There are an ever growing number of sneaky ways for thieves to access your money. Below I list several to watch out for. In general, the best way to avoid falling victim to these or other scams is to use caution with all of your personal information, especially if it relates to your bank or credit. This includes both your credit and debit card numbers directly, and personal information that a crook could use to open an account in your name. Do not provide information to someone who contacts you. Instead, find out what organization they are representing and look up the contact information for that business or charity on your own. Do not post your address in want ads or public notices. Do not follow links in unexpected emails or just call back the number they provide. You should not expect to pay a fee up front in order to take advantage of any credit, vacation, or other unsolicited offer…if the down payment or application fee cannot be rolled into the credit offer then be doubly suspicious. If it is too good to be true, it either is – or it’s illegal. Either way, you don’t want anything to do with it.
Phishing is one of the most common fraudulent activities today. A phishing scam is an attempt to acquire your usernames, passwords, credit card information, or similar personal information that can be used to access your money by way of a fraudulent email or instant message. Fake emails alleging to be from social network sites, financial institutions, auction sites, online payment processors, or IT departments are common. Often, these emails are “spoofed” to appear identical to the legitimate ones. If you get an email that you think may be a legitimate request for a response, open your browser and type the web address directly as clicking links in the email may well take you to the spoofed site. Any website you do business with already has your password stored in their computers. The only time you should get an email from them regarding your password is if you request it, such as by clicking “I forgot my password.”
ID Theft, also referred to as identity fraud or impersonation, is when a criminal pretends to be someone else in order to access their accounts or to obtain fraudulent accounts in the victim’s name. Your information is often obtained by criminals by going through your mail or trash, phishing, old electronics such as hard drives or flash drives, searching public records, using electronic devices piggybacked on unsecure card readers (think gas pumps, parking meters, etc, especially if not in the vicinity of a surveillance camera), hacking corporate or government computers or unintentional breaches of the same computers by careless employees, fake job offers, shoulder surfing (someone secretly observing as you enter logins, passwords, or pin numbers), browsing social networks or other online information about an individual, guessing weak passwords, abusing insider access (i.e., your supervisor or IT department employees obtaining your info), diverting mail (change of address filled out by someone else pretending to be you), or social engineering (making up a plausible story and talking you into giving the information up yourself).
Advance Fee fraud is a scam where you are expected to pay a fee or down payment in advance for a product or service that never materializes. The most common version of this that people admit to falling for is an offer of a loan for people with poor credit, but only after a down payment or application fee. Also common are bargains for which you must pre pay, such as vacations or even tickets, only you never receive the tickets or you receive invalid or even counterfeit ones. Another twist that is commonly seen but fewer people fess up to falling for is a request from a wealthy foreigner (such as a “Nigerian Prince”) for you to spend some of your money to open an account to which the requester can transfer foreign assets, with a promise to compensate you for the service. My own rule to avoid this type of scam is simple. If I don’t have the ability to reach across a desk and choke a refund out of someone, then I don’t give them money, whether for a fee, a down payment, or a deposit. In our ever expanding online world, there are certainly some online only financial institutions that provide honest, even exceptional service. But it is up to you to check them out in advance if you intend to use their services.
Most of you have received a phone call or other solicitation for a charitable donation. Often these are for legitimate good causes, but not always. It is common for a legal but shady organization to use a close but not quite name easily confused with a legitimate group you have heard of, only somehow all the money gets used on employee salaries and administration costs. It is also possible for an individual to not even pretend to be a legitimate group, and just give a real charity name with their own mailing address for you to send a check. If the latter, the scam artists will “acid wash” the check, enabling them to replace the pay to and even amount lines as they desire, or they could even print an entirely new check using the routing and account number on the check you provided.
Another scam that many people fall prey to is a claim they won a prize, only they have to pay taxes and fees in advance. I can’t imagine a reason a legitimate group would charge a fee to award you prize. Check with the IRS regarding whether your winnings are taxable income, and if so, find out if you must pay taxes immediately (similar to withholding from your paychecks throughout the year) or merely include it in your tax return filing. If the group awarding the prize claims you owe sales tax on an item they are giving away then you know it is a scam…they should have paid sales tax on any item they acquired unless they purchased it wholesale to sell it at retail. If they obtained it to use for their business, other than reselling, then they are the consumer and owe the sales tax themselves.
Watch out for bills or invoices for services you don’t recall or groups you don’t recognize. Be especially cautious about this if you are a business owner. Some crooks will dummy up a realistic looking bill, often for a modest amount, expecting some of the recipients to just automatically pay.
Invest through legitimate, licensed brokers and firms, or with people you know and trust. It seems like rarely a month goes by with learning of another scam where people invest large amounts with someone who turns out to be a crook. This crook will send worthless statements while spending their money on their own lavish lifestyle, instead of building a business that could someday produce a return on that investment. They will often pay back some of the early investors with money from later ones; possibly even with some extra in the hopes it will encourage more investors. Inevitably this all comes apart though…eventually more investors will want their money out than can be covered by the money coming in.
Other scams to research and watch out for include toll call requests, scam recovery, work at home, credit repair, pyramid schemes, renting or selling something belonging to someone else, and more all the time as criminals combine their greed and creativity. As with most things, being alert to potential scams will help you avoid being victimized whether you recognize the specifics or not.