DISB is promoting consumer education during National Consumer Protection Week, (March 4 - 10) to help protect your financial interests by avoiding fraud and scams, verifying investment offerings, reviewing cybersecurity and privacy measures, student debt forgiveness and repayment programs, exploring insurance considerations and more.
This information can help people tell the difference between a legitimate transaction and a potentially fraudulent product or service. NCPW is a coordinated consumer-education campaign that encourages individuals across the country to take full advantage of their consumer rights. Each day this week, DISB will share tips on how to spot financial fraud.
To get the tips directly, visit this page or follow us: @DCDISB or like us on Facebook. DISB also encourages District residents to join the Financially Fit DC movement at welcome.financiallyfitdc.com to be connected to free, noncommercial educational resources and programs that help you take charge of your financial health.
Consumer Protection Week Scam Alerts
1. Stock Redemption Scams Targeting the Elderly
An elderly British citizen in the United Kingdom, signed a Stock Redemption Agreement with a purported United States law firm, operating out of a fictitious office address on State Street in Boston, MA. According to the agreement the British citizen owned 36,840 shares of the outstanding capital stock of a U.S. public company, and that he wished to sell his shares to the law firm at $2.72 per share for a total amount of $100,204.80. The law firm’s representatives were described as an acquisitions advisor and an agent from the “United States Bureau of Securities Registration” located at the Westory, 607 14th Street, Washington, DC 20005. The victim was instructed by the scammers to register at a specified web address and to pay an advance fee of $5,710.00 so the firm could release the shares and send his payment of $100,204.80. However, the purported United States law firm was not authorized to conduct business in the United Kingdom or the United States. Additionally, the “United States Bureau of Securities Regulation” does not exist in Washington, DC, or anywhere else in the United States.
If you are ever contacted by an individual in the same manner as the British victim, you should:
- Contact the Department of Insurance, Securities and Banking (DISB) to verify the authenticity of the business, the law firm and their representatives.
- Conduct internet searches for information about similar scams.
- Report scammers to DISB.
2. Cryptocurrency Scam Targeting Unsophisticated Investors:
Bit-Guru is a company that operates a website using online advertising to recruit sales agents for its cryptocurrency-based investment programs. The sales agents target investors in the District of Columbia, using websites, social media, and online marketplaces like craigslist. Bit-Guru does not disclose any information about its principals, financial condition, or strategies for earning profits for investors. It does not provide a physical address for its offices purportedly located overseas. Despite providing no information on how it will make money for investors, Bit-Guru touts its investments as a safe way to earn a high rate of return. It guarantees investors an annualized rate of return of 100%.
What to look for?
- Investing in cryptocurrencies, carries significant risk because of regulatory and legal actions, competition from other cryptocurrencies, and the extreme volatility in the price of many cryptocurrencies.
- Additionally, these investments could be considered securities which could trigger a filing requirement with the U.S. Securities and Exchange Commission and DISB.
- If you are solicited to invest in a cryptocurrency-based investment program through the Internet, social media, by telephone, or by any other means, thoroughly research the company and if you have any questions, contact DISB.
3. Beware of Sweepstakes Scams:
You receive a letter or phone call claiming you have won a $5,000 luxury vacation or, perhaps, a considerable sum of cash. The caller then asks you to pay fees to participate in the program or to receive your prize. You should never be required to pay handling charges, service fees, taxes, or any kind of charges up front to receive a prize you have supposedly won. Winning a sweepstakes prize is a dream come true. However, that dream can quickly turn into nightmare if you don’t know the difference between a legitimate win notification and a sweepstakes scam.
What to watch for:
- Be mindful of letters or calls congratulating you for winning sweepstakes that you do not recall entering.
- Conduct a search to be sure the entity is legitimate by contacting the District’s Department on Consumer and Regulatory Affairs or the federal Consumer Financial Protection Bureau.
- Never pay up front fees to receive a prize you have supposedly won.
- Report all scams to DISB or local or state law enforcement authorities.
4. Affinity Fraud Scams Targeting Veterans:
Most consumers, in some way or another, are connected to a group, association or community-based organization. Affinity frauds target members of identifiable groups, such as veterans, the elderly, and religious or ethnic communities. The fraudsters involved in affinity scams often are – or pretend to be – members of the group. The scams usually involve “Ponzi” or pyramid schemes where the scammers generate returns for older investors through revenue paid by new investors, rather than through legitimate business activities. They promise guaranteed high rates of return with minor risk to investors. Veterans are often exploited by affinity fraud scammers because they have steady monthly income; they are a very motivated group; they watch out for each other; and they give freely of both time and money. Affinity fraud scammers will claim to be a veteran, or working for an organization that supports veterans. They might even be a veteran who is in on the scam. In any case, they will be very persuasive in convincing veterans to invest their money with them.
Steps to Take:
- Even if you know the person making the investment offer, be sure to research the person’s background, as well as the investment itself – no matter how trustworthy the person who brings the investment opportunity to your attention seems to be. You can check the legitimacy of an investment offering in the District by contacting DISB.
- Never make an investment based solely on the recommendation of a member of an organization or group to which you belong.
- Do not fall for investments that promise spectacular profits or “guaranteed” returns. These are classic warning signs of fraud.
- Be skeptical of any investment opportunity that you cannot get in writing.
- Don’t be pressured or rushed into buying an investment before you have an opportunity to thoroughly research it.
- Report all scams to the Department of Insurance, Securities and Banking by calling (202) 727-8000 or visiting disb.dc.gov.
5. Unclaimed Property Scams:
Catherine is a District of Columbia resident. One day she receives a call from John Smith, purporting to be the Director of Debts Settlement Dept., World Bank Group, International Center for Debts Settlement, located at 2015 H Street, NW, Washington, DC 20433. Mr. Smith informs her that she has an unclaimed lottery prize in the amount of $5.5 million. All she must do to receive her prize is pay $150.00 for an Access Transfer Code and an additional $150.00 validation fee. Mr. Smith tells Catherine to purchase a $300 prepaid Walmart credit card and call back his toll-free number with the card number and security code. Had Catherine researched the company on the Internet, she would have discovered that the World Bank Group, International Center for Debts Settlement, 2015 H Street, NW, Washington, DC 20433 does not exist, and that she was the victim of an unclaimed property scam.
- Be mindful of callers who ask you to purchase prepaid store credit cards to pay transaction fees so you can receive your unclaimed lottery or prize.
- Conduct an Internet search to be sure the entity is legitimate.
- Never pay up front fees for unknown services.
- Report all scams to the Department of Insurance, Securities and Banking (DISB) by calling (202) 727-8000 or visiting disb.dc.gov.
6. Investment Scam via Real Estate:
Alice, a Maryland resident, is approached by Bill, a friend of her former neighbor. Bill is a principal broker whose business is in the District of Columbia. He offers Alice an opportunity to invest in two real estate properties which he tells her he can flip for a profit. Alice’s total investment would be $50,000 which is $25,000 per property. Bill promised Alice that if she invested the $50,000 he needed to purchase the two houses; she would receive 12 monthly dividend payments of $500 totaling $6,000 and at the end of the twelve months, she would also receive her initial investment of $50,000. Alice gives Bill two checks for $25,000. Subsequently, she never received the $500 monthly payment nor did she get her initial investment back as Bill had promised.
- Be mindful of persons soliciting investment opportunities using real estate as the investment vehicle.
- Contact the District’s Department of Consumer and Regulatory Affairs’ Occupational and Professional Licensing unit to be sure the company you are dealing with is legitimate.
- Report all scams immediately to the Department of Insurance, Securities and Banking by calling (202) 727-8000 or visiting disb.dc.gov.