According to the Federal Trade Commission, over $10 billion was lost to fraud and financial scams two years back, and this number has only increased since. Some common scams include blackmail scams, charity scams, debt collection scams, identity theft, etc. Experts say that everyone is vulnerable to these scams–anyone can fall for it under the right circumstances. That is why it is essential to learn how to identify and avoid falling for financial scams.
1. Investment frauds
People often come across “investment opportunities” that claim one can make money quickly, with no risks. These are likely an investment scam or a Ponzi scheme. Ponzi schemes are also a common type of investment fraud, wherein existing investors are paid with the funds collected from new investors. Before investing one’s hard-earned money anywhere, one must make it a habit to research what they are getting into, look for secure and verified investment options, and understand the associated risks and rewards to minimize the chances of falling prey to scams.
2. Online banking scams
These scams often involve the use of fraudulent attempts to gain access to one’s personal details, such as login credentials and bank accounts. Common methods include phishing attacks or emails, fake websites, and text messages, among others.
To avoid falling for these, one must exercise good judgment and hygiene when using the web. Make it a habit to double-check website URLs, avoid using unsecured websites, do not click on suspicious links, use strong passwords, and enable two-factor authentication on all accounts.
If one feels like they have been scammed and have recognized the online banking scam, they must contact their bank immediately to inform them of the potential fraud, change relevant passwords immediately, and report the scam to the FTC.
3. Blackmail scams
Blackmailers prey on the fear and vulnerability of their victims. Here, the scammer repeatedly calls or emails individuals, threatening to distribute private content or sensitive information that could be potentially embarrassing or dangerous. They may claim that the only way to stop or postpone this from happening is by wiring money to them via a mobile app, gift card, or cryptocurrency.
These high-pressure tactics can be quite scary to deal with, which is why many people end up falling for them. To avoid being in such situations, it is best to stop communicating and following up with the blackmailers and so not pay them. Keep the messages and emails safe for law enforcement authorities, and report any blackmail to the police as well as the local FBI field office. If the blackmail involves a child, be sure to report the threat to the National Center for Missing and Exploited Children’s tip line as well.
4. Debt scams
Legitimate debt collectors tend to contact their consumers in legal ways. But there are plenty of scammers who pose as debt collectors and pressure individuals to repay false debts, thus robbing them of their hard-earned money. To avoid getting involved in this scam, always make it a point to ask the debt collector for their company name and mailing address.
Similarly, some companies offer debt settlement services to help individuals renegotiate or settle their debt with a collector. While this may look appealing on the surface, it could land one in more trouble. Be wary of any company that offers guaranteed debt settlement, or that asks customers to pay upfront.
5. Grandparent scams
Scammers often prey on the vulnerability of seniors by impersonating their grandchildren and asking them to wire money or send out gift cards. These scams have become far more commonplace with the popularity of artificial intelligence, which can be used to clone voices or alter images.
To avoid these scams, one must beware of any individual who insists on secrecy. Contact the concerned individual themselves, and if they do not answer, get in touch with them through another trusted contact.
6. Job scams
Those on the lookout for new jobs may also end up falling victim to scams. In such cases, the scammer pretends to be a recruiter from a well-known company and may put the individual through multiple interviews to build credibility. Then, they schedule an onboarding meeting, wherein they ask for personal information such as one’s Social Security number, bank account details, driver’s license, etc. Once they have access to these details, they try to siphon off the money from the victims.
Alternatively, some scammers may also ask candidates to pay upfront to “secure” their position for a job. To avoid falling for such devious tricks, one must look for a verified phone number for the company and call them directly to verify that the job exists and that they are a serious prospect for the role.
7. Prize and lottery scams
Sometimes, scammers may call or email individuals saying they have won a prize or a lottery and ask for an upfront payment to cover fees and taxes. To make this sound more legitimate, they may even associate themselves with a certain company.
If one ever receives such a call or message, they must avoid sharing personal information, including credit card or Social Security numbers, addresses, etc. Never make an upfront payment for promised prizes, especially if the demand placed must be completed urgently.
Other common types of scams that one must educate themselves about include charity scams, FDIC logo misuse, loan modification scams, impostor scams, mail frauds, fake connection links, money mule scams, romance scams, sale of non-existent goods or services, student loan scams, etc. To avoid becoming a victim of any of these, one must exercise awareness at all times and report any suspicious activities to the relevant authorities promptly.
