Americans lose a lot of money to financial scams every year, and the number of them has been going up recently. In 2022, the Federal Trade Commission got 2.8 billion reports from people who said they lost over $5.8 billion to fraud. This is a 70% increase from the year before.
Laura Harris, a Certified Fraud Examiner and research specialist at the Association of Certified Fraud Examiners, spoke with GOBankingRates about typical financial scams and how to avoid them. Here’s what you should know:
Scams Using Advance Fees
“Advance-fee frauds are one of the most popular,” Harris said. “A con artist promises something but demands payment in advance.
Someone might have won a trip but have to pay a processing fee, or a contractor might want payment upfront for goods. “The consumer must pay in advance before receiving what they are paying for.”
Scams involving charities
Harris said that people should be aware that charity, nonprofit, and fundraising scams are very common.
“Scammers will fabricate sad stories, steal photographs from other social media platforms, and humbly seek funds,” says the FBI. “This can be a strategy to deceive consumers, especially around the holidays.”
Scams in the Romance Industry
“Remember, con artists may be charming,” Harris said. “They could know just what to say to persuade a new buddy, boyfriend, or girlfriend to lend them money or invest in their business.
“Heavenly church groups’ use of social media, dating websites, and smartphones can provide clever con artists with the opportunity to meet a lonely or vulnerable person.”
“Like the romance scam, a fraudster targets a specific type of individual with whom they may have a connection,” Harris explained.
“It could take the form of racial minorities, elderly people, language minorities, religion, and other factors.” The fraudster develops a connection before exploiting it by sharing an affinity.
“If a consumer has been the victim of fraud, they should be skeptical of a company calling them and asking if the victim wants their money back or the bad people put out of business,” Harris said.
“This is usually the same individual that contacts them, so they knew who to contact.” Of course, they charge a fee to begin the procedure.
Phishing, smishing, and vishing
“Email phishing scams, which try to get sensitive information like passwords or account numbers, are known to a lot of people,” Harris said. “But now, criminals are also using texting to get this kind of information.”
“SMiShing entails texting people via short message service (SMS) and potentially presenting a link for them to click. Vishing is similar, except the victim receives a voice mail containing urgent information or a robocaller offering a deal.”
Expert Advice to Prevent Money Scams
“Although the internet can be a place where customers lose money and fall for scammers, it can also be a place where they can research the person, business, or opportunity with which they are presented,” Harris explained. “They can find out if others have been harmed and are warning others by conducting a quick search of a business name and scam or review.'”
“Remember that if something appears too good to be true, it usually is,” Harris added. “Opportunities should not be rushed, relationships should not be made contingent, and enterprises should have references. If you’re unsure, ask questions. Companies, individuals, and organizations should be glad and excited to talk about their mission and explore it in depth—not just for the sake of attracting funding. High-pressure sales practices and FOMO/YOLO advertising should be avoided.”
“We all want more money,” Harris continues, “but scammers want it even more.” Whether it’s an investment, a reward, or a relationship, one of the best questions consumers should ask is, “Am I willing to lose money on this?”