Look before you leap at offers that require you to send money up-front. Chances are you could bepaying something for nothing.

You’ve won a free trip to the Caribbean! Sound familiar? You’ve probably gotten this or similar offers over the phone or fax, through the mail or the Internet. If you think they’re great deals, you’re right — but probably not for you. They often just benefit swindlers who pressure consumers into sending money up-front for promises of goods or services that’ll never be delivered. These solicitations sometimes are referred to as advance-fee schemes, and they cost consumers billions of dollars each year. FDIC Consumer News wants to highlight some of the more common scams.

•    You’ve won a prize or vacation. Many schemes will require that you pay handling fees or taxes, or purchase expensive merchandise, in order to receive your “prize.” You can be assured that the amount of money you send will exceed the value of the prize. Besides, does it make sense to have to pay for a “free” prize?

Thoroughly research offers of cut-rate vacation packages, especially if they require a “membership fee.” Chances are you’ll encounter scheduling conflicts, unreliable transportation, substandard accommodations and other troubles on your trip. Of course, it’s also possible that the company will simply take your fee and provide you with nothing at all.

•    You’ve got credit problems but you’re “guaranteed” a loan or a credit card for a fee. Reputable lenders will never guarantee a loan to people with no credit history or bad credit reports (caused by bankruptcy, a spotty payment record or other circumstances). Yes, legitimate lenders do commonly charge an application fee to cover the costs of processing a loan application, but they won’t guarantee approval. Swindlers who do “guarantee” your loan or credit card approval typically collect your money up-front in exchange for nothing at all or for basic services you could do on your own, such as gathering lists of lenders or information about loans.

Remember: If you’ve had past credit problems and you want another chance for a credit card, consider a “secured” credit card offered by banks or other creditors. A secured card is just like any other credit card except that your credit limit is tied to some percentage of the amount you must keep in a deposit account, as determined by the card issuer. If your repayment history looks good after a year or so, then you can try to obtain a regular, unsecured card. But be wary; some card issuers may require you to purchase items from their catalog, which may consist of overpriced or shoddy merchandise. And always read and understand the terms before you sign up for any type of credit card.

•    You can “clean up” your credit record for a fee. Never send money to someone making this claim. By law, there is nothing these companies can do to remove negative but accurate information from your credit record for a set period, such as 10 years in the case of a bankruptcy. Only you can improve your credit report by consistently paying your obligations as agreed.

Con artists also may try to convince you to “create a new identity” (perhaps by getting a new Social Security number or tax identification number) when applying for a new loan. Don’t do it, because it’s illegal to misrepresent your credit history when applying for a loan.

•    You’re guaranteed “easy money” in business opportunities, including big bucks for working at home. According to the Federal Trade Commission, these scams typically originate with slick, program-length TV commercials (called “infomercials”), newspaper ads, Internet sites or other sources. But to take advantage of an offer, you’ll have to pay up-front fees and purchase a variety of materials (books, video, computer software), all costing as much as several thousand dollars. “Later you, like many others, may find that the program or business opportunity was essentially worthless and that all you have are empty promises,” says the FTC.

•    You’re offered a lucrative opportunity from Nigeria. Although the FDIC and other authorities have been warning consumers about Nigeria-based financial scams for years, Americans and others around the world continue to lose millions of dollars to this fraud.

Here’s a typical scenario: You receive a letter or fax from someone claiming to be a Nigerian government official or business executive who needs help transferring millions of dollars out of the country. Told that Nigerian law prohibits the ownership of a foreign bank account, you’re asked for the temporary use of your bank account and some up-front money (supposedly to cover various taxes and fees) in exchange for, say, 30 percent of the funds supposedly being transferred. In reality, the swindlers keep the money you send and use the bank account information to drain even more money. Some victims of this scheme have even lost their lives trying to recover their money in Nigeria.

Protecting Yourself

So, how can you best avoid losing money in the kinds of scams we’ve described? Here’s guidance from Pete Hirsch, a fraud examiner with the FDIC’s Division of Supervision in Washington.

First, be very skeptical whenever you receive an unsolicited offer for a “tremendous” deal from an unfamiliar company. “Never send money in advance or give out personal information, such as bank account, credit card or Social Security numbers, unless you’ve verified the legitimacy of the company and you initiated the contact,” Hirsch says.

See our list of danger signs on Page 13. If you have suspicions about a company, check it out by starting with your local Better Business Bureau or your state’s attorney general or consumer protection agency.

If you think you’ve already been victimized, contact the National Fraud Information Center (call 800-876-7060 or visit its Internet site at www.fraud.org). Be aware that fraud victims also may be sought out by other con artists who claim to be able to help you...for a fee, of course. And finally, remember the old saying: If a deal appears too good to be true, it probably is! Click here for a warning about an FHA Insurance Scam