Phony Fraud Settlement Scam Surfaces

By Mark Huffman
ConsumerAffairs.com

April 10, 2007

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Consumers in Oklahoma are getting letters in the mail notifying them they have been identified as fraud victims. In reality, they haven't been victimized -- but are about to be.

Oklahoma Attorney General Drew Edmondson says it appears to be a clever scam, in which consumers are notified of their eligibility for a cash settlement in a class action fraud settlement.

"The letter informs the consumer they have been selected to receive compensation under the terms of an out-of-court settlement," Edmondson said. "The letter also contains a check in the amount of $2,975, and it directs the recipient to contact a specified law office within five business days to 'facilitate the release' of the full award -- in this case $129,000.

"My suspicion is that when the consumer contacts the law firm, they are asked to provide bank account information so that the full award can be deposited. By the time the enclosed check bounces, the scammers will have had ample time to clean out the consumer's bank account."

Edmondson said his office has been unable to pinpoint the source of the scam, but there are several red flags within the letter.

"The letter states that all parties involved in the class action lawsuit are sealed, and no specific information is available regarding the type of scam to which the recipient has supposedly fallen victim," Edmondson said.

"The letter also requires the consumer to contact a Michigan law firm in a very short period of time, and because of a 'gag order' the consumer risks forfeiting his share of the money if he contacts anyone to check the validity of the settlement. Any one of these things would send up a red flag. Together, they set off lights and sirens," he said.

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