The axiom, "if it sounds too good to be true, it probably is, "remains an enduring and unassailable truth. But during the stubbornly long-running downturn, desperate people suspend disbelief.
Since 2009 , the Federal Trade Commission has been tracking get rich quick scams under the rubric Operation Short Change. "We're a small agency," the FTC's Mitchell Katz says. "So we have to really focus our attention and our resources on the scams that do the most damage." Since the Great Recession began in earnest, those scams have been what Katz called "bottom-dollar scams" – as in "bet your bottom dollar. They prey on vulnerable people who need debt and mortgage relief and are targeted at those most desperate for that kind of help. "Fraudsters know government agencies exist to help those people, and they try to trick people into thinking they're with the government."
Hundreds of thousands of people have been duped since 2007, and even with increased regulation, they’re still falling for them. In 2010, “scammers had a field day,” said CEO Stephen A. Cox of the Better Business Bureau in a press release. The biggest FTC case in 2009 involved John Beck’s Free & Clear Real Estate System, a “company” that promises easy real estate investments with little to no money down, and conned more than 600,000 people out of nearly $300 million. If you're looking into a business venture, you'd probably be well served to look twice... and look elsewhere.
1) Free Government Money – Not long ago, crudely Photoshopped images of President Obama waving a fistful of bills above big red letters announcing "Free Government Money" were nearly plastered on the Internet. While government grants do exist, the people behind those ads, and others like the infamous Matthew Lesko, generally have no better access to information on (real) government grants than anyone else could find at Grants.gov.
The Utah-based scam that operated under the name I Works, which was charged by the FTC in 2010, used a whopping 51 shell companies, complete with phony executives and fictitious websites, to make millions selling access to government grants that, in many cases, didn't even exist. And, of course, that "free" money came at a cost: Though the initial fee was only $1.99, once I Works got credit card numbers, they charged a $130 annual fee, and up to $60 in monthly charges without customer agreement. "If you have to pay money to claim a 'free' government grant," the FTC warns , "it isn't really free. "
2) You've Won A Foreign Lottery! – Funny, you don't remember having bought a ticket for Ireland's national lottery. While the Irish National Lottery does actually exist, these successful scams will eventually request processing fees or taxes on those "winnings." The U.S. Postal Inspection Service destroys millions of mailings each year in an attempt to stem this long-running scam, but the USPS estimated back in 2009 that Americans were hustled out of more than $120 million per year through this type of fraud. Never mind that it's illegal for American citizens to purchase tickets in foreign lotteries by mail or by phone, let alone claim those winnings, the bigger question is why anyone would think they had won a lottery they didn't even enter. "People know they didn't register," Katz said. "But people also want to have hope, I guess."
3) Mortgage Modification, Just In Time – Whether it arrives via email, in an envelope or over the phone, an offer to modify an underwater mortgage – or get a home out of foreclosure – is one that millions of Americans would be overjoyed to accept, especially when it comes with a money-back guarantee from a company boasting a success rate near 100 percent. That was the pitch that David Mahler, John Incandela Jr. and Jamen Lachs made to desperate homeowners under a host of different names, typically asking for half of the $2,600 fee upfront. However, the modifications weren't made, the refunds were never issued, and the FTC charged the three with two counts of fraud in March of this year.