Falling victim to a scam can be embarrassing, frightening, and financially devastating. Unfortunately, sophisticated scam artists know whom to target and how to use psychological tricks to get countless smart, hardworking people to part with their cash.
How many people fall victim to scams? Far more than most people realize. Just one specific type of trick -- called an impostor scam -- led to 406,578 complaints to the U.S. Federal Trade Commission in 2016 alone. Impostor scams prompted the second-highest total number of consumer complaints to the FTC, with only debt collectors causing consumers more trouble. This was the first time more people alerted the FTC to impostor scams than to identity theft.
Because impostor scams are cleverly designed to play on your fears, it's hard to avoid falling for them. If scams were easy to avoid, consumers wouldn't have suffered $744 million in losses from fraud in 2016.
The seven tips below can help you keep yourself safe and avoid losses.
1. Know the common tricks
Impostor scams begin when a scammer calls, sends an email, or sends a letter. The scam artist pretends to be someone they aren't so they can convince you to send them cash or give them your personal information.
Scammers usually pretend to be someone in a position of authority or a family member in dire trouble. Common tactics are used again and again by thieves who know what kinds of correspondence prompt people to send money. Some of the most common impostor scams include:
- The IRS impostor scam: You get a call and are told you owe back taxes. You're threatened with fines, fees, arrest, or deportation if you don't wire money immediately.
- The "government agent" impostor scam: Someone from "the government" calls with great news: You've won a lottery. You just have to wire taxes and fees first in order to collect your payment.
- The "debt collector" impostor scam: You get a call or a letter alerting you to the fact you've been sent to debt collections. The letter might look like it comes from a law firm or from a court. It will warn you of dire legal consequences if you don't quickly wire money.
- The grandparent impostor scam: Your "grandson" or "granddaughter" calls in desperate trouble. They're trapped somewhere and need you to wire cash right away so they can get home. They definitely don't want you to tell Mom and Dad.
All these scams have two things in common: a sense of urgency and a claim that something bad will happen if you don't pay up. If you're told there's a problem your cash can solve, think twice about giving in to the fear the caller tried to instill in you.
2. Do an internet search before sending cash
When an impostor scam is being operated, scammers don't just target one person; they'll call thousands of people and present the exact same scenario. This works to your benefit, because these scams make the news.
If you've received an email, letter, or phone call alerting you to a situation that requires you to send money or provide personal information, take to the internet and type the scenario into a search engine. You may immediately find warnings about a scam that is sweeping the nation.
It's unlikely that your grandson is trapped in Canada at the exact same time there's a major scam going on where people pretend to be grandkids trapped in foreign countries -- so if that scenario comes up in your search, you'll know you were targeted by a trickster.
3. Protect your social-media accounts
Impostor scams are most effective when the caller seems to have information about you and your family. Your "grandson" may know the names of his mom, dad, and siblings. The "debt collector" may have details about where you live, where you work, and the car you drive.
How do scammers get this info? Often, you unwittingly give it to them by sharing your life on social media. Your Facebook, LinkedIn, Twitter, and other accounts provide lots of details. Scammers use this personal information to convince you they know who you are.
To reduce the chances that your social-media information will be used against you, consider making your accounts private so only friends and family can see what you post. If you must have public profiles and pages, be cautious about the personal information you provide and be aware that others could use your data to trick you.
4. Don't trust caller ID
When a scammer calls and tells you they're from the IRS, Health and Human Services, or another government agency, your caller ID may show that the phone call actually is coming from the federal government.
The problem is that the caller ID may not be correct. The Federal Trade Commission warns that caller IDs can be faked. Scammers make calls look as if they are coming from official sources, even though the call may be coming from anywhere in the United States, or even from outside the country.
Although you shouldn't trust caller ID to prove a call is legitimate, write down the number if you suspect you're being scammed. The FTC might be able to use it to trace the party who is committing impostor crimes.
5. Tell the caller you'll call back
A perpetrator of an impostor scam wants you to provide your personal information or commit to sending money during the first phone call. But you don't have to let the call you received be the only contact. Tell the caller you'll call back, hang up, and go online to look up the official number of whoever was supposedly calling.
If the call came from the "IRS," go to the IRS.gov website to find contact details. If the call was from your "bank" or a "law firm," call back a number you find on the company's official website. If the call was supposedly from your grandchild, call the number you have stored under their name -- and if you don't have one, call their parents. Whoever you get on the line can tell you whether the call was legitimate.
6. Never, ever send funds via wire transfer
It's extremely unlikely that there's a legitimate situation that would require you to wire money. If you owe someone cash, there should be multiple ways to pay -- including sending a check in the mail. A wire transfer isn't a common payment method, and in fact, the FTC categorically states: "The government will not ask a consumer to wire money, and it is illegal for telemarketers to ask you to pay by wire."
Scammers prefer wire transfers because the money is difficult to trace and virtually impossible to recover. If you're asked to send money via a wire transfer, this is a likely scam. Just don't send it.
7. File a complaint with the FTC
If you get a call you think is a scam, let the FTC know by filing a complaint at ftc.gov/complaint. The FTC won't help you to resolve your specific situation, but it will provide information about steps to take if you suspect a scam.
The FTC will also record your complaint to track patterns of criminal behavior. The information you provide could help others avoid becoming victims.