Falling victim to fraud can be devastating to your financial affairs, both because of the actual monetary loss and because of the resulting loss of confidence in managing your assets. Unfortunately, scams and schemes are far too common, and victims in the U.S. lost almost $1.5 billion to them in 2018.
The good news is that awareness can help you fight back and ensure you don't get taken advantage of. Forewarned is forearmed when it comes to telephone scams, banking scams, and charity scams.
1. Telephone scams
Phone scams occur when dishonest actors contact you via voice call or text message. There may be a person on the other end of the line, or you may get a robocall, but the goal of the contact is always the same: to get your financial or personal information and use it unlawfully.
Scammers may try to separate you from your cash or your information by using threats or making promises. You may be told you're about to be arrested by the IRS for nonpayment or that your Social Security number or Medicare coverage will be canceled if you don't make a prompt payment or provide your Social Security number. Or you may be given the opportunity to "invest" in a "guaranteed winning" investment.
Scam calls may appear to come from an official phone number -- your caller ID may even say it's the IRS calling. But don't be fooled; scammers can "spoof" phone numbers to give themselves an air of legitimacy. Never give out any identifying details or provide any financial information in response to any phone call. Instead just say no and hang up. Federal institutions like the IRS or SSA won't ask for sensitive information via phone, so rest assured you aren't hanging up on a legitimate caller.
If you're not 100% sure the call is a scam, simply indicate you'll call back. Then use the internet to look up the official phone number for the financial institution, federal agency, or other person or entity who claimed to be calling. Contact the number you found independently to see if the call was a legitimate one.
2. Banking scams
There are four common banking scams, all of which are used to access the cash in your bank account.
Overpayment scams occur when you're told by a thief to deposit a check and wire some of the money back to them. Unfortunately, the check is counterfeit, but you don't learn this until after you've already made the deposit and wired the cash. Your bank will reverse the deposit and usually charge you a fee, so you'll be out that cash plus any amount you wired to the crook.
Unsolicited check fraud also involves a check, but this time it's a legitimate one that comes with strings attached. When you deposit the check, the money will go into your account -- but by taking the cash, you're agreeing to something in the fine print such as taking out a loan or making a purchase.
The two other types of scams don't use checks. One involves a "phishing" email or phone call -- one intended to get personal information, in this case your account information, through dishonest means. Often the email purports to come from the bank and you're asked to "verify" your account details. The other occurs when companies set up funds to be withdrawn automatically from your account -- usually after you agree to a "free" trial or provide access to your account because a scammer claims to need it in order to give you lottery winnings.
To avoid falling victim, don't give out your bank information to anyone you don't know, and don't deposit checks that don't come from a trusted source. If you get a call or email from your bank and you're not sure if it's legit, hang up or delete the email. Then call the phone number given on your bank's website or the back of your ATM card.
3. Charity scams
Finally, charity scams prey on your desire to do good. With these scams you're asked to donate to a charitable cause that isn't real. Donations may be solicited via phone, mail, or GoFundMe, but whatever the source, the charity isn't legitimate.
You can avoid these scams by doing independent research into any charitable organizations you're considering contributing to. Check out Charity Navigator to see details, including the percentage of your donation that will go to help the cause.
If the charity doesn't show up on Charity Navigator and you can't verify it's actually legit, save your money for another cause that doesn't have questionable origins.
Don't fall victim to common scams
You've worked hard for your money, and the last thing you want is to lose it to an unscrupulous scammer out to harm you. Be cautious about providing personal information or access to funds, and always remember that offers that sound too good to be true likely are.