5 Predatory Money Pitches

The onset of recessionary times is bringing increased efforts by bottom-feeding merchants to take advantage of strapped consumers with offers of "help." You can already see them emerging on cable-TV ads, like so many cockroaches scurrying across a dirty kitchen floor.

Be vigilant and careful about responding to such offers. Do not give out personal information to vendors you do not know or trust. Make sure your computer is protected so that you don't inadvertently provide personal information you'll later regret.

Don't be silent if you've been targeted by a scam merchant. Get in touch with your local or state consumer protection agency. Find out if your local Better Business Bureau (BBB) knows anything about the company or the offer that's been pitched to you. Share your concerns with E-mail networks or blogs so the word gets out. Turning on the lights freezes cockroaches, and shedding light on bad business practices has the same effect.

Here are five services you can expect to see pitched with increasing frequency. There are legitimate providers of all of these services, to be sure, but these areas also are where commercial bottom feeders live and thrive.

Credit-card deals—This is not the time to take on more credit, and you'd think banks and other credit-card issuers would be learning their lessons from the huge losses they've taken. Credit-card delinquencies are at record levels, but no mind. Unsolicited credit-card offers keep coming in. Credit-card companies are imposing or raising fees on late payments, above-limit balances, and a host of other activities. Economy.com reports that strapped consumers are accumulating higher balances and having trouble with repayments.

Heartstring "charities"—Expect a jump in holiday-season calls from organizations that prey on your desire to help those in need. Never give money based only on a phone call. Never give out your credit-card number to a stranger. Legitimate charities will seek a pledge and are willing to follow up with a mailed donation form. The best charities spend only a small amount of your donation on their fundraising operations; the worst spend nearly all your money on their salaries. There are solid online tools to help you recognize the good apples from the rotten ones.

Home equity loans—Like credit-card offers, these deals often amount to layering further debts onto people who can't afford to pay back the debts they already have. Especially around the holidays, we see an increase in offers "to get that spending money you need to give your loved ones the holiday season they deserve." The best gift to loved ones is not to be in financial distress.

Debt consolidation—Many of these companies charge you money for a service that is often available for free from a community group or other local nonprofit agency. If your debts are with one or two creditors, try to work out terms with them directly before turning to a consolidation service.

Tax forgiveness—Be wary of companies that offer to help you settle your tax obligations for 10 cents on the dollar or some other too-good-to-be-true outcome. As with debt consolidation, there are free services that provide tax help, including accountants' groups that provide free help in preparing tax returns.

Here's a BBB list of activities and problems it says surface more frequently during a downturn:

1. Advance-fee loan scams
2. Work-at-home scams
3. Mortgage foreclosure rescue
4. Illegal debt collection practices (ones that violate the Fair Debt Collection Practices Act)
5. Problems for consumers when a business goes bankrupt, such as outstanding gift cards, warranties, and goods promised