As economy sinks,  scam artists rise
5 tips on avoiding scams
1. Be vigilant. Scams appear to be more prevalent during this economic downtown.
2. Beware of financial-services firms requiring upfront fees. Lenders cannot do so.
3. Credit repair services can't require you to pay until they have completed the services.
4. Legitimate companies do not ask for personal or financial information via e-mail.
5. Work-at-home firms should be willing to describe their services in writing.

The economy is tough, and there are crooks out there looking to make things a whole lot tougher. The number of financial scams circulating is on the rise, some experts say, as criminals seize every opportunity to take advantage of the desperation many are feeling due to the economic downturn.

"I've been doing this for 22 years, and it's by far the most scams I've seen," said Steve Bernas, president and chief executive of the Better Business Bureau of Chicago and Northern Illinois. "Everyone's looking for get-rich-quick schemes."

Here's a rundown of offers to beware of, along with advice, from the Federal Trade Commission, the Better Business Bureau and the Illinois attorney general's office:

Pay now, loan later

How it works: Criminals set up fake loan companies that guarantee consumers, including those with weak credit ratings, a loan, but with a catch: Pay a fee before the loan is approved. Fees can run several thousand dollars. The consumer sends the fee but never gets the loan and loses the fee as well.

How to avoid it: It is against federal and state law for a business to request upfront fees for loans, according to the Better Business Bureau. Fees also are referred to as taxes, insurance, processing fees or collateral. An advance fee by any name is illegal.

Another red flag is the promise of a loan before the consumer has even applied. The FTC says no legitimate lender would ever guarantee that a consumer will get a loan.

Keep the change

How it works: In one version, consumers are asked to be mystery shoppers for a money-wiring service. Cash the check, wire some of the money and keep the rest as payment.

Then there are checks sent to sellers of merchandise on online auction and classified sites for more than the price of the item being sold. The seller is told to cash the check, keep a portion as payment and wire the rest back to the buyer. Of course, the check is bogus. But, according to the BBB, the check will appear to have cleared, though the bank is investigating its validity. By the time the bank determines that the check is a fake, the victim is on the hook for the money.

How to avoid it: Experts say the red flag is receiving a check from a stranger or company and being asked to deposit it and wire back a portion of the money.

'Stop Foreclosure Now!'

How it works: According to the FTC, you may get a personalized letter from a firm that found you by looking through foreclosure notices. Or maybe you saw an ad saying, "We guarantee to stop your foreclosure."

Once you're on the hook, the firm uses various schemes to steal your money. One method is by phony negotiations on your behalf. They tell you that they can work a deal with your lender to stop foreclosure if you pay an upfront fee. They also may tell you to stop contacting your lender and to make your mortgage payments to them.

"The attorney general says [consumers] should avoid these rescue schemes that ask for money upfront, because they're just looking to swindle your cash,"said Natalie Bauer, spokeswoman for Illinois Atty. Gen. Lisa Madigan.

Another method is the bait-and-switch rescue loan. You are told you are signing papers for a new loan to get your mortgage up to date. But you're really signing over the title of your home in exchange for the loan.