Worst Scams of 2012 - Newsweek and The Daily Beast For one California retiree, the worst scam of the year was the one that cost her $30,000 - extracted payment by payment from fraudsters who persuaded her that she'd won more than $2 million in a lottery. Illustration by Chris Philpot "They called my home number constantly," she says. They were so persistent. They promised me the money was waiting, and all I had to do was pay the taxes on it. The woman, who asked that her name not be used, reluctantly withdrew cash from her bank and wired it overseas, always to a different person. When the funds ran out, she asked her credit card for an advance. By the time her children discovered the questionable transfers, the scammers had vanished, along with Mom's money. A recent survey determined that so-called "419" scams such as the ones she fell for - named after the article in the Nigerian criminal code dealing with fraud - cost consumers $9.3 billion a year worldwide. But it doesn't rank as the top scam of 2012. That dubious honor goes to identity theft, which, at around $48 billion a year, has been America's biggest and costliest scam for more than a decade and is unlikely to relinquish the top spot anytime soon. Scams were everywhere in 2012, according to consumer advocate Mitch Lipka. "There was no sign of letup," he says, and adds, "Tragedies, disasters, and consumers" struggles continued to be angles for scammers to rip off consumers." Although there's no authoritative list of the top consumer scams, information collected through the federal government and advocacy groups such as the Better Business Bureau suggest these are the top "gotchas" of 2012: ID Theft. Identity thieves steal your bank, credit-card, and Social Security information and then open accounts and apply for credit cards in your name. It's so popular, they even made a movie about it - appropriately called Identity Thief. The latest targets appear to be kids, whose Social Security numbers are being ripped off and then repurposed by scammers. These scams are particularly troublesome, because it often takes years for the crime to be discovered. How to Avoid It: Don't give personal information to anyone, for any reason, and monitor your credit-card and bank accounts regularly for any suspicious activity. Lottery and Sweepstakes Scams. The California victim is just one of hundreds of thousands of Americans who fall for a lottery they never entered or are persuaded that a distant relative has left them a million-dollar inheritance. The scam is simple: the con artists request a small "processing" fee in exchange for the money, and once you start paying, they keep asking for more. How to Avoid It: Toss into the trash any letters that promise you "may have already won" the lottery. Add your phone number to the Federal Trade Commission (FTC) "s "do not call" registry and don't accept calls from strangers offering money. Home-Based Business Scams. These swindles can encompass any fraudulent home-based business offer. The FTC in November cracked down on a series of shop-at-home scammers who falsely promise jobs and opportunities to "be your own boss." The government says nearly 2 million consumers were lured in with deceptive offers to help them start businesses - for a fee - as mystery shoppers, credit-card processors, website operators, and government insurance-refund processors. How to Avoid It: Be wary of any home solicitations that promise too-good-to-be-true results. Some states have cooling-off periods for sales made in your home, so you may qualify for a refund if you have buyer's remorse. Repair Scams. Always high on any list of scams are repair-related scams, usually related to cars. But in 2012, superstorm Sandy spawned a series of repair-related scams that made national headlines. This type of criminal often offers discounted services in exchange for a cash advance and then either disappears with the money or delivers a shoddy product. Sandy inspired several other scams in 2012, including charity swindles that will affect consumers well into 2013. How to Avoid It: Insist on working with a licensed and bonded contractor and request bids on your work from multiple companies. Avoid paying for services with cash. Financial-service and Debt Scams. As the economy sputtered toward recovery in 2012, scammers preyed on consumers with a variety of schemes to defraud them of what little money they still have. Last year the federal government obtained record penalties from two companies accused of using illegally aggressive collection practices and misrepresenting the status of consumers" debt, among other things. How to Avoid It: Raising your financial literacy can prevent you from falling for one of these scams. Your bank or financial adviser, or the new Consumer Financial Protection Bureau, may also have resources that can prevent you from becoming a victim.