Financial Fraud Can Cost the Average Victim $7,076. Here's How to Avoid It

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  • Almost half a million Americans were subjected to financial fraud in 2020.
  • Knowing how to spot fraud could help you avoid it.

If there's one thing you want to steer clear of, it's financial fraud.

You'd think that during a pandemic, criminals would've perhaps decided to give their usual activities a rest. But actually, financial fraud has been rampant over the past two years, and an increase in stimulus funds and other aid programs have only made it easier for criminals to take advantage.

In 2020, there were over 465,000 cases of financial fraud in the U.S., according to recent data from SEON Technologies. All told, that amounted to an average loss of $7,076 per victim.

If you want to avoid becoming a victim to financial fraud, there are steps you should take to protect yourself. Here are a few to start with.

1. Know what fraud looks like

Have you ever gotten a random email or text message telling you to click a link that will take you to a cash prize? Chances are, that link is bogus -- or rather, the link will work, but it will take you to a site where you're asked to enter personal financial information that a criminal will use against you, like your bank account details.

As a general rule, you should never respond to an unsolicited phone call, email, or text that asks you to confirm or enter personal details. You should also know that agencies like the IRS and the Social Security Administration will not call, text, or email you out of the blue, so if you get correspondence along those lines, don't offer up a single detail about who you are.

You'll also need to be careful with your credit cards. Sometimes, a criminal will send a message that appears to be from your credit card issuer confirming a charge. A good bet is to call the number on the back of your card to confirm the request is legitimate.

2. Shred financial documents

Those monthly statements you get from your bank or credit card company? If they get into the wrong hands, a criminal could have a field day.

That's why a shredder is one of the best investments you can make. For a mere $50 (give or take), you can stick a shredder somewhere in your home and destroy documents containing personal details rather than toss them in the trash and run the risk of them falling into the wrong hands.

3. Check your credit report regularly

You're entitled to a free copy of your credit report every year from each of the three major reporting credit bureaus -- Experian, Equifax, and TransUnion. It pays to check your credit report every four months, because doing so could stop a criminal in their tracks.

Say you access your credit report and see a credit card on there you never applied for. It may be that a criminal opened that account recently and is waiting to use it -- and stick you with the bill. But if you report it immediately, you might get in before that crook has a chance to rack up charges.

Financial fraud hasn't decreased since the start of the pandemic. If anything, it's only gotten worse. And, unfortunately, it can be costly. By taking these steps, you can protect yourself from fraud -- and buy yourself some much-needed peace of mind.

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