BBB Alerts Consumers to Scams Claiming to be from the Government

January 29, 2014

Better Business Bureau serving Upstate New York is warning consumers to beware of scams pretending to be from the federal government. BBB has received numerous calls and emails from consumers inquiring about or reporting phony government grant offers supposedly coming from federal agencies or commissions.

Consumers report unsolicited phone calls notifying they ‘won’ a grant but had to pay a fee in order to collect it. Others reported receiving calls claiming to be from the Federal Trade Commission, notifying them they won a lottery/sweepstakes but had to pay taxes and fees before they could get their winnings. A few callers report being told they could run into legal problems if they didn’t immediately release sensitive information. Often these ‘fees’ were to be paid with Green Dot MoneyPak or Vanilla reloadable cards.

“Scammers claim offers from the government hoping they’ll carry enough credibility to sway consumers into action and those actions often lead to cash losses,” said Warren Clark, President of BBB serving Upstate New York. “Unfortunately it works too often. We don’t want people to be victimized by fraudsters who try to steal their money this way.”

Scams historically involved a victim wiring cash to a stranger, but many consumers have gotten wise to this ploy so scammers have found a new way to get paid often requesting use of Green Dot MoneyPak or Vanilla cards to collect their ‘fees’.

These cards are reloadable debit cards, available everywhere, and you can use them to make purchases or pay phone, cable, credit card or other bills. They're typically for people who don't want or have, bank accounts. The MoneyPak card bought at a store is like a deposit slip giving you access to the money via the 14-digit authorization code on the back. As soon as the victim gives the scammer that code, they use it to load all of your money onto their prepaid card. Scammers like them because they can seem more convenient to their victim than a money wire, but are just as untraceable as a wire transfer. The prepaid card industry is aware of fraud problems and working to thwart bad guys, but is not responsible if a criminal gets your money.

Scammers will tell their victims a variety of plausible statements to substantiate the fees needed to collect the grant, sweepstakes winning, or foreign lotteries – which are illegal for U.S. citizens to participate in.

Scam details often change to a greater or lesser degree, but scammers are always after the same thing: money and private information that can lead to identity theft or fraud.

BBB reminds consumers that federal agencies do not operate in this manner.

  • The federal government and its federal Trade Commission do not participate in lotteries and sweepstakes in any way.
  • Federal grants are awards only if someone applies for them and they are awarded on merit.
  • Grants are not awarded if you shop at a certain retail outlet or pay your bills and taxes on time.
  • Medicare/Medicaid personnel and Affordable Care Act implementers will never contact anyone over the phone to ask for or update information. If there are any changes to a resident’s status or information is needed, they will contact them by mail.

BBB offers the following advice to avoid these and similar scams:

  • Start with Trust®. Check with the BBB before responding to an offer or hiring someone doing business for you.
  • Hang up. If you get one of these calls, just hang up. You may be tempted to call back, but this will only give the scammer another opportunity to steal your information. Be sure not to press any buttons that the scammers instruct and report the incident to BBB.
  • Protect your information. Never give out your bank account numbers, date of birth, credit card number, or Social Security number to an unsolicited caller or anyone you don’t know.
  • Don’t pay fees! Never pay any money - cash, check, money cards - to collect supposed winnings. If you have to pay to collect your winnings, you’re not winning. Legitimate offers don’t require you to pay “insurance,” “taxes” or “shipping and handling charges” to collect your prize.
  • Never wire money. Scammers pressure people to wire money through commercial money transfer companies because wiring money is the same as sending cash.
  • In the event that you give your personal information, inform your banks, credit card providers and credit reporting agencies so they can be on the lookout for potential identity thieves.
  • Remember government grants have a thorough application process and none are awarded without first completing that application.

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