Legal Scams; a warning for consumers from EnviousDominous

[EnviousDominous]

This is a thread where I will periodically share an example of an aspect of life in the US as a consumer where scam artists will try to use perfectly legal means to scam me out of my hard-earned money.

I won't share anything that could potentially get SteelCageForums sued, I'll be good.

Now then, for my first example, I encountered quite a few scams under the same scam umbrella while buying a house. I hope that you can relate to my examples as a form of therapy for having also endured them, and I hope that anyone on here who intends to buy a house heeds my advice.

Some quick advice before I begin, start saving money early. I mean, if you're already 20 and you haven't started an IRA or a similar savings plan, you're too late. When I was 19, I started a savings program that involved opening multiple accounts where I would automatically contribute money from my salary and that money would be invested in various stock market funds. I know very little about utilizing the stock market to get rich, but after all this time I was able to easily borrow money from that savings account to cover the closing costs of getting the keys for the house. Roughly $9,000 was what it cost to cover the closing costs, and I was able to easily pay it because of a random decision I had made while 19.

Now then, I had obtained a no-money-down VA loan. The problem with that is that VA loans are apparently unique in that there's no limit to how many times an Appraiser can visit a property that's being purchased via a VA loan. The legal scam with that is that the bank and the Appraiser will be in cahoots, and you -- the buyer -- are expected to pay roughly $150 dollars EVERY time that Appraiser visits the house. Appraisers are not Inspectors, unless they're working on behalf of a bank that's providing a VA loan. Our Appraiser claimed that he found black mold on the deck, and there wasn't any black mold on the deck. He left, the sellers paid to powerwash the entire outside of the house and the deck, and the Appraiser came back and claimed that he STILL found black mold. Then, of course, the Appraiser remembered that he has a good friend who specializes in the removal of black mold and that he could get us a big discount on having the deck and house treated.

My realtor lit, their, asses, UP. At one point the bank tried to convince me that my realtor was being very mean, and that I should fire him for being rude. I laughed, and let her know that I knew what they were doing. The bank paid for the appraisals that occurred after the first one, and swore that they would never do business with that Appraiser ever again.

But wait, there's more.

So, there's a new trend among shady banks. I've found that a lot of people can just create a shell company and call it a bank. I have my loan through an actual bank, but I receive at least 10 letters everyday in my mailbox that attempt to trick me into selling my loan to their (shell) bank. These letters never say "We are a bank, and we would like to buy your loan. Here are some estimates of what you could pay if you sell to us", more like they're disquised in some pretty stupid ways.

One method is a letter that begins with "Notice of Available Funds". This is intriguing, because it implies that I may have overpaid on a previous account and that a company is being tasked with returning my balance to me. This does indeed happen if you setup automatic payments, and forget to turn them off. When I read further, it's obvious that their definition of "available funds" implies that my house's equity is available and that if I sell my loan to them then I could get that money. So... without being clear about how much I'd have to pay monthly, or what exactly my new interest rate would be, or how their bank would appraise the house, I'm expected to take a payout that would likely ruin me financially in the long-run.

Another method is to disguise the letter as a notice from the IRS, indicating that I should contact them because this is the "THIRD NOTICE" that they've sent me. As I read further, I see that they explain that I need to contact them to "update my information". When I read the fine print at the bottom, or sometimes hidden in a corner of the blank side of the letter, I read the legal statement where they admit that they're an obscure bank who has no affiliation with the IRS. That's a very odd disclaimer when they put the official IRS seal at the top of the letter.

I've even received giant shiny cards that one might immediately recognize as something that car dealerships send to random consumers to announce their big deals of a random holiday. The one I received indicated that (seriously) Antifa was on the march and that I needed to protect myself by siding with a true American Patriot and former soldier who would happily grant me the privilege of selling my loan to him. On the glossy card was a picture of some doofus wearing body armor over a short sleeved brown shirt and the fake background of a desert behind him.

So, yeah. As long as there's fine print explaining the real deal, these assholes can go balls out with their bullshit in the hopes that they'll catch someone who's senile enough to fall for their nonsense. I've looked up these "banks", and they're basically just small groups of scam artists that obtained the bare minimum to be able to legally call themselves a "licensed mortgage broker".

Even when things go well, buying a house is a headache. These assholes go balls out in an attempt to trick you into enduring that whole process all over again with a group of people that will likely deposit your payments into a bank account in the Bahamas. It's terrible, it sucks, and somehow it's all perfectly legal.

[EnviousDominous]

Folks, have you ever been asked what advice you would have given your younger self? For me, I would have lectured myself to tears on the dangers of being scammed when attempting to submit my yearly tax statement to the IRS.

Now, I'm not going to state any company names. I shouldn't because that might get this forum into trouble, but I also don't really have to because literally all of the tax preparation companies out there commit these legal sins against your trust.

First off; my advice is that you do research into what options you have available. Maybe the business you work for has a deal with the developer of tax preparation software, which will allow you to use that software for free. Some companies offer free tax preparation with their software, but you are often tricked into paying subscription fees. If you only received income from one source for the entire fiscal year, then you should be able to complete your taxes on a 1040 and mail that to the IRS. The form literally has its numbered sections for where you need to input data correspond with the numbered sections of your W2. There are plenty of services that offer free tax advice to guide you through the process. The companies that have committed the sins listed below offer free ways to complete your taxes, and these are purely for marketing purposes only. It is insanely difficult to weed through the nonsense and actually utilize their free services.

Now then, the scams.

We all see the marketing. Someone is dancing a jig on a commercial street corner wearing a stupid costume that indicates their tax preparation business. Then there's the tv ads, where you (the mark) are duped into believing that their focus is on getting you the money that those OTHER tax preparers may have missed. The pitch is simple, there's magic money floating around that you didn't realize you had coming to you. When you sit with a preparer from these companies, and they chat you up as they happily complete your 1040 for you, you'll see that you now owe them at least (the least I've ever paid, mind you) $150. What's the most I've ever paid? $400, and it was after the preparer literally took 10 minutes to fill out my 1040. This seems like a minor expense however, because -- as they were preparing your taxes -- you see that you're getting a MASSIVE refund. That refund is basically in limbo if you don't fork over the fee, and chances are very high that if you choose to bail and do your own taxes that you'll see a much smaller refund available (more on that later).

See, they have you hooked. You're told that you qualify for credits that you hadn't thought about. In one session, I was told that I would receive $4,000 extra as I qualified for the 1st Time Homebuyer Tax Credit. That's a real credit, that real people qualify for. I however, did not qualify for that credit because I earned an adjusted gross income of over $75,000. It's odd that a seasoned tax preparer would miss that, and promise something that wouldn't deliver. None of these companies guarantee that you'll get what they promote you would by the way, they only offer (for a fee of course) a sort of backward form of insurance where they'll eat certain costs if the IRS audits you and they find that you owed the IRS money. If you weren't the owner of the business from which you earned your salary, that's probably not going to happen.

I recall that the tax preparer who was very bold in claiming that I would be earning an extra $4,000 made a pretty wild claim that I, thankfully, saw right through. He claimed that I could obtain a "Refund Advance", and that this would eliminate the wait time for the IRS to review my taxes and deposit my refund. The "Refund Advance" is a loan, so basically it's not -- in any way -- an advance of your refund. Pretty much the opposite actually. This is the biggest legal scam these companies play. They falsely advertise to you that you can get your refund that day, and just go about your life with extra cash. In reality, my tax preparer was trying to bait me into a loan for roughly $3,500 for a fee (they love their fees). This explains why he was so clumsy when it came to figuring out what I was entitled to, the more I think I have coming to me the more stoked I am about saying yes to everything he puts in front of me.

They all do this, and they advertise that the interest rate for these loans is 0%. Which is fun, except that I would be paying them back the money that I didn't receive from my refund because they screwed up my taxes. If you accept that loan, then the IRS sends your refund to them and you trust them to be sincere about how much was received. Also; that 0% is misleading to the point of being absolute bullshit based on how it's explained. The money that they give you is paid back with your refund, and they do indeed take a percentage from you as a "fee" for providing the service and not as interest on the loan itself. This widdles your refund down even more, and you're just happy that you could wander out of their office with some money.

I feel that I should also mention that in every instance where I've used a commercial service to prepare my taxes, they would find some way to screw up my bank account information for the direct deposit of my refund. This would delay my refund at least a few months.

Again; my advice is that you trudge through with completing a 1040 if your only taxable income was from one job. If things are a little more complicated for you, seek advice from an expert on what extra forms you might need and/or what credits you may be entitled to.