Financial scams have become increasingly sophisticated, leveraging advanced technology and psychological manipulation to deceive individuals into giving away personal and financial information. The negative impact of these scams can be severe, often leading to significant financial loss, emotional distress, and long-lasting effects on one’s credit and financial stability.
Common Financial Scams & How To Identify Them
- Phishing Scams: Scammers use emails, text messages, or phone calls that appear to be from legitimate organizations, such as banks or credit card companies, to trick you into providing personal information. These messages often create a sense of urgency or fear, urging you to act quickly.
- Identity Theft: Scammers might impersonate someone you trust or pose as an authoritative figure to obtain sensitive information like Social Security numbers, bank account details, or credit card information.
- Investment Fraud: Promises of high returns with little risk are common tactics used in investment scams. Scammers may offer investment opportunities in fake or high-risk ventures, seeking to exploit your desire for quick financial gains.
- Tech Support Scams: Fraudsters may call or send messages claiming to be from tech support, suggesting that your computer has a virus or security issue. They then trick you into giving remote access to your computer or paying for unnecessary services.
Additional Indicators Of A Potential Scam
Recognizing a scam can be challenging as scammers are often highly skilled and very persuasive. Here are some signs that can help you identify potential scams or scammers:
- Unsolicited Communication: Be cautious of unsolicited messages asking for personal or financial information. Your bank or credit union will never call you and ask for your PIN number. Your PIN number should never be shared.
- Sense Of Urgency: Scammers often create a false sense of urgency, pushing you to make quick decisions.
- Generic Greetings: Emails or messages that use generic greetings like “Dear Customer” rather than your name may be a red flag.
- Suspicious Links: Hover over links to see if the URL looks legitimate before clicking. Sometimes they may be off by just 1 letter. Another tactic is for a scammer to purchase a URL with the correct name but that ends in “.com” instead of “.org”, for example.
Scammers & Technology
Scammers frequently use technology to deceive individuals. Phishing emails and text messages often contain links to fake websites that look like legitimate ones. These fake sites are designed to capture your login credentials or financial information. Additionally, scammers may use caller ID spoofing to make it appear as if they are calling from a trusted organization.
Protecting Yourself & Responding To Scams
To protect yourself:
- Verify Contact Information: Always use official contact numbers or websites to verify the legitimacy of any communication. If you are unsure, end the current communication and call the business in question directly.
- Avoid Clicking On Suspicious Links: Be cautious of unsolicited messages with links or attachments.
- Use Strong Passwords & Two-Factor Authentication: Enhance your security by using complex passwords and enabling two-factor authentication where possible. Two-factor authentication is something you can set up that requires you approve an account login in 2 ways. This typically looks like entering your password in a website then receiving a text or email with a unique code that is valid for a short period of time. You then enter that code into the webpage you are trying to log in to and it allows access. The combination of your password and the unique code sent to a designated secondary device offers an additional level of protection.
If you suspect that you’ve been the victim of a scam:
- Contact Your Financial Institutions: Notify your bank or credit card company immediately to secure your accounts. Many credit cards have an easily accessible “lock” feature. It is good to familiarize yourself with this process so you can activate it quickly if it is ever needed.
- Report The Scam: File a report with your federal, state or local authorities.
- Monitor Your Accounts: Regularly check your financial statements for unauthorized transactions. Some financial institutions and credit card companies offer complimentary monitoring for a period of time after your account has potentially been breached.
References:
- Federal Trade Commission. (n.d.). Consumer Information: Fraud. Retrieved from FTC.gov
- Identity Theft Resource Center. (n.d.). How to Report Identity Theft. Retrieved from IDTheftCenter.org
- Consumer Financial Protection Bureau. (n.d.). Dealing with Fraud. Retrieved from ConsumerFinance.gov
