Money plays an essential role in helping you pursue your most important goals in life. With proper money management, you can buy a new car or a new house. You can open a business, pay for your child’s college education, or retire early and travel the world. There’s no denying, though, that we all have vulnerabilities around money–and you’ll need to protect yourself if you want to keep your money safe.
At Leaders Credit Union, we have a mission to help our members power their dreams, and that includes helping them to avoid common financial scams. Since today’s financial scammers always seem to be coming up with new ways to steal, we’ve created this guide to help you recognize and avoid some of the most common scams.
The first step in avoiding financial scams is understanding what the most common scam tactics are.
A phishing scam is something that happens when a scammer contacts a target, often via an email or text. The message is often an alert, notifying the recipient of a security breach and requesting a verification of personal information that may include a bank account number, PIN, or password.
Most phishing attacks ask the target to click a link that leads them to a spoofed website that looks like it belongs to a credit union, bank, credit card company, or even a person-to-person payment app like Venmo. Once a target enters their personal information, the scammer can use it to access their money.
Identity theft occurs when a scammer obtains personal information including things like your Social Security Number, bank account number, passwords, and other sensitive information such as your mother’s maiden name or the name of your first pet.
If you’re the victim of identity theft, you may find that someone has used your information to sign up for new credit cards, loans, and accounts. Unless you get the situation resolved, you may find yourself responsible for thousands of dollars of unauthorized and fraudulent expenditures.
Owning a home is a dream for many Americans and the power of that dream can make some people vulnerable to mortgage fraud. Mortgage fraud can take several forms, including everything from loan modification scams to phony foreclosure protection.
One of the common traits of mortgage fraud is an unsolicited contact about loan modification. In fact, unsolicited requests are common with many types of financial fraud and should always be viewed with a skeptical eye.
Both credit cards and debit cards may be vulnerable to scams and frauds. People may get your credit card number by stealing your card, hacking into a system where your debit or credit card number is stored, or by installing a skimmer on an ATM or a point of sale.
Keep in mind that both your finances and your credit score may be impacted if someone steals your card. We recommend taking common-sense precautions, which we’ll discuss in the next section, to protect yourself.
Charity scams are designed to play on people’s emotions to get them to make donations to fraudulent organizations. Scammers send out phony emails, set up fake websites, and even solicit donations over the phone.
Sometimes, people who have been taken in by a fake charity don’t find out it was fake until they try to deduct the donation when they file their taxes.
A Ponzi Scheme is a type of investment scam where the scammer convinces people to invest in a product or opportunity that doesn’t really exist, promising sky-high returns on the investment. Often, the money from later investors is used to make early investors whole–but people who get into a Ponzi Scheme late almost always lose everything they invested.
Bernie Madoff ran one of the biggest and best-known Ponzi schemes. Collectively, his clients lost billions of dollars–and he went to prison.
A romance scam is a scam that preys on a target’s emotions by initiating online contact, building trust, and then asking the target to provide the scammer with money, often via a person-to-person payment app.
It’s easy for fraudsters to set up fake accounts using stock photos. This type of scam may also be referred to as catfishing.
A lot of Americans have debt and scammers may use the promise of debt relief or the threat of debt collection to convince people to pay them.
You should view any unsolicited contact with skepticism and do some research before entering any agreement with a company or sending money to them.
The key to avoiding financial scams is to be aware of common scams and educated on how to recognize them. Here are some pointers to help you build fraud awareness and avoid becoming a victim of financial fraud:
These tips can help you identify scams and frauds and protect yourself and your money.
Now, let’s review the steps to take if you have already been scammed. There are a few simple things to do:
Following these steps will help you recover from the scam as quickly as possible. Going forward, you can use the tips we’ve included here to identify and avoid scam attempts.
Financial scammers are persistent, but you can avoid their attempts to trick you by using the tips and advice in this guide. You deserve to pursue your financial goals without the stress of being scammed.
At Leaders Credit Union, we want to make sure our members are equipped with the necessary knowledge to avoid fraud. That’s why we’ve created our Ultimate Fraud Prevention Help Kit, to make sure our members are aware of financial threats and how to protect themselves. This resource goes over everything from common scams to a step-by-step guide on how to protect your accounts, so you can be financially safe.