Patriot Federal Credit Union

Fraud & Scam Alerts

All year round, it is important to be aware of potential scams. As we become aware of scams that might affect our members, we will post alerts to our website. Please be careful as there are many scams that are occurring both by mail, email, phone and text message.

Remember: If it sounds too good to be true, it probably is. Con artists work hard to get their hands on your money and your personal and financial information.

To help reduce the risk and protect you, here is a list of potential scams and security breaches along with tips to be safer and smarter.

FTC Fraud Reporting Platform for Consumers

The Federal Trade Commission has launched a new website, ReportFraud.ftc.gov, where consumers can easily report fraud and all other consumer issues directly to the FTC.   At ReportFraud.ftc.gov, consumers will find a streamlined and user-friendly way to submit reports to the FTC about scams, frauds, and bad business practices. The FTC has long encouraged consumers to report these issues to the FTC when they encounter them—whether or not they lost money to the fraud.

Learn more at: https://www.ftc.gov/news-events/press-releases/2020/10/ftc-announces-new-fraud-reporting-platform-consumers

Equifax Data Breach

As of 9/7/17, Equifax has stated that there is “No Evidence of Unauthorized Access to Core Consumer or Commercial Credit Reporting Databases”. Regardless, it may be in your best interest to understand or review the information Equifax has been issuing in response.

Here are the facts, according to Equifax. The breach lasted from mid-May through July. The hackers accessed people’s names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. They also stole credit card numbers for about 209,000 people and dispute documents with personal identifying information for about 182,000 people. And they grabbed personal information of people in the UK and Canada too.

This will likely impact our staff and our members. There are steps to take to help protect your information from being misused, as well as to check to see the likelihood that your information was accessed. Here they are:

We’re sure you have questions. For answers, Equifax is recommending that consumers go to www.equifaxsecurity2017.com or call 1-866-447-7759. Their call center is open every day (including week-ends) from 7:00 a.m.—1:00 a.m. Eastern time.

In addition to the Equifax Potential Impact website (https://www.equifaxsecurity2017.com/potential-impact/), Equifax will send direct mail notices to consumers whose credit card numbers (estimated 209,000 people) or dispute documents (estimated at 182,000 people) with personal identifying information were impacted.

Here are some other steps you may want to take to help protect yourself:

Visit identitytheft.gov/databreach to learn more about protecting yourself after a data breach.

eBranch Enrollment Scam

We have recently been made aware of a possible phone scam related to the launch of our new eBranch. Phone scams are designed to take advantage of individuals during times of change, like Patriot’s new eBranch with members who will be unfamiliar with the new system.

Here’s what is occurring:

Members (as well as non-members) have received a pre-recorded automated phone calls “regarding their enrollment in home banking.”  During this phone call the message instructs the call recipient to press 1 to proceed with enrollment.   THIS IS A SCAM used to collect personal information.  If you receive a similar form of communication please HANG UP and contact us at (717) 263-4444 or (888) 777-9982 and let us know that you have received the call.

Patriot does NOT initiate calls using automated service with the exception of our fraud monitoring for Patriot’s Debit and Credit Cards and would not request your personal information through an automated system.

If you have provided information to anyone that you have not initiated the communication, please contact us immediately.

Social Media & Scams

Social media provides scammers with fertile ground to perform these types of scams.  With scam accounts, pages, and groups, crooks can target individuals directly, or phish for victims in the comments section of popular posts.  While the credit union handles member information under strict guidelines and practices to protect the member’s privacy, each member also bears responsibility for protecting their personal information.

Scammers and scam groups use a multitude of techniques to attract victims, and they’ve even developed a vocabulary of slang terms to use in their operations like “Yankee” (U.S. financial institution), “Ghost” (a buyer/seller without a face, such as an anonymous transfer), “Loader” (middleman adding funds to debit cards, which can be pre-paid or otherwise), and “Ripper” (an Individual that receives account information and subsequently fails to pay for it).

 

How can you protect yourself?

Common indicators a person is a romance scammer:

Using fabricated stories, scammers “con” victims into sending them money or provide access to their online or mobile banking log in credentials. According to the FBI, more than 12,500 complaints related to romance scams with losses totaling $203 million were reported.

Common fake job scams:

Common online loan scams:

Online Loan scams usually stem from online pop-ups, advertisements, or malicious websites. When applying for a loan, you are asked to supply your account and/or online banking information. It may seem reasonable to provide account information for a loan deposit and payments, but you should never provide this information to an untrusted site or company/individual that you do not have an established business relationship with.

Aside from providing your personal and/or account information, you may also be asked to provide the first month’s payment or funds to cover taxes and fees. Even if the funds have already been sent to you, please be cautious of making any immediate payments. Beware of any loan companies that request you make payments via MoneyGram or Western Union, especially if it’s to an individual rather than a company.

Both situations involve one or more of the following:

Protect your account information.

Please note that after funds are sent out to the scammer, they are rarely recovered. If you ever receive a suspicious job or loan offer online or through the mail, please contact the credit union ​for further investigation.

Remember, never accept funds from or send funds to someone you have not met. Do not give sensitive account or personal information to anyone with whom you do not already have an existing business relationship.

All of us play a role in protecting private personal information.  The credit union is committed to engaging safeguards and processes to maintain member privacy and protect your personal information.  Please do your part in managing your personal information – if you are scammed, you will be responsible for the loss and theft of your money.

If you believe you are the victim of a scam of any kind, cease all contact with the suspected scammer and immediately contact the credit union for assistance.

Federal Trade Commission and Federal, State and International Partners Announce Major Crackdown on Tech Support Scams

The Federal Trade Commission, along with federal, state and international law enforcement partners, today announced “Operation Tech Trap,” a nationwide and international crackdown on tech support scams that trick consumers into believing their computers are infected with viruses and malware, and then charge them hundreds of dollars for unnecessary repairs.

As part of this coordinated effort, the FTC and its partners are announcing 16 new actions, including complaints, settlements, indictments, and guilty pleas, against deceptive tech support operations. This brings to 29 the number of law enforcement actions brought by Operation Tech Trap partners in the last year to stop tech support scams.

“Tech support scams prey on consumers’ legitimate concerns about malware, viruses and other cyber threats,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection. “The FTC is proud to work with federal, state and international partners to take down these scams, and help consumers learn how they can safeguard their computers against real cybersecurity threats.”

“Tech support scams prey on people’s fear of losing important work, family photos or sensitive identification information. Using that fear scammers trick thousands of consumers into paying millions of dollars to fix problems that never existed,” said Florida Attorney General Pam Bondi, who appeared at a news conference in Tampa, Florida with Pahl. “These scams will not be tolerated in Florida and that is why we are bringing more cases, against more tech support scammers than any other state in the country—in an effort to protect consumers and recover money for victims.”

Most of the scammers targeted in Operation Tech Trap followed the same pattern of misconduct. They caused consumers’ computers to display advertisements designed to resemble pop-up security alerts from Microsoft, Apple or other technology companies. These ads warned consumers that their computers are infected with viruses, are being hacked, or are otherwise compromised. The pop-up messages urged consumers to immediately call a toll-free number for assistance. Some of the pop-up ads even included a countdown clock, allegedly representing the time remaining before the computer hard drive would be deleted.

Once consumers called the toll-free number, they were connected to a call center and pitched by telemarketers who claimed to be affiliated with well-known technology companies such as Microsoft or Apple. Consumers were told that in order to diagnose the problem, they must provide the telemarketers with remote access to their computer. After gaining access, the telemarketers purported to run a series of “diagnostic tests” that inevitably revealed the existence of grave problems requiring immediate repair by one of their “certified technicians.” Through these high-pressure tactics, the defendants would persuade consumers to pay hundreds of dollars for unnecessary computer repair services, service plans, anti-virus protection or software, and other products and services.

May 12, 2017 Federal Trade Commission
https://www.ftc.gov/news-events/press-releases/2017/05/ftc-federal-state-international-partners-announce-major-crackdown?utm_source=govdelivery

Voicemail from an IRS Imposter?

You get a call or voicemail from someone claiming to be from the IRS. You’re being sued and this your final notice, the caller says: “Hello. This call is officially a final notice from IRS. Internal Revenue Service. The reason of this call is to inform you that IRS is filing lawsuit against you. To get more information about this case, file, please all immediately on our department number 202-864-0169. I repeat 202-864-0169. Thank you.”

Don’t panic. And don’t return the call. It’s a scam.

Here are a few facts about the IRS to keep in mind if you get a similar call:
•If the IRS needs to contact you, they’ll do it by mail first.
•The IRS won’t demand personal information like credit card or Social Security numbers over the phone.
•The IRS won’t threaten to arrest or sue you, or demand that you pay right away. The IRS also won’t tell you to use a specific form of payment like a money transfer from MoneyGram or Western Union, a cash reload from MoneyPak or Reloadit, or a gift card from iTunes or Amazon. Scammers ask you to use those ways to pay because they’re hard to track or cancel payments.

If you or someone you know receives a call like this, report it the FTC and the Treasury Inspector General for Tax Administration (TIGTA). Include the caller’s phone number, along with any details you have. If you’re not sure whether a call is really from the IRS, you can double-check by calling the IRS directly at 1-800-829-1040. For more, check out this IRS imposter scams infographic. Share with friends and family. They may get the call next.

September 1, 2016 by Andrew Johnson, Division of Consumer and Business Education, FTC

The IRS Doesn’t Want Your iTunes Cards

If anyone tells you to buy iTunes cards to pay the IRS, qualify for a grant, get a loan or bail out a family member, say “No.” They’re trying to scam you. The only place to use an iTunes card is at the iTunes store, to buy online music, apps or books.

People have told the FTC about scammers who called and demanded iTunes cards as “payment.” Bogus “IRS agents” told people they owed back taxes and would be arrested soon, unless they bought an iTunes card and gave the code to the “agent.” Phony “government grant” officers called and promised a big payout, after the person bought an iTunes card and read the code to the “grant officer.” Other fraudsters told people their grandkids were in jail and the only way to help was — you guessed it — to buy an iTunes card and read the code over the phone. All the stories were false.

There’s a reason scammers insist on getting iTunes cards: Once you tell a scammer the code from the back of an iTunes card, he takes control of the value on the card. He can use the code or sell it. After a person redeems the code, you can’t get your money back.

If you gave someone the code from an iTunes card and you think it was a scam, call Apple Support at 1-800-275-2273 right away (you may have to spend some time on hold). Tell them what happened and ask if they can disable the card. Also, go back to the store that sold you the card and talk with their customer service staff. And if you hear from someone who wants you to send an iTunes card, please tell the FTC.

July 7, 2016 by Bridget Small Consumer Education Specialist, FTC

NCUA Warns of Text Phishing Scam

The National Credit Union Administration has received consumer calls about a suspicious text message claiming to come from the agency. The message reads: “National Credit Union Administration Alert for (recipient’s phone number). Contact 844-234-5445.” This is not a communication from NCUA. The agency does not seek personal information through internet or on the telephone. Please contact NCUA’s Consumer Assistance Center at 1-800-755-1030 between 8 a.m. and 5 pm. Eastern if you receive one of these messages. NCUA also recommends contacting your credit union and local law enforcement.

Vishing scams are on the rise!

Voice phishing (commonly referred to as vishing) is the criminal practice of using social engineering over the phone to gain access to victims’ personal and financial information (credit card number, account number, PIN number, security code number, etc.) in order to defraud them. The fraudsters can be a live person OR vishing can be done by robocall. Either way the objective is to use clever techniques to defraud unsuspecting individuals.

The sole intention of the call is to scam people out of their hard earned money, by pretending to be financial institutions, law firms, investigators, Federal agencies or debt collectors. And since fraudsters constantly vary their scams, it is important to constantly beware of text messages, emails, and telephone calls or recordings requesting confidential data.

Here are some tips to keep in mind:

Be assured that Patriot, Law Firms, Investigators, Federal Agencies nor Debt Collectors will not seek personal information from consumers over the phone. If you believe someone has attempted to scam you in the manner described above, immediately contact Patriot at our Contact Center phone line, 888 777-9982.

“Masque Attack” iOS Vulnerability

The “Masque Attack” vulnerability could allow an attacker to install a malware-filled app on top of a legitimate iOS app over the internet.

This is a vulnerability in the iOS operating system rather than in any specific iOS app, and thus only Apple will be able to resolve the vulnerability. Unfortunately, we do not have an official statement from Apple regarding this vulnerability in iOS at this time. We recommend that iOS users follow these guidelines for protecting their phones:

  1. Don’t install apps from third-party sources other than Apple’s official App Store.
  2. Don’t click “Install” on a pop-up from a third-party web page, no matter what the pop-up says about the app. The pop-up can show attractive app titles crafted by the attacker.
  3. When opening an app, if iOS shows an alert with “Untrusted App Developer”, click on “Don’t Trust” and uninstall the app immediately.

Again, Patriot cannot resolve this issue. Only Apple can resolve this issue and they have not yet released an official statement.

Telephone Fraud: “Vishing” Alert

The National Credit Union Administration (NCUA) issued a warning on January 21 about a new telephone fraud attempt that is taking place. Known as a “vishing” scheme, the fraudulent call uses NCUA’s name in an attempt to obtain personal financial information from credit union members.

Individuals have been contacted by an automated phone call claiming to be from NCUA and notifying consumers their debit cards have been compromised. The call then asks the individual to follow prompts and provide financial data and personal identification information.

If you are contacted by this so-called “vishing” scheme, immediately contact Patriot at our Contact Center Line, 888-777-9982.

Be assured, NCUA will not seek personal information from consumers over the telephone nor does NCUA handle any day-to-day maintenance of member account information. NCUA also urges consumers to never verify or release personal financial information to unknown callers.

“Spear Fishing” Hacking Alert

The biggest risk for Target (TGT) shoppers whose personal data was recently compromised may come less from the original breach than from a wave of secondary scams seeking to pilfer far more important information.

Target’s failure to safeguard consumer information puts the company’s customers at risk of so-called “spear phishing.” The an incident, now estimated to affect as many as 110 million people, involves far more information than just credit card numbers. It also includes names, email addresses and phone numbers.

Spear phishing is a more toxic version of the generic online “phishing” scams that aim to ferret out your personal information with a phone call or email. What makes spear phishing more dangerous is that fraudsters have enough information about the target to make the contact appear legitimate.

If you are in the habit of getting electronic bill notifications and paying your bills online, a spear phishing attack with the information stolen from Target could look nearly identical to the routine communication you receive from your credit card companies and bank. Here are two examples:

Dear John,
Your account xxxx-xxxx-xxxx-2056 has been compromised. Please click on the link below to contact our fraud department.
Or
Dear Sally,
Your online statement is ready to view. Please click on the link below and sign into your account.

Worse, because locations and phone numbers were also compromised, victims may have to ward off attacks from multiple fronts – email, social media and telephone. That makes it imperative that Target shoppers take these five steps to protect their accounts and identity.

  1. Accept the retailers’ credit monitoring offer. Target has offered to provide one year of free credit monitoring and identity theft protection to every consumer who has shopped in their stores over the past year – regardless of whether or not they are affected by the data breach. Take them up on it.
  2. Double-check statements. If you used a credit card at Target, make a concerted effort to go through every item on the bill and continue to do this for several months. Don’t just look for big items, said Bill Hardekopf, chief executive of credit card information site LowCards.com. In some cases, crooks charge small items to verify the card before ringing up big purchases.
  3. Respond, don’t react. If you are contacted by email or phone to verify your account, view a statement or report fraud, stop and think before responding. A real creditor will allow you to call back – not to a number they specify, but to the listed number for the company – to respond to an inquiry. A real email contact about your monthly statements will follow an identical format as the statements you’ve received in the past. Look for any deviation before assuming it’s legitimate. And be aware that any pressure tactic to push you to respond immediately is a red flag of fraud. Hang up on high-pressure callers. Ignore threatening emails.
  4. Don’t click through. Even if you think the statement you’ve received via email is legitimate, consider opening a new browser window and going to the company’s web site another way. There’s no downside to being too cautious. On the other hand, clicking on a malicious link could load your computer up with viruses and “malware” that could put your entire electronic life at risk.
  5. Update your security software. If you don’t have security software on your computer and phone (if you use it for banking or payments), get it. Keep it updated. Normally, if you click on a link that’s about to take you to a suspicious site, the security software will issue a warning and allow you to back out before any damage is done. Don’t ignore the warnings.

Automated Phone Call Scam Targets Debit Card Accounts

If you receive an automated, recorded call that your debit card has been suspended due to a compromise, this is a fraud. These calls are not being initiated by Patriot or any other financial institution. The recording is asking members to press 1 and enter their account number. Never respond or provide any personal information by phone or online. Patriot will never send a text, email or phone call that asks you to provide card or account information.

Here are more details about this type of scam
A credit union recently reported receiving hundreds of calls from members and nonmembers saying they received a phone call on their landline or cell phone with an automated message indicating their account may be locked or closed, or their card numbers were compromised. The victims were asked to enter their credit or debit card number.

Awareness about this type of a scam is critical to prevent your accounts from being compromised by this version of vishing (voice phishing). Again, you should never respond to these calls by providing the requested personal or financial information – no matter how urgent the message may seem. Please remember:

Secret Shopper

Patriot had a member deposit a check for $2,000.00 drawn on State Street Bank & Trust in Boston, MA from F.T. Management Inc. 17 Federal St. Boston, MA. At the time of the deposit, the member did not mention that she had applied online for a “Secret Shopper position”. The member visited a Patriot branch after she received the “paperwork” instructing her to deposit and cash the check at her bank. She was then to go to her local “JC Peenys” outlet and purchase item or items of her choice and to do the same at Sears and then complete a Western Union transaction (for the bulk of the funds). The form was titled “Global Survey & Management Services Inc.” There were numerous typographical errors, misspelled words and variations in font. Patriot informed the member that this was a scam and was able to avoid a bad situation on this members account. Please be on the lookout for these types of mailings.

SMiShing

Two members reported receiving text messages “from their credit union” to call the automated service at 240-349-0118. When the call was placed to this number, an electronic verification service recording explained that the callers credit card has been restricted and to enter their 16 digit card number in order to un-restrict their card.

You can be sure the text was not from Patriot Federal Credit Uni0n. You should never provide any information to an unknown source.

Telemarketing Fraud

When you send money to people you do not know personally or give personal or financial information to unknown callers, you increase your chances of becoming a victim of telemarketing fraud.
Here are some warning signs of telemarketing fraud—what a caller may tell you:

If you hear these or similar “lines” from a telephone salesperson, just say “no thank you” and hang up the telephone.

Tips for Avoiding Telemarketing Fraud:

It’s very difficult to get your money back if you’ve been cheated over the telephone. Before you buy anything by telephone, remember:

Nigerian Letter or “419” Fraud

Nigerian letter frauds combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter mailed from Nigeria offers the recipient the “opportunity” to share in a percentage of millions of dollars that the author—a self-proclaimed government official—is trying to transfer illegally out of Nigeria. The recipient is encouraged to send information to the author, such as blank letterhead stationery, bank name and account numbers, and other identifying information using a fax number provided in the letter. Some of these letters have also been received via e-mail through the Internet. The scheme relies on convincing a willing victim, who has demonstrated a “propensity for larceny” by responding to the invitation, to send money to the author of the letter in Nigeria in several installments of increasing amounts for a variety of reasons.

Payment of taxes, bribes to government officials, and legal fees are often described in great detail with the promise that all expenses will be reimbursed as soon as the funds are spirited out of Nigeria. In actuality, the millions of dollars do not exist, and the victim eventually ends up with nothing but loss. Once the victim stops sending money, the perpetrators have been known to use the personal information and checks that they received to impersonate the victim, draining bank accounts and credit card balances. While such an invitation impresses most law-abiding citizens as a laughable hoax, millions of dollars in losses are caused by these schemes annually. Some victims have been lured to Nigeria, where they have been imprisoned against their will along with losing large sums of money. The Nigerian government is not sympathetic to victims of these schemes, since the victim actually conspires to remove funds from Nigeria in a manner that is contrary to Nigerian law. The schemes themselves violate section 419 of the Nigerian criminal code, hence the label “419 fraud.”

Tips for Avoiding Nigerian Letter or “419” Fraud:

Advance Fee Schemes

An advance fee scheme occurs when the victim pays money to someone in anticipation of receiving something of greater value—such as a loan, contract, investment, or gift—and then receives little or nothing in return.

The variety of advance fee schemes is limited only by the imagination of the con artists who offer them. They may involve the sale of products or services, the offering of investments, lottery winnings, “found money,” or many other “opportunities.” Clever con artists will offer to find financing arrangements for their clients who pay a “finder’s fee” in advance. They require their clients to sign contracts in which they agree to pay the fee when they are introduced to the financing source. Victims often learn that they are ineligible for financing only after they have paid the “finder” according to the contract. Such agreements may be legal unless it can be shown that the “finder” never had the intention or the ability to provide financing for the victims.

Tips for Avoiding Advanced Fee Schemes:

If the offer of an “opportunity” appears too good to be true, it probably is. Follow common business practice. For example, legitimate business is rarely conducted in cash on a street corner.

Health Care/Insurance Fraud

Medical Equipment Fraud: Equipment manufacturers offer “free” products to individuals. Insurers are then charged for products that were not needed and/or may not have been delivered.

“Rolling Lab” Schemes: Unnecessary and sometimes fake tests are given to individuals at health clubs, retirement homes, or shopping malls and billed to insurance companies or Medicare.

Services Not Performed: Customers or providers bill insurers for services never rendered by changing bills or submitting fake ones.

Medicare Fraud: Medicare fraud can take the form of any of the health insurance frauds described above. Senior citizens are frequent targets of Medicare schemes, especially by medical equipment manufacturers who offer seniors free medical products in exchange for their Medicare numbers. Because a physician has to sign a form certifying that equipment or testing is needed before Medicare pays for it, con artists fake signatures or bribe corrupt doctors to sign the forms. Once a signature is in place, the manufacturers bill Medicare for merchandise or service that was not needed or was not ordered.

Tips for Avoiding Health Care Fraud or Health Insurance Fraud:

Redemption/Strawman/Bond Fraud

Proponents of this scheme claim that the U.S. government or the Treasury Department control bank accounts—often referred to as “U.S. Treasury Direct Accounts”—for all U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals promoting this scam frequently cite various discredited legal theories and may refer to the scheme as “Redemption,” “Strawman,” or “Acceptance for Value.” Trainers and websites will often charge large fees for “kits” that teach individuals how to perpetrate this scheme. They will often imply that others have had great success in discharging debt and purchasing merchandise such as cars and homes. Failures to implement the scheme successfully are attributed to individuals not following instructions in a specific order or not filing paperwork at correct times.

This scheme predominately uses fraudulent financial documents that appear to be legitimate. These documents are frequently referred to as “bills of exchange,” “promissory bonds,” “indemnity bonds,” “offset bonds,” “sight drafts,” or “comptroller warrants.” In addition, other official documents are used outside of their intended purpose, like IRS forms 1099, 1099-OID, and 8300. This scheme frequently intermingles legal and pseudo legal terminology in order to appear lawful. Notaries may be used in an attempt to make the fraud appear legitimate. Often, victims of the scheme are instructed to address their paperwork to the U.S. Secretary of the Treasury.

Tips for Avoiding Redemption/Strawman/Bond Fraud:

Investment-Related Scams

Prime Bank Note Fraud

International fraud artists have invented an investment scheme that supposedly offers extremely high yields in a relatively short period of time. In this scheme, they claim to have access to “bank guarantees” that they can buy at a discount and sell at a premium. By reselling the “bank guarantees” several times, they claim to be able to produce exceptional returns on investment. For example, if $10 million worth of “bank guarantees” can be sold at a two percent profit on 10 separate occasions—or “traunches”—the seller would receive a 20 percent profit. Such a scheme is often referred to as a “roll program.”

To make their schemes more enticing, con artists often refer to the “guarantees” as being issued by the world’s “prime banks,” hence the term “prime bank guarantees.” Other official sounding terms are also used, such as “prime bank notes” and “prime bank debentures.” Legal documents associated with such schemes often require the victim to enter into non-disclosure and non-circumvention agreements, offer returns on investment in “a year and a day”, and claim to use forms required by the International Chamber of Commerce (ICC). In fact, the ICC has issued a warning to all potential investors that no such investments exist.

The purpose of these frauds is generally to encourage the victim to send money to a foreign bank, where it is eventually transferred to an off-shore account in the control of the con artist. From there, the victim’s money is used for the perpetrator’s personal expenses or is laundered in an effort to make it disappear.

While foreign banks use instruments called “bank guarantees” in the same manner that U.S. banks use letters of credit to insure payment for goods in international trade, such bank guarantees are never traded or sold on any kind of market.

Tips for Avoiding Prime Bank Note Fraud:

“Ponzi’ Schemes

“Ponzi” schemes promise high financial returns or dividends not available through traditional investments. Instead of investing the funds of victims, however, the con artist pays “dividends” to initial investors using the funds of subsequent investors. The scheme generally falls apart when the operator flees with all of the proceeds or when a sufficient number of new investors cannot be found to allow the continued payment of “dividends.”

Tips for Avoiding Ponzi Schemes:

Pyramid Schemes

As in Ponzi schemes, the money collected from newer victims of the fraud is paid to earlier victims to provide a veneer of legitimacy. In pyramid schemes, however, the victims themselves are induced to recruit further victims through the payment of recruitment commissions.

More specifically, pyramid schemes—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses. At the heart of each pyramid scheme is typically a representation that new participants can recoup their original investments by inducing two or more prospects to make the same investment. Promoters fail to tell prospective participants that this is mathematically impossible for everyone to do, since some participants drop out, while others recoup their original investments and then drop out.

Tips for Avoiding Pyramid Schemes:

Market Manipulation or “Pump and Dump” Fraud

This scheme—commonly referred to as a “pump and dump”—creates artificial buying pressure for a targeted security, generally a low-trading volume issuer in the over-the-counter securities market largely controlled by the fraud perpetrators. This artificially increased trading volume has the effect of artificially increasing the price of the targeted security (i.e., the “pump”), which is rapidly sold off into the inflated market for the security by the fraud perpetrators (i.e., the “dump”); resulting in illicit gains to the perpetrators and losses to innocent third party investors. Typically, the increased trading volume is generated by inducing unwitting investors to purchase shares of the targeted security through false or deceptive sales practices and/or public information releases.

A modern variation on this scheme involves largely foreign-based computer criminals gaining unauthorized access to the online brokerage accounts of unsuspecting victims in the United States. These victim accounts are then utilized to engage in coordinated online purchases of the targeted security to affect the pump portion of a manipulation, while the fraud perpetrators sell their pre-existing holdings in the targeted security into the inflated market to complete the dump.

Tips for Avoiding Market Manipulation Fraud:

For more information on common fraud schemes and ways to avoid becoming a victim, visit the FBI’s web site: https://www.fbi.gov/scams-safety/fraud/fraud.

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