While you're working hard at your job every day, there are other people working equally hard to separate you from your cash. No, I'm not talking about advertisers hoping to sell you on the next big thing. I'm talking about scammers who employ all types of tricky schemes to convince you to send your money to them. Here are five of the most common scams you need to watch out for.
1. Tax scams
Millions of people are expecting tax refunds this year and scammers are hoping to claim as many of them as they can. There are a few different ways they can go about this. The most common way is to file a false tax return on your behalf. They usually load it with deductions and credits you don't actually qualify for to increase the tax return and have the money mailed to them. You won't even realize what has happened until you go to file your own legitimate tax return and cannot submit it.
Some scammers might try to get you by calling or emailing you and pretending to be from the IRS. They might tell you that you owe them a certain amount of money and demand that you provide a credit card number or wire money so that they can collect the money. Don't feel pressured into doing what they say, though. The IRS will never reach out to you about an unpaid bill via email or phone.
The boldest scammers might pose as tax professionals, offering to help do your taxes for a small fee, possibly a percentage of your tax refund. They will file your taxes, but they'll probably also claim irrelevant tax deductions and credits to inflate your refund and, thus, their cut of your money. Then, they'll skip town and you'll be the one left to deal with the IRS.
You can avoid most tax scams by filing your return early, reporting fake calls and emails to the Federal Trade Commission (FTC), and choosing a legitimate tax professional or software. You can get recommendations from friends or family members or check reviews for tax professionals and tax filing software online.
2. Charity scams
Charity scams can happen at any time, but they're most likely to happen around the time people are most seeking to donate -- the holidays and following a natural disaster. So many real charities are seeking donations that it's easy for scammers to blend right in. The only difference is that your donation lines the scammer's pockets instead of going toward a good cause.
Before you donate any money, you should verify a charity's legitimacy. Look it up using the IRS's Tax-Exempt Organization Search tool. If you cannot find anything about it, it is most likely fake. Don't give any money or personal information to this organization. Report them to your local police and the FTC and find a legitimate charity to donate your money to instead.
3. Investment scams
Investment scams may come in the form of an email, a letter, a phone call, or a salesperson at your door. The individual often claims to have a limited-time, low-risk, high-reward offer that they claim can make you rich quickly. They may profess to have insider knowledge and they'll usually pressure you to "invest" right away. But all these things should raise red flags in your mind.
You should always do your research before investing in anything to make sure it is legitimate. You can look up the brokerage or the individual using the FINRA BrokerCheck tool, and you can look up the investments they are recommending using the Securities and Exchange Commission (SEC) EDGAR database. If you can't find anything in either of these, that's a good sign you're dealing with a fraud. Tell the FTC, the SEC, and your local police.
4. Banking scams
Banking scams come in many varieties. You've probably heard of check overpayment scams where the scammer allegedly buys some item and mails a check for more than the item costs. Then, they request that the seller wire them back the difference. The check bounces and the seller loses their item and the money on top of it.
Other banking scams involve people posing as members of legitimate banks. They might send out emails requesting that you update your personal information or log into your account, but the information you enter goes to the hacker instead. Or they might pose as a bank offering affordable loans to those with poor credit who may not be able to get a loan elsewhere. They might request an application or origination fee, and then they don't actually send any money.
It's best to never enter your personal information into an email. Type your bank's URL into your internet browser yourself rather than clicking on links, and always double-check any phone numbers provided in an email in case they take you to a scammer. If you have any questions about the legitimacy of any correspondence, reach out to your bank directly to verify the information.
5. Romance scams
Romance scams are some of the toughest to swallow because people don't want to believe that the person they're dating is really only after their money. Often, it starts out just like any other online courtship, but at some point, the person will request money, either to help them get out of a tight situation or so they can afford to come and visit.
It's possible that their claims could be legitimate, but it's more likely that they're not. Be cautious and don't give out the money, especially if you've never met this person face to face. If they become angry or aggressive, report them to the dating platform they contacted you on and cut off contact with them.
Scams aren't going away, much as we'd like them to. So you must protect yourself by knowing the most common types and carefully guarding your money. If you run into any of the scams listed above, report it to the appropriate authorities and let your friends and family know so they don't fall victim to the same tricks.