Scammers use various tactics to get hold of your money, especially in today’s digital era. As we mentioned in our previous article, over 8,000 people reported some kind of fraud only during the COVID-19 crisis.
While it is crucial to stay cautious, and pay great attention to potential signs of fraud, you shouldn’t panic - there are many ways you can protect yourself from getting tricked into disclosing your financial information to scammers.
We've prepared a list of some of the most common types of financial scams, so you can learn how to detect, and avoid them, so read on!
1. Phishing, Smishing, Vishing
1.1. Phishing
Phishing is a very frequent email scam, where scammers disguise themselves as legitimate entities, such as a bank, financial institution or any other trustworthy business. They send out emails, and try to steal people’s passwords, account numbers or Social Security numbers, so they could gain access to your email, bank or basically any other account (Amazon, for example). These emails are usually designed to look as if they were indeed sent by verified sources, and contain content that encourages people to click a link within, and enter the requested information. However, such emails usually contain many typos, and, if you check the sender or hover over a link, you could notice random letters, symbols or spelling mistakes. For example, fraudsters cannot use real domains, so if you notice the sender’s email goes something like nnn@3242sur.com or basically, anything that looks even a bit suspicious, report it as spam, and block the address.
Your bank or financial institution will never ask you for your password or any sensitive information in an email. If a sender urges you to update your information, says there’s been a payment issue, or addresses you in a generic way, do not interact.
1.2. Smishing
Smishing is basically the same, just done via text messages. While it might be more difficult to detect, keep in mind you should not click on links directly. If you want to check out what’s going on, go to the website, and log in directly - never follow the links.
1.3. Vishing
Vishing, again, is quite a similar, but slightly more risky practice done over the phone. A person will desperately try to get your information, and if you notice them trying hard, hang up. Again, a legitimate business will usually never ask you for personal information just like that. If unsure, call your bank after a few hours, and check with them. Keep in mind not to do so right away, as the phone line might be high-jacked.
2. Investment scams
Investment scams can be done online, over the phone or text messaging. The principle is the same: someone will try to get you into investing in a company that doesn’t exist. They might promise miracles, high return rates with little investment, and alike, but just the fact a business is contacting you directly to ask for investment should be a warning sign. Companies rarely do that. Ignore, and report to your local or federal government.
Do the same in case you’re contacted about any opportunity of investing in something that guarantees profit on sporting events/betting. Whether it be a promising prediction software that always tells the winning combination or some group membership, it’s most likely a scam.
3. Personal loan scams
Here, scammers look for people in urgent need of money, who’re usually experiencing financial difficulties, and are looking for quick solutions. But, since our online activities are often tracked, someone might try to scam you this way even if you’re only browsing personal loan offers on the Internet. You can land on a website that appears legitimate, and submit information to who-knows-whom; or, you can land on a legitimate website that contains infected links, so scammers can steal your data. This is why it’s important to never submit anything via websites without a tiny green padlock (HTTPS). The green padlock means the traffic to and from a website is encrypted, so you can safely enter your information. One point to remember is to always check the website name, as it might be “certified”, but not the “real” website. Watch for typos, variations, etc. For instance, you can have amazon.com, but you can also have amazn.com, the latter being quite fishy.
You can read more about this type of scams on Bankrate. Their extensive personal loan scam guide will help you learn how to detect, and avoid such frauds for sure.
4. Crowdfunding and fake charity scams
Crowdfunding is a way of supporting projects and businesses by having many people donate small amounts of money, which is usually done online. Often, contributors receive a reward for helping a campaign, so this scheme looks like a win-win. However, before engaging in such a project, make sure you do some research on a campaign creator, and the campaign itself. Check for reviews, and try finding any relevant information prior to investing money. It’s not uncommon that a campaign is fake, and that the money goes nowhere near where it was said it would go - but to the campaign creator instead.
5. Romance scams
Online dating platform users are quite an easy target (love is blind?), so it is not surprising why they are among the greatest victims of financial scams. In fact, romance scams are so frequent that, in 2019, people lost more money to them than to any other kind of fraud - astonishing $201 million!
Romance scammers create fake profiles, engage with people, and, once they feel the target is seduced alright, they ask them for money. They might say it’s for travel tickets, some purported debt, medical expenses or something else. As per the FTC, a particular red flag is if someone asks you to pay by wiring, reload cards or gift cards, since such transactions are hard to reverse.
So, if you’re ever asked to send money, for any reason and by any means, to a potential lover you’ve met via an online dating app: do not. Ignore, block, and report the person immediately.
6. Other kinds of financial scams
There are many more ways people use to get money from others. Such are mobile payment scams, online auction scams, job scams, fake tickets scams, health scams, insurance scams, technology support scams - the list is quite long!
However, a general advice on how to protect yourself from any of these is simply to always stay vigilant, especially online. Create strong passwords. Verify whatever can be verified (websites, names, businesses…), and never (re)act on impulse. Most of all - never share your personal and financial information or send money by request just like that.
Finally, when it comes to devices you’re using to access your bank checking or savings account, make sure to update them regularly. Software updates and patches are very important when it comes to your digital safety, and cyber security, so the next time an update window pops out, think twice before clicking on the “Remind me later” button.