Financial scams, whether through phone calls or emails, can be devastating. Unfortunately, they’ve only become more common in recent years. It pays to know how to recognize these schemes.
Let’s explore 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
Common financial scams to avoid
There are many common financial scams you should be aware of:
Phishing 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. This practice is known as phishing.
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.
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 scam is when you’re contacted about winning a prize, such as a sweepstakes 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.
How to protect yourself from financial scams
Financial scams can be dangerous, but there are steps you can take to help protect yourself.
- If you’re asked to share personal or financial information, make sure the request is coming from a verified source
- Treat links and attachments with caution, especially if you haven’t received an email from that sender before
- Don’t send money to unknown individuals or pay upfront for promised funds
You can also check your financial statements for unauthorized activity regularly to help protect your finances.
How to verify if something is legitimate
Verifying the identity of the person reaching out can help you avoid financial scams. That can look different depending on how they’re contacting you.
For example, if you receive a phone call from a number you don’t recognize, or it comes unexpectedly, and they’re asking for personal details, you may want to call the company or source the caller claims to represent. Be sure to use the organization’s 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.
Remember: Urgent requests or those that rely on scare tactics are signs of scams. Treat them with caution.
When it comes to electronic communications, verification might look like making sure the website connection is secure (a secure connection will have “https” at the beginning rather than “http”). You can also look for spelling errors in the website link or email address. For example, scammers might use very similar email addresses to your bank. Performing an internet search for that address may help you confirm the source. Unusual word choices can also be a tip-off that you’re dealing with a potential scam.
