How to avoid online scams

The Cash for Clunkers program has been great for car buyers and the auto industry. But, you know who else is benefiting from it? Online scam artists. Phony websites are suddenly popping up claiming to be connected to the program, according to fraud expert Sid Kirchheimer, author of Scam-Proof Your Life. Don’t fall for it! “The phony sites ask for your Social Security number and tell you that you have to preregister in order to qualify for Cash for Clunkers, which you don’t,” he says.

How to Avoid Online Scams

And this is just the latest in a string of Web scams—from work-at-home schemes to fake lotteries to bogus shopping sites and more. According to the FBI Internet Crimes Complaint Center, online fraud complaints went up 33 percent from 2007 to 2008, with $265 million in lost or stolen money. To protect yourself from getting ripped off, follow these online safety tips from Kirchheimer.

1. Be smart about the price. Research the average prices for cars, computers, furniture or whatever you’re shopping for online. “If you see an item priced far below similar items, be suspicious,” says Kirchheimer. Scammers use dramatically lower prices on high-demand products to reel you in. Too-good-to-be-true offers are usually just that.

2. Never click on links sent from someone you don’t know. Scammers can build websites that look like online destinations for well-known banks, retailers and escrow payment services. Clicking on links for these fraudulent sites allows scammers to steal your money when you enter your payment information.

3. Never purchase items online from a public computer or with your own computer when connected to an unsecure or public Wi-Fi network. Criminals may have hacked that network and could steal your passwords, credit card information and other details.

4. Don’t shop online when your computer is slow or has numerous pop-ups. This suggests your computer may be infected with a virus that could include malicious software.

5. Avoid using words found in the dictionary as passwords. Even when repeated, spelled backwards or tweaked with symbols and numbers, they are still vulnerable to hackers using “dictionary script” software. “Think of creative combinations, letters of favorite phrases and fragments of words to get a unique password,” advises Kirchheimer.

6. Padlock icons should always be on the outside frame of a web page. Be wary of any security indicators within a web page; this is especially important to remember for sites that require you to log in and those that contain private banking information.

7. Mark sure that any web page where you’re filling out financial information has a URL that begins with https. If you just see http (without the “s”) on the page, don’t enter any personal or financial information—the page is not secure.

8. Know whom you’re dealing with. Many online classified sites only advertise items for sale; they don’t get involved in transactions. Other sites do help facilitate transactions. “If a seller claims to be working with or accessing a transaction service from a website you know, make sure that site actually offers that service by visiting its home page and finding it yourself,” says Kirchheimer.

Top 5 Warning Signs That You’re Being Scammed
Being smart about what you do and don’t do online is just part of Kirchheimer’s stay-safe solution. Being able to recognize some of the biggest red flags is the other:

1. Any request for you to wire funds. There’s no legitimate reason why a vendor or company would ask you to wire money.

2. Scammer grammar. Many scams originate overseas, and English is not the native language. So be on the lookout for poor grammar and misspellings—a red flag that an ad or e-mail might be fraudulent.

3. E-mails that are not personalized. If the greeting is “Dear Friend,” “To Whom It May Concern” or any other generic opening, it’s a definite sign of fraud. Never click on anything included in this type of e-mail.

4. No communication or contact information. If a site doesn’t post a telephone number or physical address, or if a seller is unwilling to give you a phone number—beware.

5. Any communication from the government or suspicious e-mails from your bank. Uncle Sam does not send e-mails, so never open anything that claims to come from a government agency. Also, e-mails from your bank asking you to update account information may be fraudulent. Since your bank has this information on file, contact them directly when it needs to be updated.