The Federal Trade Commission estimates that fraud cost U.S. consumers more than $7 billion in the first quarter of 2023. That was a 5% increase from the same period in 2022, meaning financial scams are now more prevalent and sophisticated.
Financial scammers are always looking for new ways to steal your money. However, you can protect yourself and others by recognizing the warning signs and identifying the common scams.
Here are 13 common financial scams to watch out for in 2024.
Identity Theft
Identity theft is becoming more common, with scammers devising new ways to steal your passwords, social security numbers, bank account details, and any sensitive information you may use to access your accounts.
Scammers use your personal information to obtain loans, get new credit, or open accounts. Thousands of Americans are responsible for fraudulent and unauthorized expenditures due to identity theft.
Watch out for signs like missing mail from your mailbox, getting bills for items you don’t use, or unexpected changes to your credit report. Monitoring your accounts regularly for fraud alerts or unauthorized activity will help avoid identity theft scams.
Phishing Scams
You receive an email or a text message from your bank saying there’s something wrong with your account and you need to log in urgently to rectify the problem. Once you click on that link, scammers steal your personal information, and you become a phishing scam victim.
Protect yourself against phishing scams by ignoring messages requesting you log in and provide your banking information. Also, avoid approving payments you didn’t initiate. If something seems odd, verify any information through official channels.
Debt Relief Scams
With a debt relief scam, fraudsters will call you, promising to negotiate with creditors on your behalf to eliminate or reduce pending debt at a fee. However, most of these are scammers and won’t provide any assistance. Always contact registered debt relief organizations or work with a financial advisor to identify your debt relief options.
Romance Scams
Romance scams prey on an innocent person’s emotions by initiating contact, building trust with the other party, and using different tactics to get money later. Some scammers will create fake accounts using downloaded photos to scam you.
Navigating the online dating world is tricky, but taking it slow and conducting research on the other person will help you avoid falling into this scam. Avoid people who seem too good to be true.
Ponzi Schemes
Ponzi schemes happen when someone presents you with a potential investment opportunity to lure you and get you to use your money. However, the scheme brings in more investments to fuel the con growth, making new targets lose money.
Avoid any investment that promises unrealistic returns in a specific timeframe. Avoid investment opportunities if they are unregistered or have complicated withdrawal processes.
Debit Card/Credit Card Fraud
Debit or credit card fraud occurs when fraudsters hack into a system where your passwords are stored and steal that information. Some scammers install a skimmer on the point of sale or ATM to get this data. Avoid anyone who asks for your password or PIN via text, email, or call. If your debit or credit card is stolen, contact your bank to block the card.
Mortgage Fraud
Mortgage fraud happens in different forms. Some will promise weird foreclosure protection, loan modification, or mortgage relief scams that promise to save your home in exchange for upfront fees. Consult a Housing and Urban Development agency if you’re struggling to pay your mortgage before falling prey to scammers.
Credit Repair Scams
Fraudsters have discovered ways to get your attention, promising to remove negative information from credit reports for a fee. However, these companies will fail to deliver on their promise, leaving you with the same credit problems and other expenses.
Consider working with a financial advisor to determine your credit repair options and avoid falling into this scam.
Fake Charities
Fraudulent organizations now use misleading information and emotional appeals to persuade donors to give. Unfortunately, the money donated ends up enriching the scammers and not for charitable purposes. Stay away from charities that are not registered, those with fake websites, or solicit funds or donations over the phone.
Social Security Scams
A social security scam happens when someone tricks you into giving away your personal information by impersonating officials. Fraudsters will contact you over text, email, or phone, claiming there’s a problem with your benefits if you don’t verify your account.
All these are to get you to provide sensitive information like your bank account details or social security number. Avoid sharing personal information over the phone from unverified social security representatives.
Cryptocurrency Scams
Although trading cryptocurrency can earn you significant returns, there are scams you must watch out for. Fraudsters will ask you to send them money so they can invest on your behalf, and others will guarantee unrealistic gains. Watch out for these red flags when making cryptocurrency investments.
Refund Scams
A refund or overpayment scam occurs when the fraudster promises to return the money they falsely claim was sent in excess. The scammer may use phishing tactics to access the payment terminal or manipulate the person operating the POS terminal to send an unwarranted refund. Account monitoring solutions can help you detect suspicious exchanges.
Educating your staff on this potential scam can also prevent refund scams.
Advance Fee Scams
Scammers promise a large inheritance or lottery winnings if you part with a processing fee or provide your bank details upfront. However, victims lose their funds, and no money is received. Avoid sharing personal information with unknown people, do not pay for anything in advance, and verify the identity of the person contacting you.
Most of these common scams promise quick returns, demand payment upfront, or request personal details. By identifying these scams, you can protect yourself from falling victim to financial fraud.
