The holidays bring good cheer, mistletoe – and scam artists.

Holiday scammers play on your trusting nature, desire for a bargain and “urgent need” to update your financial information in their continuing quest to separate you from your money.

“Skimming is the simplest scam,” says Jim Stickley, co-founder of TraceSecurity in Baton Rouge, Louisiana. “The person processing your credit purchase disappears for a brief period, copies down your name, account number and the number on the back of the card before returning it to you. The thief can then use your credit card.”

The beauty of the scam is that you won’t know you’ve been had until the bill arrives a few weeks later. By then, you’ve almost certainly used the credit card several times and it’s difficult to trace the fraud. So, never let your card out of your sight.

Unscrupulous merchants will double bill small amounts, typically on different days. If you catch it, the merchant will blame the fraud on “clerical error” and correct it. But many people don’t check their monthly credit card statement and the crook simply pockets the overcharges.

Keep an eye out for these holiday scams:

1) E-Card Greetings

An e-mailed greeting card looks like it’s from a reputable company, and you’re curious about who sent it. If you open the card in a burst of holiday cheer, you’ll get an error message saying the animation won’t work unless you download the latest software. Don’t do it. The software is a Trojan horse that gives the sender complete access to your computer, including online banking, stock trading and taxes.

This scam is effective because after downloading the software, the animated e-card comes to life and your computer functions normally. It may take weeks before you discover financial irregularities.

Solution: Don’t open an e-card or e-mail attachment from anyone you don’t know. Never download questionable software from the Internet. Always install the latest security updates from Microsoft or other software companies. 

2) Phony Sign-Up Table

ID thieves set up a table at a mall and urge passersby to sign up for a new credit card. Many folks overspend during the holidays and another credit card, especially one with a low introductory rate, seems like a good idea. But there’s a reason you’ve never head of the company offering the card – it doesn’t exist. On the application for the phony card, you provide name, address, date of birth, mother’s maiden name, Social Security Number, driver’s license number – all the information a thief needs to steal your identity and destroy your credit by running up huge bills.

During the holiday season, mall security may not immediately know who has permission to set up a table. Those who haven’t been approved will be asked to leave and they’ll take all the vital credit information with them, no questions asked.

The scam can be pulled at swap meets, hobby shows, sporting events – you name it. Fake credit card applications that arrive in the mail are a variation on the theme.

Solution: Apply for a credit card only through a bank. 

3) Account information needed.

If you get an e-mail asking you to confirm your ID and account number, some entrepreneur (and candidate for prison stripes) is fishing – or “phishing” in Internet lingo – for your credit information with intent to defraud.

This scam takes many forms and frequently shows up in e-mails purporting to be from your bank, credit card company, online stock trader, or an online auction company. Most notes say there’s been a security breech or a computer glitch and the company needs to double-check your information to be sure your account hasn’t been compromised. In short, the scammers say they’re helping you and dire consequences will befall you if you don’t respond immediately. A variation on the theme uses a toll-free phone number.

Solution: Don’t respond and delete the note. Would you give your financial information to a stranger on the street? Not likely. So, never give your personal ID or credit information to someone you don’t know via e-mail or over the phone, even if that person claims to be from your bank. 

4) You’re a winner!

You get an e-mail or phone message saying that you’ve won a nifty prize and all you have to do is visit a Web site or return the call by a certain time to collect your prize.

If you respond, you’ll be asked to provide personal information such as name, e-mail and home address to “verify” that you’ve won the prize. Then you’ll be asked to perform a detailed task to win the prize. Get this: There is no prize, even if you complete a task that would make Sisyphus look like a slacker. This is disclosed in the 99th paragraph of the fine print, but few read that far into the legalese jungle in their eagerness to pick up the prize.

The scam is so simple and obvious that many overlook it: The goal is to get current personal information. It’s then sold to companies that will send you endless spam or junk mail offers for stuff you neither need nor want.

Solution: Ignore phony e-mails or phone calls saying you’ve won the prize of a lifetime.

5) You’re approved!

Some less-than-stellar companies view the holiday season as prime time to rope unsuspecting, or needy, folks into new credit cards with interest rates that would make Shylock blush.

Typically, the card offered is valid only at specific online stores and may be limited to certain types of merchandise of questionable quality offered at inflated prices. The card is likely to come with a high credit limit to encourage wanton spending – and a stiff membership fee, even if you don’t use it.

Solution: Don’t respond to offers for special cards. Deal with a major bank when applying for a credit card. You’ll be able to use the bank’s card anywhere, the interest rate and any fees will be disclosed and you’ll build your credit rating. Remember that banks compete for your business and few charge an annual fee for the use of a credit card. 

6) Oops, Wrong Number!

A breathless caller will leave a message, apparently in error, on your voice mail offering what purports to be inside information on a sweet deal. Remember that the set up is the first step in the scam: the phone call reached you in error so the message will be addressed to Tom, Dick or Suzy Two Shoes.

The scam will offer enticing merchandise – a high definition TV, for example – at a steep discount. But you can bet it will be Brand X junk with no warranty and the good folks at Fly By Night, Inc. might just swipe your credit card number as part of the deal.
This is a variation on the “pump and dump” theme made famous by Wall Street bucket shops selling shabby stocks. In that scam, the caller pumps up a dog stock that is rightfully ignored by shrewd investors. However, if the scammers get enough suckers to buy it, the price will rise and they dump the shares they bought for next to nothing on the next round of suckers and walk away with a hefty profit. The stock price will collapse as surely as the highly touted merchandise falls apart and the scam artists are on to the next round of fraud.

Solution: Never respond to a hot offer from a company or person you don’t know.

Report scams to the Better Business Bureau or your local police. Don’t expect a detective to show up at your door, but the cops are always on the look out for the latest practitioners of time-worn scams.

Just remember what your mother taught you: If it’s too good to be true, it’s a scam. Keep that in mind and no crook will spoil your holiday.


Do you have children? Check out our collection of the very best in parent-friendly personal finance, Shopping With a Purpose, for more ideas and information on helping your children learn and grow through finance this holiday season and beyond!