New Credit Card Scam Targeting Seniors

The Official Geezer Guide - Your guide to supplementing your retirement income, saving money and protecting and growing your investments.

Volume 2, Issue 3, December 2010

This month's articles:

Off the Cuff

1. New Credit Card Scam Targeting Seniors
2. Have You Seen Storage Wars? You can play too
3. How and Where to Sell Your Gold
4. Making Money Buying and Selling Gold

Off the Cuff

Well the holidays are here and with it more scams. Our first article is about a new credit card scam that actually happened to a friend of mine. Remember, a real call from a real credit card company or bank will NEVER ask you for any information on your card as they already have it.

Don’t stand in line at the Post Office this Christmas. You can do all of your postage and labels on your computer with Stamps.com and just take your packages to the back door of the post office. Stamps.com has a great offer for my readers. You get $100 worth of stuff including

• $45.00 in Free Postage
• A $50.00 Postage Scale
• $5.00 in free supplies

I like Stamps.com mostly because it saves me time, but it also saves me money. Get postage discounts on Priority Mail & Express Mail. You can import orders from eBay and Amazon. You can save up to 10% on package insurance and you can hide the postage amount on your shipping labels. Besides normal domestic First Class and Priority service, Stamps.com allows you to ship worldwide with USPS First Class International.

This is a temporary offer that could go away after the holidays so act now to get this deal.

We found some great new stuff to sell on eBay this year --mostly in the kitchen gadget area. If you are looking for some clever and unusual gifts this year take a look at the new section of our eBay Store. If you are interested in getting started on eBay either to help make it through retirement or just to score some extra money, here is a link to our sister site where I list 77 Free Tips for Selling on eBay. While you are there also take a look at my latest book, How To Make a Living Working from Home.

There is more than one way for seniors to supplement their retirement income. In San Diego, CA the Geezer Bandit is still on the loose. (I wonder if he subscribes to this newsletter).

If you haven’t heard of this guy, he is a gentleman in his 70s or 80s who has robbed over 12 banks in California from Bakersfield to San Diego. A typical robbery nets him between $7000 and $10,000, which is what a teller typically keeps in her drawer.

The robber is described as between 70 and 80 years old. He typically flashes a handgun and demands money. He wears natty clothing and in one robbery he was wheeling an oxygen tank.

Police speculate that he is laying low, moved or might be ill, because he was robbing about 1 bank a week, but his last robbers was in November just before Thanksgiving. The FBI is offering a $20,000 reward for information leading to his arrest. I know he looks harmless, but remember he is armed with a handgun.

Have Grandkids? Here are a couple of websites that have some really creative ideas for working and playing with grandkids. www.grandloving.com and www.Grandparents.com.

I am often asked what is the best camera to use for taking photos of items you want to sell on eBay. So I set up a camera review site on Amazon called Skips Camera Store. If you want to learn more about digital photography, here is a link where you can download a free copy of my best selling book Online Auction Photo Secrets.

Lets get started with this month's articles:

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1. New Credit Card Scam Targeting Seniors

This is a fairly new credit card scam that has been hitting us Geezers and others, as we get closer to the holiday season. I verified this with Snopes.Com. 

This one is pretty slick since they provide you with all the information, except the one piece they want.

Note, the callers do not ask for your card number; they already have it. By understanding how the VISA & Master Card Telephone Credit Card Scam works, you’ll be better prepared to protect yourself.

One of our friends was called on last week from “VISA.” The scam works like this: Your phone rings and the voice says: “This is Susan and I’m calling from the Security and Fraud Department at VISA. My employee number is 11546. Your card ending in 4567 has been flagged for an unusual purchase pattern, and I’m calling to verify. This would be on your VISA card, which was issued by (name of bank). Did you purchase a computer for $499.00 from a company based in Ohio?”

When he said ‘No’, the caller continued with, “Then we will be issuing a credit to your account. This is a company we have been watching and the charges range from $200 to $499, just under the $500 purchase pattern that flags most cards. Before your next statement, the credit will be sent to (she read him his address), is that correct?”

He said yes and the caller continued – “I will be starting a Fraud investigation. If you have any questions, you should call the 1- 800 number listed on the back of your card and ask for the Fraud Protection Unit. You will need to refer to this Control Number.” The caller then gave him a 6-digit number. “Do you need me to read it again?”

Here’s the IMPORTANT part on how the scam works:

The caller then said, “Before I can issue the credit, I need to verify you are in possession of your card.”

She asked him to “turn your card over and look for some numbers.” There are 7 numbers; the first 4 are part of your card number, the next 3 are the security numbers (Your CVV Code) that verify you are the possessor of the card. Would you read those three numbers to me please?”

At this point my friend became suspicious, as he had been told never to give anyone the code. So he told her he was going to call in to finish the transaction. At that point she hung up.

After you tell the caller the 3 numbers (Your CVV code needed for internet purchases), they will use that to make a purchase of some merchandise that can quickly be turned into cash. You probably won’t realize anything is wrong until you get your statement.

The scam works because you actually say very little, and they never ask for or tell you the Card number.

To make a long story – short – he made a real fraud report and closed the VISA account. VISA reissued him a card with a new number.

What the scammers want is the 3-digit PIN number on the back of the card. Don’t give it to them. Instead, tell them you’ll call VISA or Master card directly for verification of their conversation. The real VISA told our friend they will never ask for anything on the card, as they already know the information since they issued the card! They will only ask security questions to verify whom they are speaking with.

This particular fraud is really accelerating at Christmastime, so you may want to share this blog post with your friends and family.

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2. Have You Seen Storage Wars? You can play too

Storage Wars is the hot new TV show on A&E Cable network. It’s about five guys in California who go to Storage Locker Auctions to bid on goods for their secondhand stores and to sell on eBay. This does work. Over the years I and other eBay sellers have made tons of money from storage unit auctions. It is amazing what turns up in people’s abandoned lockers. Just last year a fellow in Los Angeles bid $650 on a storage locker full of boxes with no idea what was in the boxes. When he opened the boxes they contained clothes and papers from Paris Hilton. He was about to start selling them on eBay when Paris Hilton’s lawyers contacted him and offered him $100,000 for return of the goods.

If you are not familiar with storage unit auctions, here are the basics:

• In most states, when someone fails to pay their storage locker rent for 3 months, the owner hires an auctioneer to conduct a sale of the contents.
• When the sale starts, the auctioneer cuts the lock off of the locker and opens the door. You have four or five minutes to look into the unit, but you may not actually step inside. You have to look from outside, but you can use a flashlight
• The bidding goes very fast with most units selling for between $100 and $500, but some units can go for several thousand dollars if they obviously contain valuable items.
• When you win the auction, you put your own lock on the unit, but you only have between 24-48 hours to remove the contents –or make an arrangement to rent to locker.

When I win a unit, my system is to break everything down into 4 piles. I take the small valuable items and sell those on eBay. Then I take any larger items like furniture or appliances and I will sell those locally on Craigslist (so I don’t have to ship them). The next pile is useful stuff that isn’t that valuable (used clothing, dishes and so on). These I donate to our local thrift shop and take a tax deduction. The last pile is trash and we stop at the dump on the way home with that.

There are a lot of tips and tricks to doing auctions successfully. I cover all of these and much more in my book, The Virtual Peddler. If you would like to read a book that is just about storage locker auctions, my friend Steve Lindhorst has written Storage Unit Auctions. This 75-page eBook explains all you need to know to get started, and succeed in the ever-expanding world of storage-unit auctions.

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3. How and Where to Sell Your Gold

With the price of Gold hovering around $1400 an ounce, there are lots of people interested in selling their old gold jewelry or any other scrap gold you may have lying around.

Any gold that needs to be melted down in order to resell is called scrap gold. The market for scrap gold is traditionally between 40% to 60% of the spot price for pure gold. But those companies that advertise on radio and TV and on the web will usually give you less than 20% --and some people have reported getting as little as 5% of the value.

The first step in determining what your gold is worth is to weigh it. A little postage scale works fine, or you can take your gold to any coin dealer, pawnshop or jewelry store and they will weigh it for you.

The next step is to determine the purity of your gold. Virtually all gold jewelry is market in Karats (K). The most common markings are 10k, 14k, 18k and 24k. 24 Karat gold is called pure gold although its only 99.998% pure, which is about, as good as it gets.

Here are the breakdowns:

• 10K - 41.7% gold
• 14K - 58.3% gold
• 18K - 75.0% gold
• 22K - 91.6% gold
• 24K - 100% gold

So you can now determine how much gold you have with some simple math. Lets say you have a gold necklace that is marked 18K and it weighs 4 ounces. Eighteen karat is 75% gold so you take 75% of 4 oz., which is 3oz., so you have 3 ounces of pure gold.

Now if scrap gold is worth 50% and the spot gold price is $1400, you just multiply 3 x 1400 to get $4200 and take 50% of that which gives you $2100. However if you mailed that same necklace in to one of the popular cash four gold dealers, you would be lucky to get back even $500 and would most likely get about $300.

If you don’t believe me, just Google the names of the cash for gold dealers followed with the word “scam.” You will read some really scary stories of how people were cheated and how hard it was to get their gold back.

So where do you sell your gold?

Almost every town of any size in America has collectible and rare coin dealers. These are almost always the place where you can get the best price –and if there is more than one nearby, you can even get competitive bids. Yes, you could get a dishonest dealer, but coin dealers are one of those businesses where their reputation is critical to their success. So its more likely they will be honest and this is even truer in a small town.

Some small independent jewelry stores also buy gold and you can even advertise as there are lots of jewelry craftspeople and hobbyists who buy gold (and silver) to make their jewelry with and they are always looking to save money. Most of these people have a flame and crucible to melt the gold down and extract the impurities.

The other place is a pawnshop. You will probably do better at a coin dealer as pawnshops are in general not that concerned about their reputation, although we have one in our town that is run by one of the most liked and respected business people in our town so even that isn’t always true. In my experience pawnshops like to buy really low so they will usually be at the lower end of the scrap gold price –probably nearer to 30% or 35%.

So if you hear one of those ads on the radio that says just call us and we will send you an envelope to mail in your gold, forget it and take your gold somewhere local. You are guaranteed to do better.

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4. Making Money Buying and Selling Gold

Buying and reselling gold and silver is a great business for a retired person. This is a business where you can get started for about $1000 and make far more than that each week with just a few hours work and no heavy lifting involved.

Just put an ad in your local paper that you buy old gold jewelry for cash. Follow the information in the article above to determine how much to pay for your gold. In order to make money doing this you should pay 50% of spot price (or less) if you want to make money.

Once you have your gold you need to contact a refiner. Just Google Gold Refiners and you will get plenty of hits. I came up with over 20 US refiners on just the first couple of pages. Go to their websites and read about them and then contact them. Make sure they know you are doing this as a business as most of them will not deal with individuals as they make their money in quantity.

There are two types of refiners. Some will actually melt your gold down and send you the pure ingots that have an assay mark so you can sell the gold without trouble. Other types of refiners just take your scrap gold and send you the money. Most of them pay in the neighborhood of 90% but fees and other charges could lower this by three or four percent.

So lets say you bought 6 ounces of 14K gold chains. Fourteen karat gold is 58.3% gold. If you do the math you find you have 3.498 ounces of pure gold. Gold today is hovering around $1400 an ounce so lets use that as the spot price for our example. That means if you send the scrap off to a refiner who gives you 90% and charges a $50 fee, you will end up with $4,382.48. If you paid 50% of spot for the scrap then you paid $2448.60. This means your profit is $1933.88. Not a bad day’s (or week’s) work.

A lot of serious gold experts predict that gold will go to over $1500 in less than a year and over $2000 by next year, so this will be a good market to be in. Gold is like the plant nursery business. Your inventory gets more valuable every day. And if gold does fall, you don’t care because you aren’t storing it for more than a few days. There is always a market for gold (and silver). You are buying it at 50% of value and selling it at 80% --so you can always double your money no matter what the price.

One word of caution: When you are going out to purchase gold, make sure you meet in a public place in daylight. You are telling people that you buy gold for cash. That is an invitation for thieves who might want to meet you and rob you. A great place to meet is the lobby of your local bank as that is probably the last place someone would pull a gun and rob you. The other thing to worry about is buying stolen merchandise. If someone approaches you to buy their gold and they look seedy and suspicious and have valuable gold jewelry that they could never obviously afford, then refuse to buy it and report it to the police. It’s a case of better safe than sorry. If you get greedy and buy the jewelry and it turns out to be stolen, you are the stuckee. Your money is gone and the police will seize your gold if you already melted it down.

That’s all for now. See you after the holidays.

Please accept my best wishes for a Merry Christmas and a Happy, safe and prosperous new year and a happy holiday season to all.

Skip McGrath
Head Geezer
Official Geezer Guides, Inc.

P.S. If you missed the last issue, check out our newsletter archives.

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