From Credit Card Hacks to Romance Scams, Financial Fraud Picks Up Speed
by Christy Bieber | Updated July 17, 2021 - First published on Feb. 11, 2019
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Being scammed can be a major blow to your finances and your peace of mind.Learn how fraudsters are coming for your money -- and how you can protect yourself.Image source: Getty Images.
You work hard for your money, and you deserve to keep it. Unfortunately, there are tons of scammers and criminals out there who would just love to get their hands on American workers' hard-earned cash.
And the data shows they're succeeding.
The number of reported financial scams increased in 2018, and most experts believe this troubling trend will continue -- especially as we become ever more reliant on technology for all of our transactions.
To protect yourself from a financial threat, it helps to know what you're up against. Here's some of the troubling data -- and some tips on how to keep the scammers at bay.
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More financial scams hit consumers in 2018
To get an idea of how much financial fraud rose in 2018, you can look to the Scam Tracker run by the Better Business Bureau. There were 49,387 scam reports submitted across America last year, according to the BBB. That's one report every 11 minutes. It's also 1,560 more scam reports than were submitted the year prior.
Scams of all different types were reported, including:
- Online purchase scams: In an online purchase scam, fraudsters claiming to be buyers will contact sellers on online marketplaces such as Craigslist and eBay. These supposed buyers offer more money for the purchase if the seller is willing to accept a money order or cashier's check. The payment arrives, and it's for a larger amount than agreed upon. The "buyer" asks for the excess money to be wired back, and after the seller sends the cash, it turns out the initial payment was a fake, and the money sent to the scammer is gone for good.
- Credit card scams: A scammer may pretend to be a representative of your bank or credit card company seeking personal information, supposedly to ensure that you're getting the best interest rate or rewards. Once you've provided your info, scammers use it to steal your identity. Sometimes, thieves perpetrating these scams also ask for up-front payments in exchange for special rates or rewards, so you're also out cash.
- Credit repair or debt relief scams: Thieves who perpetrate these scams prey upon people desperate to escape their debt cycle or improve their credit. In most cases, scammers promise you they can make your debt disappear or bump up your credit score quickly. You'll pay an up-front fee in exchange for recommendations that actually damage your finances -- such as withholding payment from creditors or applying for a tax ID number to use on credit applications instead of using your Social Security number.
- Advance fee loan scams: This is a simple scam in which you're promised a loan, no matter how bad your credit. The catch is, you have to pay an up-front fee. Once you pay, the loan never comes, but you're out the money you spent.
- Romance scams: In this particularly hurtful scam, which usually happens through online dating sites, fraudsters pretend to be their target's love interest. They may establish a seemingly deep connection with the victim over the course of weeks or even months -- before they start asking for money. They often claim they need the money to come visit or to pay for a personal or family emergency, but it's all untrue.
- Employment scams: Here, thieves pretend to offer job opportunities. Then they make the would-be worker pay an up-front fee -- sometimes for materials, training, or access to job postings. In some cases, these fake employers ask for information such as Social Security numbers, which can be used for identity theft.
As if all this weren't troubling enough, the FTC also estimated that consumers were on track to lose $3 billion in cryptocurrency scams by the end of 2018.
The future isn't looking any brighter
If you managed to avoid becoming one of the many scam victims in 2018, don't assume you're not still vulnerable. FICO identified emerging payment solutions as a trend to watch: As more people switch to peer-to-peer (P2P) payment networks and mobile wallets instead of cash and checks, criminals will move aggressively into these new markets.
The faster new technologies develop, the more likely they are to become the targets of unscrupulous actors. The Nilson Report predicts that merchants, card issuers, and merchant acquirers will face losses of around $34.67 billion due to fraud across the world by 2022. Around $12.1 billion of these losses are expected to come from the U.S.
Since we've already seen major retailers targeted, ranging from Target to T-Mobile, warnings of widespread merchant losses due to fraudsters should worry every consumer. Merchants will need to find new ways to protect their customers -- and Payments Journal warns that the quest to balance security and convenience is likely to be the No. 1 fraud challenge businesses face.
You can follow these tips to protect your data
Safeguarding your money and sensitive information is a continual challenge. But there are some ways you can reduce the chances that you'll fall victim to fraud. Some tips include:
- Don't give away financial info in response to calls or emails: If someone claiming to be a representative of your bank or credit card issuer calls you and asks for either payment or personal information, hang up and call the number found on the back of your card or on the bank's website. Don't assume you can trust caller ID, as this can be "spoofed" to make it appear that you're getting a call from a trusted organization. And never click links in emails or respond to emails by providing your personal info. Instead, go to the company's website directly.
- Don't give money to people you don't know: This includes people who claim they want to buy something from you online outside of the normal process, as well as people you meet on dating sites.
- Avoid storing your credit card info with too many merchants: The more companies that have your card on file, the greater the risk of a data breach.
- Watch out for offers that seem too good to be true: If a job offer or loan offer seems far better than what competitors are offering -- but you need to pay an up-front fee -- odds are it's a scam.
By keeping these tips in mind, hopefully you can avoid becoming one of the increasing number of victims who lose out to thieves.
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About the Author
Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
