10 church scam tricks and 5 golden rules to prevent your trust and compassion from being abused: Internet Scambusters #358
Church scam tricks exploit trust and cost their victims millions of dollars every year, so much so that one state has named one variety of this type of crime its number one scam.
Yet by applying some commonsense measures, most of these con tricks can be avoided -- whether you're a member of a religious organization or on the receiving end of a bogus request for help.
In this issue, we highlight the 10 most common types of religious scams and give you our five golden rules for avoiding them.
First, we recommend you check out the most popular articles from our other sites during the past week:
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Prevent Unwanted Email -- Prevent Identity Theft: Learn how to prevent spam and you will learn how to prevent identity theft.
What To Do About iPod Headphones: Find out why is it so difficult to get ipod headphones that fit and what you can do about it.
Which is Better? Cable TV or Satellite Reception: Side by side comparisons of cable TV and satellite to help you decide which would work better for you.
On to today's main topic...
Let Us Prey: How Church Scam Artists Get Away With Millions
The trusting nature of many religious worshippers, and, often, their fervent wish to help others, have opened the floodgates to an evil deception -- the church scam.
Church scams can happen when members of a congregation, a church, temple or mosque, or even a whole religious organization, are fooled into parting with their money either for a supposedly profitable investment or simply to support an individual who claims to have fallen on hard times.
Tens of millions of dollars have been plowed by individuals into hopeless projects that have turned out to be Ponzi schemes. You can find out more about Ponzi schemes in this article: The Top 10 Ways to Avoid Being Sucked into a Ponzi Scheme.
Perhaps the most common religious scam is a variation of the Nigerian scam, which we wrote about in SCAMMED! What We All Can Learn from These Real-Life Victims (under Foreign Inheritance).
In other religious scams, churches have been left with thousands of dollars of debt after being hoodwinked into signing costly leases for equipment they thought was free.
In this issue, we take a look at the most common types of church scams and offer some advice on how to avoid them.
The affinity church scam
"Affinity" simply means something like "a shared understanding, interest or belief." And claiming to share someone else's viewpoint is the sneaky cover many church scam artists use.
Pretending to share their faith lulls members of religious organizations into thinking a scammer is genuine.
Often claiming some kind of divine guidance, using religious slogans, or claiming to be raising funds for a religious or other worthy cause, church scammers invite their new "friends" to invest in what turns out to be nothing more than a Ponzi scheme paying for their personal lifestyle.
This is such a huge and common crime that the state of Arizona just listed affinity scams of this type as its number one scam for 2009.
And in one recent nationwide religious scam, churchgoers are said to have lost more than $50 million in a phony gold bullion scheme, promoted on daily telephone "prayer chains," in which they thought they could earn a huge return.
Many affinity church scams involve promises of triple digit returns or other similarly unbelievable come-ons.
In the bullion case, for example, the amount of precious metal said to be involved was greater than the gold reserves held by the United States!
The sob-story church scam
In a way, this religious scam is a variation of the affinity scam. It just happens at a personal level and usually involves less money.
A newcomer turns up at church. They may profess to be recently converted to the faith and claim this has changed their lives.
Sometimes immediately, sometimes over a lengthy period of time, they tell a story of a struggle against hardship or a recent tragedy.
Typical examples are stories about needing to travel across country to reunite with family they haven't seen for years or to attend a parent's funeral, or claims to be suffering from a terminal illness.
Church funds or contributions from compassionate congregation members usually appear quickly. And just as fast, the scammer disappears!
"Free" or cut-price equipment offers
Recent news reports have highlighted several variations of this type of church scam, in which religious organizations sign up to use equipment for what they believe to be little or no cost.
Typically this may involve computers, photocopiers or other technology.
Sometimes the organizations are told they have to pay upfront but that their costs will be reimbursed by a sponsor, who fails to materialize.
Other times, fees and other costs are hidden in the fine print of an agreement or lease.
And on yet other occasions, churches have replaced equipment leased to them via a third party (i.e., not the original supplier or manufacturer).
The third party -- the scammer in this case -- does not return the equipment to the supplier or cancel the original lease. They sell the equipment instead.
In one case, a church with two photocopiers discovered it owed money on 14 leases!
Other common religious scams
If you belong to a religious organization, here are a few more scams to beware of:
Using a church as a drop-off. The scammer orders equipment in the name of a church, then waits for the item to be left on the step, knowing no one will be there.
Hijacking of the church's email account, which is then used to send out phony distress messages (for example, from the pastor) asking for money to be wired.
A "Nigerian" scam in which church members are told they are entitled to buy cut-price cars or other equipment, supplemented by a religious bequest. Again, they have to wire cash in advance.
"Gifting clubs" -- a sort of pyramid scheme, where new members contribute money in the hope that they too will get cash by recruiting more members. These are illegal. See Are Your Home and Cell Phone Records Private? for more on gifting clubs.
In addition, here are three more church scam tricks, this time ones crooks use to try to fool the general public:
Business and door-to-door collections supposedly on behalf of a church or religious group. Or phony church-goers who charge in advance for community services, like meals-on-wheels that never arrive.
Illegal tax avoidance schemes that claim you can set yourself up as a church so you can claim charitable status.
Cults. This is a whole church scam subject in itself. Basically, under the guise of some sort of faith, an organization recruits members and convinces them to hand over all their possessions.
How to avoid church scams
There are five golden rules for avoiding church scams drawn from the tips we frequently provide subscribers across all type of con tricks.
The most common adage applies to affinity and equipment-related church scams -- if it seems too good to be true, it probably is.
Never believe someone is who they say they are, or that their claims are true, without independent proof.
Never wire or donate cash unless you are 100% sure who the recipient is.
Always read the small print of any agreement you are signing. Discuss it with others -- don't rush.
Carefully check out the credentials of any organization you are dealing with, whether they're investment firms or equipment suppliers.
There is also some useful guidance on church scams on the Federal Trade Commission website.
By applying these common sense rules, you can ensure your church or religious group can safely maintain its spiritual and social focus.
The church scam artists meanwhile can await their day of judgment -- whether it's in this world or the next!
Time to close -- we're off to take a walk. See you next week.