Buyers beware

'If it looks too good to be true, it is' advised consumer-fraud experts at workshop

The biggest challenge for government agencies that confront consumer fraud is keeping up with the bad guys.

That was Laureen France's assessment Wednesday at a daylong workshop hosted by AARP in Kalispell. She's a senior investigator with the Federal Trade Commission.

"This world moves really fast," France told a group of about 150 senior citizens. "As soon as the industry figures out how to close a loophole, the bad guys figure a way around it."

When it comes to identity theft, the fastest-growing crime in America, much of the deception has switched to the Internet. France was one of a string of government officials who doled out copious amounts of information about how consumers can safeguard themselves against the burgeoning problem.

France explained "phishing" Web sites, one of the latest scams to steal identities. A phishing scam sent by e-mail may start with con artists who send millions of e-mail messages that appear to come from Web sites consumers trust, such as the sites for their banks or credit-card companies.

"Scammers have figured out how to copy these Web sites" to make them look authentic, she said. "The information they ask for is everything they need to steal your identity."

Unsuspecting consumers often respond to these requests for their credit-card numbers, passwords, account information or other personal data.

MONTANA'S LEADING consumer-fraud fighters - Attorney General Mike McGrath and State Auditor John Morrison - explained efforts under way on the state front to curb consumer fraud.

McGrath laid out the details of a bill he wants passed by the 2007 Legislature that would place a "security freeze" on a consumer's personal information, restricting access to credit histories. That, in turn, would prohibit businesses from issuing credit in a consumer's name without that person's permission.

When the freeze is in place, the credit bureau may not release a consumer's credit report or other information unless the consumer allows it. The proposal would allow a temporarily "thaw" or lift the freeze for a particular creditor if the consumer applies for loans, credit or other services that may require credit-record checks.

"The point is you have control over your own personal information," McGrath said. "We think it will make a big difference in personal privacy."

McGrath also noted a new identity theft "passport" program that allows victims to get a special pass from the state, making it easier to prove to creditors and law officers that "they are who they say they are."

"I wouldn't go so far as to say it's a 'get out of jail free' card, but it does make it a little easier," he said. "Identity theft creates a host of problems. It's difficult to clean up your credit reports."

A new state law that went into effect Wednesday requires businesses to shred or otherwise destroy personal information about employees when they no longer need it. It further requires companies to notify anyone whose personal information may have been breached by that business.

Changes made by the 2005 Legislature shifted the responsibility for consumer protection from the state auditor to the Attorney General's Office.

The Auditor's Office is nevertheless heavily involved in consumer protection, particularly in cases of insurance or securities fraud.

Morrison relayed several examples of Montana residents victimized by investment scam artists, including a retired farming couple who invested $425,000 in a scheme that promised a 25 percent rate of return on their money by putting it in an off-shore account. By the time they called Morrison's office, they essentially were flat broke.

"Folks wind up in denial about it," Morrison said. "They don't want to admit they've been duped."

In another case, a 91-year-old assisted-living resident with dementia and other health problems was taken advantage of by a dishonest investment broker who had been a reputable agent.

"Sometimes a good apple becomes a bad apple," Morrison said, explaining that the broker had become addicted to day trading.

"Over time he made hundreds of unauthorized trades," he said.

By the time a friend realized the problem with the elderly woman's investments, the broker had stolen $100,000 and the woman died before it was recovered.

"We count on consumers to be our eyes and ears," Morrison stressed.

STATE LOTTERY criminal investigator Bill Henne warned the audience to be on the lookout for sweepstakes and lottery scams, especially those originating in other countries such as Canada.

"Technically we're not allowed to play foreign lotteries," he said, telling of one couple who lost over $200,000 by getting "sucked in" to a such a scam.

Cort Jensen, an attorney in the Attorney General Legal Services Division, cautioned consumers to "view everything with a heavy degree of skepticism," even alleged miracle cures.

"What you're really buying is hope," Jensen said.

And if anyone asks to have money wired to them, "don't do it," he stressed.

"It's tough to track and you can't take it [the money] back. It's gone for good," Jensen said. "Unless your idiot son needs bail money, there's no reason to use Western Union."

He explained another popular scam in which con artists buy goods with authentic-looking phony money orders. He cited the example of a person buying a car on eBay. The buyer sent the seller an $8,000 money order for a $5,000 car. Claiming it was a mistake and saying he didn't want to bother his bank with issuing a new money order, the con artist suggested the seller cash the $8,000 money order and wire the extra money back to him.

"The money order will bounce at the Federal Reserve, and when it bounces you have to pay the money back," Jensen warned.

Another popular scam tells consumers they've won government grants that they can collect by paying application fees.

The message of the day stressed by every presenter was twofold: Be careful who you give personal information to, and if it sounds too good to be true, it is.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com.