Key insights:
- Some of the most common financial scams include phishing, loan scams, fake investment opportunities and mortgage fraud
- Every year, consumers lose billions of dollars to financial scams
- Knowing how to avoid financial scams can help protect your money and information
Consumers lose billions of dollars each year to fraud, according to the Federal Trade Commission (FTC). Financial scams and fraud can be devastating for individuals and families alike. Unfortunately, they’ve only become more common in recent years, so it’s more important than ever to know how to spot and avoid them.
Let’s take a closer look at financial scams, including common types, tips for protecting yourself and what to do if you suspect someone is targeting your finances.
What are financial scams?
A financial scam is a type of fraud meant to trick individuals into giving away money or access to a financial account or personal information. This can happen through many methods of communication, including:
- Phone calls
- Emails
- Text messages
- Social media
Scammers attempt to gain access to your information and then use it to drain money from your accounts, take out loans in your name or trick you into sending money to an account they control.
What are common financial scams to avoid?
There are several common financial scams to know. Knowing what to look for will help you understand how to avoid financial scams.
Phishing scams
Phishing is one of the most common financial scams. You may get calls, texts or emails asking for your banking credentials (or other personal information, like your Social Security number) in order to access your money. The scammer’s goal is to get you to give confidential information to a source you believe is trusted.
Impersonation scams
Scammers may claim to be someone you trust, such as your bank, tech support or even a government employee. Typically, they’ll try to use that position of trust or authority to get you to give them information or access to your personal accounts. They may even fake the caller ID if they contact you by phone.
Fake investment opportunities
Investment scams typically present themselves as opportunities to get rich quickly, with very little risk. You may come across these via a seminar or free training program, and that’s where the scam comes in. They try to convince you to pay for training or coaching to learn more about investing in things like cryptocurrency or real estate, with the promise that it will lead to success.
These scams can be extremely lucrative for fraudsters and often disastrous for prospective investors. They’re especially predatory because they often appear legitimate. You might even attend an event in person and meet the scammers face-to-face. But if it sounds too good to be true, it probably is.
Debt relief or loan scams
Scammers may contact you with the promise to wipe out your debt, or you may see ads claiming guaranteed loan approval — in exchange for upfront fees, such as processing or application fees. Legitimate companies cannot guarantee to eliminate debt or approve a loan.
Prize or lottery scams
Another common financial scam is when you’re contacted about winning a prize, such as a sweepstake or a lottery. The catch is that you’re told to pay a fee, which may be framed as taxes or a funds transfer fee, to access your winnings. It’s typically a small amount compared to the purported prize, which never materializes.
Be aware that this is not how prizes work, and if you’re asked to pay these types of upfront costs, it is a scam.
Mortgage closing fraud
Homebuying has become rife with fraud. In the first quarter of 2025, nearly half of all mortgage closings had at least 1 title or wire fraud risk. There are a variety of financial scams in real estate, with scammers posing as different members involved in a closing process. It’s crucial to hire a trusted real estate agent, attorney and loan officer, and meet with them face-to-face so you can’t be tricked by scammers impersonating them.
Charity scams
Scammers will happily prey on your generosity. Fraudsters occasionally pose as charities, especially during disasters or the holiday season, to trick people into sending money. You should never send money to a charity without confirming it’s real and a registered 501(c)(3) with the IRS’s Tax Exempt Organization Search Tool.
How do you protect yourself from financial scams?
Financial scams can be dangerous, but there are steps you can take to help protect yourself.
Always verify the source
If you’re asked to share personal or financial information, make sure the request is coming from a verified source. This is generally the simplest way to avoid financial scams.
For example, if you receive a phone call from someone claiming to represent your bank, asking for personal information, hang up and call the bank directly. Be sure to use the official contact information, such as the customer service phone number listed on their website. They should be able to verify if the caller is legitimate.
Treat email links and attachments with caution
Never click a link or attachment in an email without verifying it’s legitimate, especially if you haven’t received an email from that sender before. If you’re not expecting an email from a trusted contact, call them before clicking any links or attachments that seem unusual or out of character.
Scam emails can look very convincing. Some warning signs to look for include:
- Tone: Urgent or threatening tones are a major red flag. Scammers want you to panic and not think. Messages claiming your account will be suspended, a package is undeliverable or you owe money immediately may be part of a financial scam.
- Email address: Just because the “from” name looks legitimate doesn’t mean it is. Check the actual email address to see if it’s misspelled, uses a public domain rather than a company address or is completely unrelated to the sender.
- URL: You can hover your mouse over links without clicking to see where they truly lead. If the destination is clearly different than what’s displayed, don’t click.
- Grammar and spelling: Professional organizations may make spelling errors, but they’re usually small and in context with the rest of the email. Emails filled with typos, spelling mistakes or poor sentence structure are probably fake.
Don’t send money to unknown individuals
Never send money to someone you don’t know. Whether it’s an unsolicited request, an upfront payment for promised funds or payment for services to be rendered, always verify who you're sending the money to before you do.
What to do if you suspect a financial scam
If you think you’ve been targeted by a financial scam or your information has been compromised, there are a few key steps you should take to help protect yourself:
- Contact your bank or credit card issuer: Your financial institution can help you understand your options. If you lost money, you may ask them to reverse fraudulent charges.
- Report the scam: You can report suspected financial scams to your local police or sheriff’s office, as well as the Federal Trade Commission (FTC). They can help you understand your next steps. You may also want to contact your state attorney general, as well as the FBI’s Internet Crime Complaint Center.
- Monitor credit reports and account activity: You can get a free copy of your credit report from the 3 main credit bureaus every week. This can help alert you to any unusual activity, such as new accounts being opened in your name. Depending on your financial institution, you may also be able to sign up for notifications about suspicious activity.
- Change your passwords and security questions: Changing your account passwords can help prevent fraudsters from accessing your accounts. You should also avoid reusing passwords from compromised accounts. (A password manager may help you keep track of changes.) In the same vein, double-check that your security questions aren’t based on information that may be potentially discoverable, such as your mother’s maiden name. If they are, change them ASAP.
- Update your security software and scan your computer: This can help you catch and delete problematic files on your computer.
Financial scams are a risk that comes with modern life. By practicing anti-fraud habits, you can help protect your finances. That way, you can get peace of mind.
Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
