Class-Action Scam Threatens Consumers

Supposed lawsuit settlement is bogus

December 3, 2008

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Consumer protection agencies in South Carolina are warning of a new under-handed scheme to separate you from your money. It's called the class-action scam and it works like this:

A caller tells you you're part of a class-action lawsuit settlement that entitles you to hundreds, even thousands, of dollars. All you need to do, the caller says, is pay a few hundred dollars to cover part of the legal fees and the taxes on your share of the supposed settlement.

“Especially in this day and age, when the economy is bad, consumers are going to, you know, race for any kind of golden rainbow that they can find. And this is no different. It’s also dangerous because class action lawsuit is something we are familiar with,“ said Alice Brooks of the South Carolina Department of Consumer Affairs.

For example, there have been legitimate class action lawsuits against credit card companies over interest rates, and it’s possible you could be a part of that class and know nothing about it or any settlement. The key difference is that any settlement money would likely be just a few dollars and it would be credited to your credit card account.

The Department of Consumer Affairs say there are two main things you should know to avoid this scam: no legitimate class action suit will have someone contact you by phone; and you would never have to pay money upfront in order to receive money from a lawsuit settlement or lottery winnings.

Another red flag in this scam is that the person making the phone call sometimes asks that the “fees” should be mailed to a postal box in Canada or sent by wire transfer.

The scam was first reported by NewsChannel 7's Robert Kittle.

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