Investment Scams

In a con where life imitated art, Squid Game fans found out the hard way that a cryptocurrency based on the Netflix series was just as risky as the money contest the series is based on. 

After a team of cryptocurrency creators rolled out a digital currency called SQUID, investors rushed to buy assets worth more than $3 million. But those same investors woke up Monday to find that the creators had closed down their website and taken off with the cash.

For the un-Squided, the Squid Game project is a crypto play-to-earn platform inspired by the Korean hit series on Netflix about a deadly tournament of children's games, according to CoinMarketCap. “SQUID is the only token that can be used in Squid Game. You will need SQUID to participate in a game or get restart after you fail the game.”

Netflix was quick to say it had no part in this. The streaming service told CNN Business that it was not affiliated with the cryptocurrency and declined to comment any further.

A “rug pull”

Gizmodo reports that this type of scam is called a "rug pull." That means the cryptocurrency creators cashed out of their coins in exchange for real money, quickly devaluing the crypto's value.

Like many crypto darlings, SQUID took off quickly. The digital asset hit a high of $2,861 before falling to $0 as of Monday, as reported by CoinMarketCap. The scam could have actually netted more for the creators if they allowed it to gain more traction. CoinMarketCap data reviewed by ConsumerAffairs noted that SQUID was on 34,183 individual watchlists. 

It seems that this particular hustle was planned out in advance. Some SQUID owners told CoinMarketCap that because of an anti-dumping mechanism put in place by the developers, they were forced to the sidelines with little choice but to watch helplessly as the cryptocurrency’s value climbed. 

Despite the plunge in value, it appears that some investors are still trying to pump money into SQUID. As of 11 a.m on Tuesday, CoinMarketCap listed the live Squid Game price at $0.003467 USD, with a 24-hour trading volume of $14,445,122 USD. 

The Federal Trade Commission (FTC) reports that it has sent checks to more than 4,500 consumers who lost money to a company called Blue Hippo that sold high-priced computers on an installment plan.

The case stretches back to the early 2000s. At the time, the internet was becoming mainstream, but smartphones and tablets were only a glimmer in Steve Jobs’ eye. People who wanted to access the growing benefits of the internet needed a personal computer.

In 2008, the FTC charged BlueHippo Funding, LLC and affiliate BlueHippo Capital, LLC with promising to finance new computers that they sold at a very high price. The agency said the companies collected money from customers and then failed to provide them with computers. 

The FTC also claimed that the two companies failed to disclose key terms of BlueHippo’s refund policy to customers prior to receiving payments.

ConsumerAffairs reported extensively on the issue in 2007 and received many reports from consumers who said the devices they received were old and out of date. We found that Wal-Mart's laptop and printer combo could be purchased for $571 at the time. In contrast, BlueHippo's slower laptop package carried a price tag of up to $2,698 -- almost five times the cost of Wal-Mart's better offering.

Contempt charges

After agreeing to a settlement with the FTC, the agency charged that BlueHippo continued to engage in deceptive practices. In 2009, the FTC sued the companies again, as well as CEO and sole owner Joseph Rensin, charging them with contempt for violating the 2008 order. 

After a lengthy court battle, the FTC won. It is now using the money it recovered from Rensin to provide more than $103,000 in refunds to consumers.

The FTC has the names and addresses of consumers who are eligible for a refund. The agency said people who receive checks should deposit or cash them within 90 days. 

Consumers who have questions about their checks can call the refund administrator Analytics, Inc., at 1-855-558-1233. It’s also important to remember that the FTC never requires people to pay money or provide account information to cash a refund check.

The Federal Trade Commission and the Office of the Illinois Attorney General are sending $4 million in payments to more than 10,000 consumers who were duped into giving money to the operators of a fraudulent debt collection agency. 

Consumers who fell victim to the scheme were tricked into paying debts that they either didn’t owe or that the defendants weren’t authorized to collect. 

The defendants did business under a number of names, including Stark Law, Stark Recovery, and Capital Harris Miller & Associates. The people behind the scheme allegedly harassed consumers with phone calls and demanded immediate payment for supposedly delinquent loans. 

Victims would sometimes be threatened with lawsuits or arrests and were told they would be charged with “defrauding a financial institution” or “passing a bad check,” even though failing to pay a private debt is not a crime. 

‘Brazen’ scam 

The complaint noted that many consumers ended up paying the debts they supposedly owed (even if they didn’t actually owe them) simply because they wanted to put an end to the calls and alleged threats.

The case is part of the FTC’s “Operation Collection Protection,” which aims to crack down on parties subjecting consumers to illegal debt collection tactics. 

“It’s illegal to harass people to pay debts they clearly don’t owe, and to sell phony debts to other debt collectors,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “We’re proud to partner with the Illinois Attorney General to halt these egregious debt collection practices.”

“Phantom debt collection is one of the most brazen scams today,” said Illinois Attorney General Lisa Madigan. “With the FTC, we are working to protect consumers by shutting down these scam operations.”

Consumers affected by this scam are receiving full refunds -- an average of $375 each. The FTC says consumers who receive checks should deposit or cash them within 90 days. 

There aren’t too many people out there who have been happy to hear a debt collector on the other end of the phone, and one of the latest purported schemes by a debt collection operation certainly won’t help that image.

Earlier today, the Federal Trade Commission (FTC) charged defendants Hardco Holding Group LLC, S&H Financial Group Inc., Daryl M. Hall, and Dequan M. Sicard with collecting money on fake debts by posing as lawyers and threatening to sue consumers if they didn’t pay up.

The agency said that the defendants often called people without identifying themselves as debt collectors and provided phony case numbers and a phone number to call so that they could address a pending or imminent lawsuit or criminal action charge. To get some people to pay up on these “phantom debts,” the defendants also allegedly threatened them with jail time or told them that police would be arriving at their home to take them away.

Additionally, the FTC says that the defendants often posed as legitimate small businesses and disclosed information on supposed debts to third parties, failed to send consumers required written notices with the debt amount and creditor’s name, and failed to give consumers the opportunity to dispute their debts.

The agency charges the defendants with violating the FTC Act and the Fair Debt Collection Practices Act and has entered a temporary restraining order to freeze their assets and seek equitable relief. The case was filed in U.S. District Court for the Middle District of Florida, Orlando Division.

How to handle fake debt collectors

The FTC says that fake debt collectors will often go to great lengths to get you to buy into their scams. The agency offers the following advice:

• If a debt collector says you owe a debt, before you agree to pay anything ask for a validation notice that says how much money you owe. By law, they have to send you a validation notice in writing, within five days of contacting you. If they don’t, that’s a sign that you’re dealing with a fake debt collector.
• If a debt collector threatens you with jail time, hang up the phone. They’re violating the law and you should report them to the FTC.
• If you own a small business, it might be a good idea to research online occasionally to check if anyone else is using your business’ name. And if you start receiving complaints about practices that your business is not engaged in, report it to the FTC.

Cyber hacks are not the only way criminals get access to your bank account. The relatively old school practice of installing "skimmer" devices on ATMs still works pretty well.

Despite the practice of many banks to refund customers' money lost to skimming, the FBI estimates the crime costs consumers $1 billion a year.

A skimmer is device a thief places over the real card reader on an ATM. It looks like a card reading device but it "skims" the data from the ATM card's magnetic strip and records it.

There is a second component to a skimmer -- a tiny camera that records key strokes when customers enter a PIN. With both pieces of data, a thief can then clean out consumers' bank accounts.

New York case

The FBI used the recent arrest and prosecution of a defendant in New York to elaborate on these schemes and to inform consumers about how to avoid them. The FBI charged a Romanian citizen with installing numerous skimmers at ATMs along the I-87 corridor around Albany, N.Y.

The agency says the defendant installed the devices at night, when no one was around. The FBI described the devices as relatively primitive—two simple pieces of metal with a skimmer hidden in one and a camera hidden in the other. However, they were effective enough to do the job.

The defendant and his accomplice, who has since fled the country, would only leave the equipment in place for 24 hours or so. In that time they could gain access to dozens of accounts. With the stolen data, they created their own ATM cards and pulled money out of the victims' bank accounts.

If a bank noticed the skimming devices, losses could be reduced. If they didn't customers could lose all the money in their accounts. At one bank, the FBI said the defendant walked away with $63,000. The haul from three banks added up to $127,000.

How to protect yourself

The FBI urges consumers to be careful when and where they use an ATM and learn how to identify tampering. Anywhere there is a card reader, such as gas pumps, there's potential risk.

“You really should be cognizant of where you’re using one,” said FBI Special Agent Paul Scuzzarella. “If it’s in a hidden area in a building, like in a gas station around the corner, who knows who’s back there. If it’s in the main area, it’s less likely someone has tampered with that.”

If you notice anything unusual on an ATM, you shouldn't use it. For that reason it pays to use a single ATM regularly. That way you are familiar with the way it is supposed to appear and operate. If something doesn't look right, don't use the ATM and notify the bank.

Seven individuals from Nigeria and South Africa have pleaded guilty to participating in a large-scale international online fraud conspiracy that victimized consumers seeking romance online and netted tens of millions of dollars over the last decade.

According to the plea agreements, the defendants used unsuspecting victims to cash counterfeit checks and money orders, used stolen credit card numbers to purchase electronics and other merchandise, and used stolen personal identification information to take over victims’ bank accounts.  

David, of Loveland, Colorado, told ConsumerAffairs in 2007 that he fell for a romance scam in December 2005, when he thought he was helping a young Russian woman stranded in a foreign country.

"Since then I have been approached on every dating site I have joined by supposed women who are stranded in Nigeria or Ghana," David said. "When the dating sites are notified they are scammers they do nothing about it."

In the current case, the defendants admitted that they recruited U.S. citizens via similar romance scams, in which the perpetrator would use a false identity on a dating website to establish a romantic relationship with an unsuspecting victim. 

Trust and affection

Once the perpetrator gained the victim’s trust and affection, the perpetrator would convince the victim to either send money or to help carry out fraud schemes.  For example, the defendants admitted that they used romance victims to launder money via Western Union and MoneyGram, to re-package and re-ship fraudulently obtained merchandise, and to cash counterfeit checks. 

In 2014, a woman in Indiana lost $150,000 to an online scammer whom she'd thought was a local man falling in love with her. 

"It's almost like you know something is coming, but you're in so, so far. You just play it through," said Tonya, who sent her supposed lover nearly $150,000 before she finally wised up.

Anyone who believes they may be a victim of online fraud should report suspected criminal activity using the Homeland Security Investigations Tip Form.

Rhulane Fionah Hlungwane, 26, of South Africa; Gabriel Oludare Adeniran, 30, of Nigeria; Olusegun Seyi Shonekan, 34, of Nigeria; Taofeeq Olamilekan Oyelade, 32, of Nigeria; Olufemi Obaro Omoraka, 27, of Nigeria; Anuoluwapo Segun Adegbemigun, 40, of Nigeria; and Adekunle Adefila, 41, of Nigeria, each pleaded guilty this week to one count of conspiracy to commit mail and wire fraud. 

In addition, Hlungwane, Adeniran, Shonekan, Oyelade, Omoraka, and Adegbemigun each pleaded guilty to one count of conspiracy to commit identity theft, access device fraud, and theft of government funds.

Money-making schemes linked to Amazon and other legitimate companies bilked consumers out of thousands of dollars by promising big profits and also luring victims with a phony grants program, the Federal Trade Commission alleges.

The FTC said three individuals and their five companies took money from seniors, veterans and debt-laden consumers with their schemes and grant promises.

The Amazon scheme offered big profits to its victims, who were asked to put up thousands of dollars for a website that would supposedly earn commissions by selling merchandise on Amazon. Consumers who fell for it were also hit up for advertising and search engine optimization services that, the FTC alleges, were worthless.

A federal court has temporarily halted the operation. The agency seeks to end the alleged illegal practices and obtain money for return to consumers.

Government grants

Besides the Amazon scheme, the defendants' telemarketers allegedly also call people, often claiming to represent the government, and falsely tell them they can get government and corporate grants to help pay for home repairs, medical costs, and paying down debt. They ask for thousands of dollars up-front and falsely promise that consumers will receive grants worth tens of thousands of dollars within 90 days.

According to the FTC, the defendants then tried to extract even larger payments from many of these same consumers using a tactic known as “reloading” – offering to sell them additional phony grants and typically promising that they can qualify for larger grants by forming a limited liability company.

Consumers receive no money from these schemes, according to the FTC. Those who call the defendants to complain are ignored, and the defendants provide no refunds.

The defendants are Blue Saguaro Marketing LLC, also doing business as Blue Saguaro Grant Program, Gera Grant, Government Grant Service, Grant Center, and Grant Resources; MarketingWays.com LLC, also d/b/a Amazon.com Associates Program; Max Results Marketing LLC, also d/b/a Amazon.com Associates Program, Amazon Affiliate Program, Amazon Associates Central, Gera Grant and, and Grant Strategy Solutions; Oro Canyon Marketing II LLC; Paramount Business Services LLC, also d/b/a Paramount Business Resources; Stephanie A. Bateluna; Stacey Vela; and Carl E. Morris, Jr. They are charged with violating the FTC Act and the Telemarketing Sales Rule.

The U.S. District Court for the District of Arizona entered a temporary restraining order against the defendants on October 11, 2016, and extended the order on October 25, 2016.