Scammed By Family or a Friend? Here's What to Do

It's bad enough to get financially scammed by a stockbroker, investment adviser or some other financial expert that is supposed to be working for you. But what should you do when a family member -- or a trusted friend -- scams you and costs you money? Here is some advice on handling this thorny situation.

Evaluate the Circumstances
Start by taking a long hard look at what went down. Was there some intentional fraud involved -- like them using your social security number or credit without your knowledge? Did the con you by lying or manipulating you into giving them money? Or was it just a case of them giving you bad financial advice and you losing money? Family members and close friends may get ask you to "invest" in new business ventures or get-rich-quick schemes and then when you lose money, they say: "Don't be mad at me... I lost my money too!" It's hard to evaluate the extent of their guilt in these situations, which is why in most instances it's best to say "No" to such "investment opportunities" and preserve your relationship. Trust me, they'll get over it if you say "No" and decline to "invest." But you may not get over it, if you invest and get scammed.

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The New "Oprah" Scam
No, Oprah would not ask you for your credit card information via email, so if you get a message saying you've been selected for some special episode and asked to send along your personal data, don't fall for it. The FBI just issued a warning to consumers about this new scam that uses Oprah's popularity to try to separate you from your money, first by thinking you're buying a plane ticket to her how in Chicago.

Find out how you can complain if you get this email by checking Mitch Lipka's latest Buyer Beware column.

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Save Yourself from These Scams

Think you couldn't fall for a scam? Well, even when pennies are tight, a new study says 1.3 million people have fallen for check scams and most of them have been taken for $3,000 or more! To protect yourself, peruse this list of the most prominent scams and keep your money safe.

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"Spear Phishing"
This is not your ordinary stab-in-dark phishing scam, but such an extra-dangerous attempt to bilk you from your money that the FBI just issued a warning to consumers.

This is how the scam works: Rather than use a massive email blast, spear phishing attacks choose smaller, selected groups that share something in common. That could be anything from a workplace, to a bank to a website everyone purchased from.

Find out how to protect yourself.

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Mystery Shopper or Processor
Work from home scams have been around for a long, long time, but thanks to a lousy economy they have become a growth market for frauds.

Many people have been duped by mystery shopping offers, some even combining the lure of getting paid for shopping (after paying a hefty fee for training) and the "overpayment" scam (see the next slide...).

Scammers might also sell you on the idea you could make money processing rebates or do billing. To learn how to enter this lucrative field you are sold a kit and most likely will get hit with subsequent monthly charges. The only ones making money on these deal are the crooks.

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Getting Paid Too Much
This scam is enjoying a resurgence that folks using classified ads like Craigslist have been seeing. Someone answers your ad and offers to pay way too much for a service that is offered. Sometimes they say it is to pay their mover, who won't accept their check from a foreign bank. Often the person on the other end claims to be from another country. They tell you to keep what you're due and then refund them the rest. Just wait ... their check bounces and you're left high and dry.

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The Check Isn't Real
The check comes in the mail. It's probably for a few thousand dollars. It's supposed to cover the fees you are to receive for a grant you've supposedly just been awarded, the lottery you've won or some other reward you never sought. Cash their check and then send that amount back to them (makes sense, right?) then you'll get a much fatter check. Problem is their check is bad, but you'll not likely find that out for a week or more -- after your money is long gone.

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Your Auto Warranty Is Expiring -- Or Is It?
The automated call comes in on your cell phone or home phone. You're told your auto warranty is about to expire and if you don't act right away to keep it current you could lose coverage. Actually, what's happening is you're being sold an extended warranty. For some, the calls are ludicrous; they don't have cars. But for others they can be scary and, at a minimum, annoying and uses up minutes and battery time on your cell phone. The Better Business Bureau reports a huge spike in the number of complaints against those selling auto warranties.

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The Nigerian Letter
This is one of the classic scams that just keeps coming back for more. It presents itself in new and different forms -- recently using a bogus note from the director of the FBI himself as the come-on. The Nigerian letter, also known as 419 fraud for the section of Nigerian law it violates, involves an e-mail (it really started as a letter) that seeks your help to stash some money for a foreign official in a jam. Your kindness in hanging onto their millions is supposed to be repaid by giving you a percentage. Instead, you end up sending your money to them.

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Stimulus for Crooks
Whether it's letters supposedly from the Small Business Administration, bogus e-mails from the Internal Revenue Service or promises of "free" advice to get government grants, frauds are exploiting the idea that the federal government is distributing economic stimulus money. These phony notes solicit personal information intended to give the bad guys access to your credit or worse -- your cash. Remember, if something that appears to be from the government asks you for all sorts of personal information it's more likely from a crook trying to stimulate his or her own bank account.

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What a Car Deal
It starts out with an ad for a car, most recently featuring people claiming they are about to be deployed with the military. The car is priced way below market value because they have to sell it quickly. You contact the seller and are told that you have to pay to an escrow service that they chose. The price is so good you don't want to lose out, so you agree to place a deposit or even pay the full amount to the "escrow service." It turns out it's not an escrow service and you don't end up with a car.

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Protect Your Credit and Finances
If you know beyond a doubt that you were conned, and that it was indeed intentional, re-claim control of your finances by being proactive and aggressive in resolving the problem to the best of your ability.

Let's say you were the victim of identity theft, and someone misused your credit. Put a credit freeze and a fraud alert on your credit reports to prevent further damage from this person who has blatantly taken advantage of you. Start monitoring your credit every month to make sure nothing else unexpected pops up there. If you had a bank or credit account that the person tapped into, perhaps because they were a co-signer or authorized user, have them removed immediately.

Confront the Con Artist
You must also confront the culprit directly. It doesn't matter if that person is a "close" family member. I don't care if it's your sister, a cousin – or even your mother. Let this individual know that they have totally crossed the line and damaged your finances or credit rating in a way that is completely unfair, disrespectful to you, and that has long-lasting implications. Also explain that they have violated your trust.

If the person did something like getting a cell phone or a utility account in your name, tell him or her that they have exactly one week to contact every creditor in which they used your name to cut off that service -- and put it in their name.

If that person's credit is bad (a likely scenario) and they can't get a phone, utility service or cable in their own name, that's their issue to deal with; not yours. A week's time is plenty of notice for them to take action. Tell them that if they don't handle it in a week, you will be forced to contact those utilities directly and advise them of the situation. Hopefully, you will be stern and straight-forward enough in your approach to this person that he or she will know that you mean business.

Turn the Scammer In -- Or Not
I'm not saying that you have to turn the person in (although they do deserve it). But neither should you be held continually responsible for someone else's financial mess. Ultimately, the decision about whether to report the financial scam to authorities, such as the police, should be based on the magnitude of the damage done, the relationship you have with the individual, and the extent to which he or she is willing to make amends.

If the person doesn't act quickly, and follow through as you've told them to do, don't hesitate to get those services cut off or report them to the appropriate authorities. If push comes to shove, and you "have to" tell a company or the authorities who the culprit is, I would go ahead and do it. Why would you go through unwarranted mental and financial stress for this person when clearly they've shown you absolutely no personal or financial consideration whatsoever?

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Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times best selle, 'Zero Debt: The Ultimate Guide to Financial Freedom.'