How To Spot These 3 Financial Scams

Bernard Madoff, money manager and convicted mastermind of a multi-billion dollar investment fraud, leaves a courthouse in Manhattan. Photographer: Daniel Barry/Bloomberg News.
You may think you’ll never be a victim of a financial crime.
Maybe you went to law school, worked on Wall Street, or watched countless Law & Order marathons.
However, sometimes fraudsters can scam you in unassuming ways.
Here are three popular financial scams and what you need to know to safeguard your money.
1. IRS Scam
The Scam: You receive a phone call from someone claiming to be an IRS agent who claims that you owe unpaid income tax. If you do not make immediate payment, the caller says that you will be arrested or face a lawsuit from the IRS.
What To Know: 

The IRS will always contact you first by mail before calling you. The IRS will never demand immediate payment. The IRS will never request a specific form of payment such as a wire transfer. The IRS will not threaten you with arrest or deportation for not paying your taxes. The IRS will not request personal or financial information by email. What To Do: Hang up the phone. If you think you may owe federal taxes, you can call the IRS at 1-800-829-1040 or visit the IRS website for help. You can report the scam to the Treasury Inspector General for Tax Administration or call 1-800-366-4484. You can file a complaint with the Federal Trade Commission (FTC) and add “IRS Telephone Scam” to the complaint description. You can also call 1-877-FTC-HELP (1-877-382-4357). If you receive an unsolicited, online message requesting immediate payment to the IRS, you can report the message to 2. Charity Scam
The Scam: Following a tragedy, you receive an appeal from someone claiming to represent a charitable organization who asks you for a donation.
What To Know: 
If you feel that you are being pressured to donate immediately, don’t give money on the spot. Ask to be removed from the organization’s contact list. If you decide to give, pay with a check or credit card (rather than cash). Verify the exact name of the charity. Many fake charities use similar names to reputable charity or use buzz words such as “cancer” or “disaster relief.” Contact the National Association of State Charity Officials, which is an association of state offices charged with oversight of charitable organizations and charitable solicitation in the United States. In many states, charities are required to register (often with the state attorney general) before they may solicit donations. If you decide to give and would like to claim a tax deduction for your donation, ensure that the charity has 501(c)(3) status. What To Do: You can contact your state’s attorney general or the Better Business Bureau to verify the charity’s identity. You can file a complaint with the Federal Trade Commission (FTC) or call 1-877-FTC-HELP (1-877-382-4357). 3. Obama Student Loan Forgiveness Scam
The Scam: A student loan debt company – usually through an online ad or email – will (for a fee) consolidate your student loans and lower your monthly payments through the ‘Obama Student Loan Forgiveness’ program.
What To Know: 
There is no ‘Obama Student Loan Forgiveness” program. This is a scam that sounds like Public Service Loan Forgiveness, which is a program for public servants that was created by President George W. Bush, not President Obama. If the company claims to have a relationship with the U.S. Department of Education, it is a scam. When it comes to student loans, only student loan servicers and debt collectors have a relationship with the U.S. Department of Education. Don’t pay an upfront fee for student loan debt relief. For your federal student loans, you can enroll for free in a student loan repayment plan with the federal government. You can also consolidate your federal loans (not private student loans) into a Direct Consolidation Loan with the federal government. What To Do: You can report the scam to the Consumer Financial Protection Bureau (CFPB). The best way to lower your student loan interest rate and monthly payment is to refinance your student loans. There are no origination fees or prepayment penalties, and you can find out your new student loan rate in two minutes without any impact to your credit score.

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