Filed under: Banks, Ripoffs and Scams

Counterfeit $100 bills are circling the globe, and their story is intriguing. These bills are so well done that that it’s next to impossible to tell that they’re fakes. They’ve been dubbed “supernotes” because of their precision.

Experts state these are the most sophisticated examples of counterfeit U.S. currency ever seen. They are made of the exact same cotton and linen mix from which legitimate U.S. currency is made. They even have the proper-colored microfibers and an embedded strip that glows under ultraviolet light… both key pieces of currency that are supposed to be difficult to counterfeit. The fake bills also have the proper microprint and optically variable ink (OVI) that distinguishes authentic U.S currency.

Authorities say the bills haven’t been printed in big quantities. Only $50 million of supernotes have been found since 1989, which is estimated to be too tiny to even cover the cost of the sophisticated printing process required.

Some experts say the organization doing this almost certainly has access to some of the government’s printing equipment. Some are even suggesting that the government itself is printing these fake notes for intelligence purposes. Others think that it might be foreign governments doing it to undermine the value of the dollar and the strength of our economy.

The counterfeiters have had an uncommon capability to keep up with changes in the currency. Since 1989, there have been 19 changes to real U.S. currency, and the counterfeiters have mastered them all. However, there are some small differences in the fake notes, and experts wonder why such good counterfeiters would print money with obvious errors.

The counterfeiting remains a mystery, as experts state that the cost of producing these bills definitely exceeds the amount put into circulation. So what would be the purpose of the counterfeiting? Whatever the case, our government isn’t commenting on the issue.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Bargains, Budgets, Extracurriculars, Ripoffs and Scams, Saving, Shopping

Pssst, Hey buddy, have I got a deal for you.

Each once in a great while you might get an approach similar to that at your friendly neighborhood resale shop. That can be especially true if it’s a shop you’re not very familiar with. When a thrift store employee or operator brings out something from under the counter which they’ve “saved for special customers,”… watch out! The chances are good that you’ll be looking at an item from a questionable source.

Take for instance that mint condition collection of Buffalo Head nickels, or a complete set of sterling silver flatware in its own velvet lined case. The sales person may tell you that it came from an estate sale they were at that same morning. Take care about your buy or you could become guilty of receiving stolen property. It’s a dead giveaway when the store clerk suggests that you go outside to look at items they’ve in their automobile. Yeah, it’s not on the shelves and it’s not on the books. Ask them if you really look that much like an idiot.

Coin collections, stamp collections, antique currency, precious metals, and gemstones seldom make it to the front counter of thrift stores, and if they do, you should generally anticipate to pay full market value for those items. Brand new tools are a rarity at thrift stores as are brand new musical instruments. I’m not saying that you’ll never find these things, but if you do, be sure to carefully question the item’s source and ask for any documentation or certificates which may be available for the piece. An honest thrift operator will never be threatened or offended by these inquiries.

Be careful about buying full case lots and be wary of large multiples of identical items. These are the earmarks of warehouse ripoffs and semi-trailer skimming. A thrift store shouldn’t have a pallet load of infant formula sitting just inside its loading dock.

Your best defense against purchasing stolen property is to stand by the old adage, “If it sounds too good to be true, it probably is.” You’re smart to be thrift shopping in the first place, so let your good sense be your guide.

Share This

Share This

Filed under: Ask WalletPop, Entrepreneurship, Ripoffs and Scams

In order for multi-level marketing companies not to qualify as pyramid schemes, you’ve to believe that people participate to acquire products. Skeptics, including myself and WalletPop’s Tracy Coenen, believe that in many cases, the products simply serve as cover for a scheme that’s not different from a chain letter in any meaningful way.

The strength of multi-level marketing recruiting efforts in times of economic weakness and uncertainty seem to reinforce my belief that these “business opportunities” are tiny, and often nothing, more than endless chain recruitment schemes.

In 2002, Entrepreneur columnist Michael L. Sheffield responded to a reader who was worried that her network marketing business would suffer in step with the general economic malaise that was gripping the country at the time:

… If you’re serious about your network marketing business, then, believe it or not, a recession could be the best thing that’s happened to you in a while. Shaky economic times have historically produced a renewed awareness of the need to make more money. You’ll find people who were previously uninterested in your business are suddenly looking for new financial opportunities. They want a business that doesn’t require a lot of capital, grants them to establish their own hours and offers rewards that can grow faster than capital or labor stipulations.

That’s certainly logical. But the products that most network marketing companies sell — expensive vitamins, cosmetics that cost far more than drugstore products, and $42 a bottle Tahitian Noni Juice — would seem to be extremely vulnerable to an economic slowdown.

Mr. Sheffield doesn’t even mention this, and it’s easy to comprehend why: Network marketing success is not about selling products on their merits; it’s about getting desperate people to buy products they can’t afford in the hope of recruiting others to do the same so they can earn commissions. That’s why it follows a totally different economic cycle than conventional product sales.

Mathematically, only a tiny percentage of people can succeed in a business that isn’t based on selling something to people outside of the system. In biology, shut systems are generally not sustainable for a long period of time — When evaluating a possible business opportunity, you should avoid shut systems like the plague.

Share This

Share This

Filed under: Kids and Money, Ripoffs and Scams

It’s Girl Scout Cookie time again. And the tiny girls in green are already making headlines. Hopefully, however, the headlines won’t be as hideous as this one.

A ten-year-old Girl Scout snuck out to sell her cookies without an adult chaperone, per Girl Scout of America rules, and was the victim of highway robbery. Well, bike-way robbery. A 12-year-old girl in her neighborhood stopped to order cookies from the younger girl, and filled out her order form before snatching the Scout’s bag of money and fleeing on bicycle.

The cookie-nabber, however, was the victim of her own inexperience. She’d filled out the cookie order form with her name and address before swiping the cash, and police arrived at her apartment swiftly. The accused denied the action. I wonder what she’ll think when she doesn’t get her cookies. A police investigation continues.

Her mom, meanwhile, is not commenting. No doubt she’s mortified with the international press attention her daughter’s alleged actions bringing down on her.

In the meantime, it bears repeating that Girl Scouts between the ages of 6 and 11 aren’t granted to sell cookies without an adult. Troops can be whipped into a frenzy in a contest of who can sell the most boxes of cookies, but there are checks and balances in place.

Now who’s gonna sell me some Thin Mints?

Share This

Share This

Filed under: Ripoffs and Scams, Fraud

China doesn’t grant Multi-Level Marketing (MLM) schemes or pyramid schemes, period. The government allows single level direct sales if a company has a proper license. But no recruiting is granted and no multi-level structure is allowed.

While we often think of China as being behind the times compared to the United Says, those of us who study the ill effects of MLM wish that our government took such a hard line against this abusive business structure. Despite the laws against MLMs in China, there are people and organizations who do businesses there anyway. Companies have discovered that it is impossible to make money with the single level selling that the government allows, but that the MLM structure thrives with over a billion people available to be recruited. Usana Health Sciences and Herbalife are just two MLMs that have been found doing business illegally in China by undercover investigators.

And now a promoter of an Ant Farm pyramid has left thousands of Chinese consumers penniless. Liaoning province is fast becoming the hub for illegal pyramid schemes and illegal MLM activities in China. It was there that the Yilishen Tianxi Group offered an “opportunity” to purchase a box of ants for the equivalent of U.S.$1,375.

Purchasers were to feed and water the ants until they died, which is about 90 days after they’re born. A Yilishen representative was then supposed to pick up the dead ant and take them to a factory that would use them to produce products that the Chinese believe cure many ailments. “Investors” were offered an annual rate of return upwards of 32% on their investment, and many bit. They believe strongly in the healing power of dead ants, and therefore were convinced this was a legitimate opportunity.

Thousands of people lost all their money, and the organizer of the scheme is in jail. But the scheme lasted for eight years and affected many people. An identical scheme which ran from 2002 to 2004 in the same area collected an estimated U.S. $390 million from people.

China is making some attempts to crack down, but the rampant cheating among business promoters is proving to be a big problem. Last year, 600 fraudulent schemes in 14 provinces and cities were busted. And that represents only a fraction of the business opportunity schemes.

These schemes are growing — in part due to the big population in China, and in part due to the corruption of government officials. The future of pyramid schemes in MLMs in China is uncertain in the long-term, but the schemes are apt to grow in the short-term.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Cards, Ripoffs and Scams, Fraud

Nancy Trejos, a personal finance columnist for the Washington Post had her identity stolen and her debit card and bank account compromised. She was lucky. Her bank called her while someone was trying to purchase over $800 of merchandise with her debit card number.

The writer found herself in an uncommon position. She had given up her credit card in favor of a debit card, hoping to become debt-free by avoiding credit cards. Trejos used her debit card a lot, and each time she used it, she was putting her bank account at risk. Each time we use our credit card, we’re putting our accounts at risk as well. It’s just the nature of the beast. Use a card, and the number is exposed to someone.

Trejos quickly found out that the thief had more than just her debit card number. She also had lots of personal information and the security code from the back of the debit card. How did that happen?

While she pondered her situation, she set herself up with a “fraud alert” at one of the credit bureaus, filed a complaint with the FTC, and reported the situation to the police. It would now be harder for Trejos to get credit, as each credit issuer would have to verify her identity before approving a new account, but it’s a hassle worth dealing with if your identity has been compromised.
Trejos didn’t find out how or where her information got in the hands of criminals. But surprisingly, the police have been investigating and may be close to charging someone with a crime in the case. That’s uncommon because often, the police don’t even want to bother with these types of cases. Trejos still doesn’t know where she went wrong, but she had her debit card canceled immediately, and a new one was issued.

Debit cards are a great idea when trying to live within your means, but not so great when identity theft is involved. While credit cards generally protect you against all fraudulent buys, debit cards do not necessarily do the same. And even with the cards that do protect you, your wait to have the money put back into your bank account could be burdensome. If you’re committed to using a debit card, do so infrequently, and have it linked to a bank account with only a small amount of money in it, to limit your losses if your number is stolen.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Ripoffs and Scams, Fraud

Matthew Mitchell, a fan who has been going to New York Yankees games since 1984, is suing the team over the steroids scandal that pointed the finger at 20 current and former Yankees. He says the Yankees committed “consumer fraud,” and he wants a refund of $221 for tickets he bought and a public statement from the team.

Is he kidding? He’s asking for $221??? This screams publicity stunt to me, and I’m nearly ashamed to be giving him the attention he desires.

He states he’s suing the team because he didn’t get what he paid for - steroid usage changed the game and he says that’s not what he bargained for. So far, the Yankees are ignoring him, as they should.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Ripoffs and Scams, Shopping, Fraud

Have you heard about “binding arbitration” clauses in contracts? They’re the part of the contract which says that if you’ve a dispute with the other party, you can’t take them to court. You concur, instead, to go before an arbitration panel with your dispute. (Note that many claim the arbitration panels are notoriously unfavorable to consumers!)

Binding arbitration clauses are all over the place these days. They’re in most credit card agreements, and are very often found in automobile purchase documents, home construction contracts, and all sorts of other contracts. And you may not even realize you’re concurring to this mandatory arbitration.

Have you ever made a buy online and failed to read the fine print? You just clicked on “I concur to the terms and conditions”? Well if you did that at Overstock.com, you’ve agreed to mandatory arbitration.
A judge recently dismissed a lawsuit filed by Shandie Deaton against Overstock.com for claimed violations of the Fair Credit Reporting Act (FCRA). She says that Overstock.com violated that law by printing too much credit card information on the receipt for her purchase from the company. A class action suit was filed on behalf of her and everyone else who had credit card information printed on their Overstock.com receipts in violation of the law.

But the lawsuit was dismissed because each time a customer purchases something on Overstock.com, they enter into this binding arbitration clause. That means no lawsuit filed in court. Customers must go before the arbitration board if they want a remedy to the wrong, and they must go one by one. No class action status.

Think this through the next time you’re making a buy and this clause is in the contract. Do you really want to give up your right to go to court? Do you really want to give up your right to appeal a decision? Because decisions in arbitration are final. There is no appeal and there’s no do-over if something was handled inappropriately.

Consumers need to stand up against these binding arbitration clauses and refuse to give their money to companies like Overstock.com that force this arbitration clause upon them.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Ripoffs and Scams, Tax

The Internal Revenue Service states that from 1999 to 2004, actor Wesley Snipes didn’t file tax returns… and his income during that time was a whopping $37.9 million. What’s more, he was told in 2002 that he was being criminally investigated, but he continued to not file.

How did this happen? Apart from possibly internalizing Leona Helmsley’s sage advice (”Only the tiny people pay taxes”), Snipes hooked up with Eddie Ray Kahn, a known tax protester who had been banned from filing tax returns for others because of his shenanigans with a group called American Rights Litigators.

In addition to not filing tax returns, he also is accused of trying to get fraudulent refunds for over $11 million of taxes paid in 1996 and 1997. Snipes was warned on more than one occasion that he was in trouble for his tax-related activities, but it doesn’t seem to have bothered him.

The trial begins this day near Orlando, Florida, where prosecutors state Snipes lived when he committed his tax fraud. The government states that at the time the fraud was committed, Snipes signed deals for the movies “Blade II” and “Blade: Trinity,” and each deal was worth more than $10 million.

Taxes on nearly $38 million of unreported income? Large. Interest and penalties? Huge as well. Possible imprisonment if criminally convicted? Priceless.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Record-keeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This

Filed under: Ripoffs and Scams

Okay, this is creepy. It’s one thing to be fond of toys or dolls. It’s another thing to take a doll and treat it like a human being, especially when you’re an adult. Youngsters are encouraged to have active imaginations and to pretend when they play. Adults need to be grounded in reality, except when playing with aforementioned youngsters.

“Re-Born” dolls are being sold to adults in the United Says and Britain, with the life-size ones selling for $150 to a few hundred dollars. They’re dolls that look like real babies, in a scary sort of way. I mean they look so real, it’s frightening. Check out this clip from a documentary to see for yourself.

It all sounds creepy to me. Grown women running around with these dolls and pretending they’re real? And I suppose there are some really weird men who carry on with them too. They give them baths and change their diapers and generally pretend that these toys are living beings.

Seriously, if you need to bond with a baby, call a friend. They’ll be happy to let you babysit for free for an evening or two. Heck, if you’re not too weird, they might even let you hang with their kid regularly. Sure beats paying a couple hundred bucks to pretend a hunk of rubber is the real thing.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Bookkeeping, and is the author of Essentials of Corporate Fraud.

Share This

Share This