How To Avoid Financial Scams and Fraud

While scams and fraud can happen to anyone, according to the FBI, each year millions of elderly Americans fall victim to some type of financial fraud or confidence scheme. (FBI.gov)

It’s important to be aware that scammers and fraudsters are relentlessly finding new ways, day in and day out, to victimize us and run away with our hard-earned money. They’re not only innovative with their techniques as technology advances, but at the same time, the stories they employ to either overwhelm or entice us are constantly evolving.

We would like to especially highlight that senior citizens are particularly preyed on, but no matter who you are or your age group, you can get scammed if you’re not careful.

When it comes to avoiding scams, awareness is key, knowledge is imperative, and being skeptical is a weapon. Here are a few ways to avoid scams and fraud.

The Common Red Flags

There’s a reason why scammers and fraudsters need to be relentless. It’s because they know that not a lot of people, or only a very little percentage of who they target, will take the bait.

They spam us through emails, phone calls, instant messaging, or whatever channel they use to possibly reel someone in. To most people, their tactics are easily thwarted, but to those unaware, they work like a charm.

Don’t be a part of the percentage that gets hooked by their bait. Learn how to identify common red flags, like:

  • Get rich quick schemes

  • Too good to be true deals and promises

  • Pay now and swim in a ton of cash later offers

  • A family member is in trouble and they need money quick ruse

  • “I’m out of town or country and I need your help but will pay you later” narratives

  • The Jamaican lottery

  • The Nigerian prince scam

  • The Haitian relief scam

  • “You missed a jury summons” scripts

  • “You missed paying a loan and you’re in ‘big trouble’” scenarios

  • “We’re sending the sheriff to arrest you” threats

These are just some of the schemes employed by scammers, and identifying similar ones upon encounter is already a huge step towards avoiding financial scams.

Scam call centers, like the one depicted above continue to thrive, though the COVID pandemic and the lockdown’s that ensued have slowed them down.

Know How They Manipulate

Scammers and fraudsters are essentially con artists. Con artists are successful in scamming people because they know what strings to pull, i.e. emotions. Please do take note that the goal when it comes to manipulating emotions (of would-be victims) is to overwhelm, if not paralyze their minds.

A scammer will do whatever they can to take away your logic and common sense. Once you are flooded with emotions, then your judgment is clouded, and you are more likely to act impulsively, carelessly, and make poor decisions.

A scammer will either use extreme excitement or overwhelming fear to try and control you. Don’t let them. Once you’re in a similar situation, be skeptical, be calm, and take control of your emotions.

The best defense when unsure in such situations is to hang up and dial the known hotline for what the caller claims to be representing. Most of the time, scammers will claim to be from the police, emergency response team, hospital, bank, immigration, law firm, or school.

They pose as someone in a position of authority or credibility to make you feel inferior and doubt yourself. Some may even threaten to arrest you if you don't do as they bid. Don’t. Stand up to them and be wiser.

In any case that you might think that the call you got is legitimate, then still don’t rush any judgment. Research the company’s real phone number and tell them that you’ll call them back with the information that they need.

Be Wary of the Overly Aggressive Caller

One way that scammers and fraudsters can overwhelm you with excitement is by concocting a dire need for urgency.

One of the best ways for scammers to execute such a tactic is via a phone call. Text messages, chat messages, and emails can be easily disregarded, so the urgency ploy might not be as effective. With phone calls, they can be.

The false sense of urgency is oftentimes created by the scammer through a scarcity ruse. You’ll often hear lines like “This is your last chance or it’s going to be sold out fast.”

This ruse will occasionally be paired up with a false social consensus such as “This product was brought by the leading authority in this field or industry” talking points. They may also use known brands, companies, or businesses to make them seem credible and legit.

It won’t end there, either. Aside from pestering you to purchase what they offer, they will then be very aggressive when it comes to asking for your credit card or bank account information.

This is the worst situation to give these details out. Never give your credit card or bank account information, not even your social security number, when you feel like you are forced to do so. A legit party needing such information will be sensitive to your position and treat it as a delicate situation in a professional manner.

EXTRA TIP: Some of these “urgency” scams will be found in the spam folder of your email. They are called phishing emails. Please, if anything is dubious and is already in your spam folder, delete it right away. These emails are in your spam folder for a reason and your email provider has already imposed very helpful security measures to protect you.

Know That Not All Scam and Fraudulent Attempts Are Loud and Aggressive

Please keep in mind that not all scams are loud, active, and aggressive. Some are laid traps, passive, and subtle. Keeping that in mind will have your guard up every time.

The internet, as we all know, is a scammer and fraudster’s playground. Security protocols can only do so much. If we can’t protect ourselves then we'll still fall for these scams.

The phishing emails we mentioned above are examples of such tactics. Fraudulent websites are a huge part of this ruse, as well. You can get scammed by websites that lead you to harmful sites, leading you to either download a virus to your computer or input your credit card or bank account information voluntarily.

Your anti-virus software can only do so much. Your awareness about these schemes is still your best defense against them. A computer virus can easily take your computer files hostage, while the scammers threaten to wipe out your files or use sensitive information against you.

Inputting your credit card or bank information online may lead to fraudsters emptying your account or stealing your identity. Know that threats are everywhere and always protect yourself.

Familiarize Yourself With All Types of Fraudulent Activities

There are multiple types of fraud committed by perpetrators every day. Having even the basic knowledge of these can go a long way for your protection.

We already mentioned identity theft. This happens when someone steals personal information and uses it to gain access to someone else’s financials. Then, you have mortgage fraud that often targets desperate homeowners. The FBI deals with this kind of fraudulent activity by the thousands yearly.

Then, there’s the very common credit and debit card fraud and debt collection fraud. Be wary of anyone asking you to pay for something with a gift card or wire transfer, as these transactions are hard to trace and can be even harder to get your money back.

Lastly, for some time now, fake charities have been organized by dubious individuals and “organizations” to scam people into giving their money voluntarily for a cause that doesn’t even exist.

Think of any other scheme and chances are, there’s probably a scammer doing it already.

Old But Definitely Not Gold Tactics

We just want to remind everyone about age-old tactics that scammers still use nowadays. Unfortunately, a good amount of people are still falling for these schemes.

We’re talking about no other than the lottery and phantom riches schemes. It’s pretty straightforward, too. You’ll get a call, message, or email telling you that you won the lottery or that you were visitor X on a website and you won a huge amount of money.

Don’t believe them, none of them are true. Especially if you didn’t sign up or join anything remotely similar. Also, take note of phantom riches scenarios where suddenly you have a rich uncle or great grandfather who died and left you a ton of cash.

These plots only happen in the movies.

Conclusion

Knowing how scammers and fraudsters operate is how we make sure that we are one step ahead of them. We need to educate ourselves so we don’t fall prey to these people.

There’s a reason why experts advise people to be skeptical when on the internet, receiving a random call, or getting dubious messages. If we fall for misinformation on a daily basis due to fake news spreading uncontrollably, then it’s not far-fetched that we may encounter and fall for a financial scam.

Be vigilant and on the lookout for these fraudsters to protect yourself and your loved ones. Part two of this serious, How to Minimize the Impact of Being a Victim of Fraud, provides great information for individuals that have fallen prey to scams or had their identity stolen.

Sources:

https://www.investopedia.com/financial-edge/0512/the-most-common-types-of-consumer-fraud.aspx

https://www.intego.com/mac-security-blog/top-10-online-scams-watch-out-for-these-common-red-flags/

https://www.saveandinvest.org/protect-your-money-spot-and-avoid-fraud/how-spot-red-flags-fraud

https://www.csoonline.com/article/3397138/how-to-defend-against-scams-14-red-flags-everyone-needs-to-be-aware-of.html

https://moneyfit.org/episode/scam-red-flags


Rick Munster

About the Author

Rick’s been with Money Fit by DRS for 18 years and early in his career, he managed two divisions, customer service, and credit counseling, before settling in his current role of managing the organization’s marketing efforts. He is known for being someone who’d give the shirt off of his back for you, and smile while doing it! He takes that positivity and problem solving to consumers when relaying a message of help, hope, and better times ahead. When he isn’t helping consumers regain control of their debt, he loves traveling and seeing new places.