No one is immune to the threat of predators and their financial scams. For example, a recent study by True Caller finds that as many as 59.49 million individuals in the U.S. report losing money due to phone scams alone in the last year. These days, they are everywhere, so it is crucial to gain awareness and educate yourself on how to avoid financial scams. These scams can leave individuals and families not only devastated financially but emotionally as well. Falling prey to a scheme that robs one of their rent, their ability to buy food for their families, or depleting their emergency fund can leave behind a sizeable psychological bruise that can take some time to heal.
Here we will touch on some of the most common financial scams running rampant today and what to do if you think you have fallen victim to one.
Stolen Identity
Stealing personal information about you and using it to adopt your identity is the underbelly of many of the financial scams we discuss here, but what we talk about in this instance is the act of purposefully stealing one’s personal identifying information, such as social security numbers and banking passwords, to act like that person. Of course, the danger comes from the identity thief using this sensitive information to open new accounts in your name, move your money out of your accounts, and essentially turn your financial world upside down. The way many people discover that their identity has been stolen is through a credit check. Imagine going to purchase a new car for your family and being turned down because your credit score has been hit hard due to fraudulent accounts opened in your name left unpaid, resulting in a low credit score. Once you discover that your life has essentially been “hacked,” it is a slow and tedious process to correct the situation.
Telephone Scams
We hear a lot about telephone scams lately because these scammers have gotten more and more sophisticated. If we are going to stay vigilant and educate ourselves on how to avoid financial scams, learning about telephone scams is essential. They may use text or robocalls to lure you in, and often you will end up with an actual person on the other end of the phone working their scheme to get your money. They are clever and often use emotionality to chip away at your defenses and get you to part with your money. An example of a telephone scheme that is especially heartbreaking is what’s called a “grandparent” scam. This is a scam where the scammer poses as a grandchild in trouble, calling or texting and asking the grandparent for emergency funds for things such as an urgent surgery or to enable them to leave a foreign country. Pulling at the heartstrings is the goal here, and it is unfortunately quite successful.
Another example may be that they call to say your home is being foreclosed upon, and funds are needed immediately to stop an auction of your property. Again, you may think this would be difficult to fall for, seeing as banks typically send plenty of alerts before something like this would happen. Still, once someone is on the phone with you skillfully triggering your anxiety about something as important as your home, people do fall prey.
Banking scams
These sorts of scams involve someone making an effort to access your bank accounts to steal funds. It can often come under the guise of a representative from your bank calling you needing some verification of your account, sometimes even saying your account has been compromised. They say they need access to your login information to stop someone from stealing from you. Once they have accessed your account, they are free to move money out and withdraw what they like.
IRS Impersonating Scams
These scams occur when someone reaches out to you pretending to be an IRS representative. They can contact you by phone, letter, email, or text. They may say you owe back taxes and that police will be dispatched if you do not pay them immediately, typically with a prepaid debit card or wire transfer. The intense emotional response that arises from the threat of legal persecution can go a long way in getting someone to part with their money.
Disaster-Related Scams
As we have navigated the day-to-day complex and challenging world of the COVID-19 pandemic, there are scammers hard at work coming up with ways to profit off of this crisis. Scammers will go door-to-door or call unsuspecting citizens with claims of grant funds available to them if they provide their personal information, such as social security numbers and banking information. They can even go so far as to use your personal information to invoice federal healthcare entities fraudulently. Another time you may see disaster-related scams pop up is after a hurricane. Imposters will sell themselves as FEMA (Federal Emergency Management Agency) workers to gain your personal information. Scammers have also posed as FEMA contractors or estimators to begin repairs on your home and obtain money through requesting deposits or other funds for materials. Legitimate FEMA representatives do not solicit money from catastrophe victims. If you feel you have been approached by a person posing as a FEMA representative, they ask that you contact them to report it immediately.
Technology Scams
Another scam making headlines these days are those involving people posing as tech support workers. The scenario is that these fraudsters will cause a pop-up on your computer, or you may receive a text or email saying you have been infected with malware or a virus. They may claim to be from one of the larger computer companies and are there to help. They will proceed to obtain remote access to your computer, where they will be able to invade your banking and investment accounts and steal other valuable information.
If you have sent money or given your credit card information to someone you realize is a scammer, the first step is to contact your card issuer or bank and report the fraud. Next, put a freeze on your credit by notifying the three major credit reporting agencies (Transunion, Equifax, and Experian). This freeze is essential because you want to make sure no additional credit inquiries are approved. Finally, if you need to report calls, emails, or texts that you have received and are fraudulent, you can contact the FTC directly and report them.
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