000, we can guarantee that people searching for certain terms will see your site at the top of their Google rankings. And they say, we guarantee you results. You just have to make $1,000 down payment, and then you pay us more money after you get the results.

Ross Reynolds

(42:42) And you sort of would love those results.

David Bellevue

(42:46) But I just did some research on it. Fortunately, I didn't fall for the scam, but I did some research on it, and I found that not only is it not really possible to guarantee that placement. It's something that Google and, of course, any self-respecting search engine is going to try to avoid. They'll do everything they can to prevent people from jimmying their results.

Ross Reynolds

(43:10) Did you find any legitimate search engine optimization companies that really could do that?

David Bellevue

(43:14) There are consultants who actually do that legitimately, but the way you do it legitimately is by having good content on your website, not by some magic backdoor scheme.

Ross Reynolds

(43:27) Thanks for your phone call, and to watch out for that. We've got a few minutes left at 206-543-5869, or you can write conversation at kuow.org. Scams are the conversation today. Ellen's listening to us today in the Wedgwood neighborhood, and this has to do with charities, right, Ellen?

Ellen in Wedgewood

(43:46) Right. And, strictly speaking, it's not illegal, but it sure feels like a scam to me. The first thing is that their names are similar to well-known charities. For instance, instead of the American Diabetes Association, the name will be something like the Diabetes Society of America.

Speaker 2

(44:02) Oh, clever.

Ellen in Wedgewood

(44:03) And they hire direct marketers, which also isn't illegal, but they spend so much money on that that very little is spent on research or education. The other thing, and I get this every once in a while, is they write to me and say, will you please canvas your neighborhood for us? So now I'm going to my neighbors, and that's scamming my neighbors.

Ross Reynolds

(44:22) Sure, and they trust Ellen.

Ellen in Wedgewood

(44:24) Exactly.

Ross Reynolds

(44:25) So you're kind of putting your good name up. And how did you first tumble to this?

Ellen in Wedgewood

(44:31) Actually, you know, I've been following a lot of these guys for years. I call them the cancer bums because there are so many cancer organizations. I hesitate to name them because I'm not sure which is the real one and which is not the real one, but a good thing to do is to check the Secretary of State website and see what percentage of funds actually go to research and education.

Ross Reynolds

(44:52) I'm glad you brought that up, because the Secretary of State's website is a real good resource when checking out charities. Thanks for that call, Ellen. Let's go to Jack, listening to us today in Kirkland. Jack, good afternoon.

Jack in Kirkland

(45:01) Hi, good afternoon.

Ross Reynolds

(45:02) Did you fall for a scam?

Jack in Kirkland

(45:04) Well, no. Actually, I'm calling because I've been accused of a scam, and falsely. And in essence, it's actually the attorneys who accuse people who do my sort of business.

Ross Reynolds

(45:23) What's your sort of business?

Jack in Kirkland

(45:24) Well, my company is a state rescue, and we stop foreclosures by buying houses. And in some rare situations, we can keep the homeowner in their house and basically rent it back to them and set a buyback amount so that they can purchase the property back and maintain some equity.

Ross Reynolds

(45:42) So you ease them through a financial crisis, if it works out?

Jack in Kirkland

(45:46) Well, they have no other alternative. They can't refinance because they're in foreclosure. Bankruptcy is not an option for them. They're either going to do this, or they lose their house in foreclosure.

Ross Reynolds

(45:57) Now, you say you're doing this legitimately. Are there people in your same business, Jack, who do it illegitimately?

Jack in Kirkland

(46:02) Absolutely. Yes, there are. And their intention is to defraud the people through the contract and not allow them the opportunity to buy the property back where they have no intention of selling the property back.

Ross Reynolds

(46:19) So, Jack, give us one piece of advice if there's someone listening who might be considering a company like yours. How can they tell the good guys from the bad guys? What are the questions to ask?

Jack in Kirkland

(46:29) Questions to ask would be, can my attorney look at the contract and see that we do have a legitimate uh... buyback option and is that it is that a legitimate option for us and um... and don't pay any money up front. That's another one.

Ross Reynolds

(46:46) Good advice. Good advice. Jack, thanks for that. Sometimes things can appear to be scams, and there's some questions and some ways to check it out.

(46:54) I hope this has been useful to you. That free book, Weapons of Fraud, is available through AARP Washington. If you go to their website and do a search, I'm sure you can find it. How common are scams?

(47:05) Nobody really knows. There's a powerful disincentive to admit that you have been scammed, of course. But a few years ago, a group called Professionals Against Confidence Crime estimated that of 500 cons, 200 are reported, fewer than 10 result in arrest, and only 2 in 500 cons end up with someone going to jail. It's the conversation.

(47:40) A home is often the biggest investment you'll make, and you'd like to know that the toilets are connected to the sewer line, so you look up home inspector in the phone book. But how do you know the home inspector is qualified? The Washington Department of Licensing is looking into licensing home inspectors. Larry Stamp likes the idea.

(47:55) He's a home inspector himself. He runs Cameo Home Inspection Service in Olympia. He's seen problems with unqualified home inspectors.