Scams are on the Rise: Stay Aware
In 2023, American consumers lost over $10 billion to fraud. Impostor scams were the most frequently reported, where criminals impersonate trusted organizations like banks, government agencies, or financial institutions to steal money or personal information. Impostor fraud alone accounted for nearly $2.7 billion in reported losses.
This type of scam is increasingly common and can have severe consequences. However, it’s just one of many financial scams to be wary of.
A key defense is to approach unfamiliar situations with caution and skepticism. If something feels off, take a step back, give yourself time to think, and investigate further. Scammers often use urgency to pressure people into making hasty decisions. Also, be alert to payment requests via cryptocurrency, gift cards, or bank wires—these are major warning signs of fraud.
Here are six prevalent financial scams to be aware of, and tips on what to do if you suspect you've fallen victim to one.
Impostor Scam
Here’s how an impostor scam might unfold: You receive a call, and your caller ID shows it's from your bank. However, it’s actually a scammer pretending to be them. They claim they’ve detected suspicious activity in your account and urge you to act immediately.
To "verify your identity," they send you a code, asking you to either read it back or enter it into your phone. In reality, this code is for resetting your password, allowing them to access your account and steal your money.
Never share such codes with anyone unless you were the one who initiated the contact. Do not read or provide any code to someone unless you’ve contacted the bank using their official phone number.
Avoid typing the code into your phone or a website unless you're accessing a legitimate banking app or site. Even if scammers can’t directly see the numbers, they can decipher the unique tones your phone generates when you press the keys.
How to protect yourself:
● If you receive a call, text, or email asking for action or personal information, don't engage.
● Hang up or close the message and reach out to the bank or institution directly through their official website.
● Never share or "confirm" your personal information in response to unsolicited contact.
● Never read back a security code or type it into a message unless you initiated the call to a verified company number.
● Only enter security codes when logging into an official app or website.
Remote Access Scam
You might get a call saying there is a problem with your computer. A message may also appear on your screen, warning that your device has a virus. If you follow the instructions, you could lose control of your computer, and your personal information could be compromised. The scammer may then demand a payment to restore your access.
How to protect yourself:
● Never allow anyone to remotely access your computer or share passwords and security codes over the phone. If you need help, only give remote access to a trusted source that you have contacted.
● Avoid clicking on pop-up ads, links in emails, or attachments from unknown senders. Instead, type URLs directly into your browser. Don’t call any numbers that appear in pop-up messages; legitimate security warnings won’t ask for a phone call.
● Scammers may ask you to download software that grants them access to your device. If someone calls requesting remote access, hang up immediately—reputable companies will never make such requests out of the blue.
● Be cautious if a caller asks you to keep the conversation confidential—this is a common scam tactic.
● Keep your security software updated and run a scan if you suspect there’s an issue. When seeking tech support, reach out to a company you trust.
● Regularly back up your data so that if your system is compromised, you can restore it by wiping your hard drive and reinstalling your operating system.
● Strengthen your account security by enrolling in the highest protection levels available and keeping your contact information up to date.
Confidence/Romance Scams
In these scams, the victim believes they have a genuine relationship—whether romantic, friendly, or familial. The scammer then manipulates them into sending money, personal information, or valuable items. A common version of this is the "grandparent scam," where someone calls pretending to be a grandchild in urgent need of money due to an emergency, such as an accident or arrest. The scammer preys on the victim’s emotions to gain their trust.
How to protect yourself:
● Never send money or gifts to someone you haven’t met in person, no matter how well you think you know them.
● Watch for red flags: the individual declares their love or affection quickly, attempts to distance you from friends and family, asks for money, or claims to be living and working abroad.
● Take your time. Ask questions and be alert to inconsistent or vague answers.
● Discuss any new relationship with someone you trust. Pay attention if friends or family express concerns.
● If you believe you’ve been scammed, report it to the FBI’s Internet Crime Complaint Center.
Fake Charities
Scammers may contact you by email, phone, or even in person, posing as a charity seeking donations for a seemingly good cause. Sometimes a friend may unknowingly share a fraudulent link on social media. These scams often use names that closely resemble legitimate charities or exploit specific situations, like natural disasters or wars, to prey on people's compassion. Many fake charity schemes are now circulating via social media platforms like Facebook, X (formerly Twitter), TikTok, WhatsApp, and LinkedIn.
How to protect yourself:
● Before donating, thoroughly research the charity using resources like the Better Business Bureau's Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar.
● Always visit charity websites by directly typing their web address into your browser. Avoid clicking on links sent to you, even if they appear to come from someone you know.
Social Media/Investment Scams
Scammers can use the personal photos and details shared on social media to target individuals for various scams. Romance scams are common, but two others flagged by the FTC are investment fraud and online shopping scams. Both often lure victims in with deals that seem too good to pass up and frequently begin on social media.
In online shopping scams, you might see an ad offering high-end products at very low prices. After purchasing, you may receive something completely different or nothing at all.
Investment scams can be trickier to detect. Scammers sometimes hack celebrity social media accounts, urging followers to send cryptocurrency with promises of large returns. Other schemes involve fake websites that mimic legitimate cryptocurrency investments, but once victims "invest," they can’t withdraw their money.
Some scammers also create fake cryptocurrency apps that look like genuine ones. These scams can also be spread through fraudulent ads.
How to protect yourself:
● Be cautious of unsolicited investment offers.
● Watch out if someone tries to shift the conversation from one social media platform to another.
● If an offer seems too good to be true, it probably is. Avoid anyone promising huge returns with no risk.
● Verify the authenticity of any emails claiming to be from an investment company by contacting the company directly—don’t click on links in the email.
● Instead of following links in ads, search for the company and visit their website directly.
● If you're considering investing with a new company, search online for its name along with terms like “scam” or “complaints.”
● If you fall victim to a social media or online scam, report it to the FBI’s Internet Crime Complaint Center.
Tax Refund Fraud
In this scam, criminals use your stolen Social Security number to file a fraudulent tax return and claim a refund in your name. When you attempt to file your legitimate tax return, it’s rejected because the IRS has already processed a return with your Social Security number. In some cases, you might receive a notice from the IRS before you file, alerting you to a suspicious tax return filed under your identity.
How to protect yourself:
● File your tax return as early as possible to minimize the chances of a fraudulent return being filed before yours.
● If your return is rejected due to a duplicate filing, complete and submit IRS Form 14039, the Identity Theft Affidavit.
● The IRS will only contact you via mail—not by phone, text, or email—so be cautious of any unsolicited messages claiming to be from the IRS.
● Never respond to calls, texts, or emails from someone claiming to represent the IRS.
● Visit the IRS’s Identity Theft Central for resources on protecting yourself from tax-related identity theft and securing your data. You may also want to obtain an Identity Protection PIN from the IRS to help prevent fraudulent filings using your Social Security number.
● Check with your state’s tax agency for additional identity theft protection resources.
● Continue to pay your taxes and file your return, but you may need to file a paper return along with Form 14039 if you’ve been a victim of identity theft.
Practice Strong Cyber Habits
The scams mentioned are just a few examples—there are many more to be cautious of. While no security measure is completely foolproof, anyone can fall victim to fraud due to a moment of distraction or poor judgment.
Staying alert and following basic safety practices can protect you from most attempts to steal your personal information or money. Always take a moment to pause and check for warning signs before responding to any unexpected emails, phone calls, texts, or social media messages asking for money or personal details—even if the sender appears to be someone you trust.
Sources:
https://www.fidelity.com/viewpoints/personal-finance/preventing-identity-theft
Disclosures:
This information is an overview and should not be considered as specific guidance or recommendations for any individual or business.
This material is provided as a courtesy and for educational purposes only.
These are the views of the author, not the named Representative or Advisory Services Network, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information
