How to Protect Yourself Against Scams

Crooks who want to separate you from your money seem to be everywhere, and they continue to get more adept at pulling off financial scams. It’s not just the most vulnerable people in society who fall prey to scams — I have had conversations with educated high-earners conned into sending money to a scammer. To me, that indicates there is no one-size-fits-all set of solutions to keep you safe from a clever scammer. But if we are vigilant, there are ways to protect ourselves against financial scams.

The Federal Trade Commission (FTC) is the government agency tasked with protecting consumers from financial fraud, and it reports that criminals are proactive. That means criminals will generally reach out to their victims first. Whether it’s an enticing offer that comes to you in an email, or a threatening phone call seemingly from a government agency, it is the scammer who generally initiates contact.

The first level of protection you have against scams is knowledge. If you know how these shady characters operate, you will be more likely to shut them down right away.

First, familiarize yourself with the many types of scams. FTC.gov is a great place to learn. Here is a list of just a handful of known scams:

• Investment scams appeal to our greed. They present an investment opportunity that may include precious metals, cryptocurrencies or real estate. If they tell you that you need to act quickly or miss out, shut down communication.
• IRS scams feed on our potential fear of filing our taxes and the power of the Internal Revenue Service (IRS). The scammer may pose as a tax collector or an IRS agent. Remember that the IRS will never reach out to you for payment through email, social media or text — it generally initiates contact only through the U.S. mail.
• Social Security scams often involve messages informing you that your Social Security benefits will get suspended unless you pay a fee.
• Romance scams feed on our desire to be with someone we love. Once scammers trick you into falling in love, they begin asking for money. They might say that their family member is sick, that their car broke down or that they need financial support to travel to visit you. These scams are often developed over months to build trust. The FTC reports that in 2023, more than $1 billion was stolen in the name of love.
• Job scams often prey on those looking for a job. They may impersonate a job recruiter for a well-known company. After a few interviews, they may tell you that you are the top candidate and even schedule an onboarding interview. Of course, the scammer will say that the Human Resources department needs your Social Security number, bank account information and driver’s license to get everything set up.
• Debt scams impersonate a debt collection agency to trick you into paying a false debt claim. Alternatively, scammers may ask you to pay an actual debt you owe, but all of the money goes directly to the scammer. The same scam exists for student loan debt.

What can you do to avoid scams?

Slow down and double-check. If you receive an email from your bank requesting that you click on a link to verify your account, stop and think about it. Has your bank ever contacted you like this before? Probably not. Look at the return address or the link they provide. Is the financial institution spelled correctly? Is the URL address odd? Does the logo in the email look a bit off? Your intuition is the first line of defense. If it seems odd, it’s probably a scam.

Go to the source. If a call or email requests personal and financial information, defer the conversation and go directly to the source. Call the bank or company in question with a number other than the one provided by the suspected scammer. Ask the representative you reach if they need the information that was requested. If it is a legitimate request, inquire as to why they need that information.

Notice the payment method. If you are conned into sending money to a scammer, the manner of payment can be a huge red flag. For example, if they request money sent via wire transfer, Western Union or money order, they are probably attempting to complicate the money trail. A wire transfer will probably go to a bank account that is immediately closed after they receive the money. If they request gift cards of any type, it’s probably a scam.

Strengthen your account security. If multi-factor authentication is available, opt in for that service. Check your financial accounts regularly and look for unusual activity or unidentified charges. If you find anything that is questionable, report it immediately to the institution. Just because an unidentified charge is small does not mean it’s not a threat. Scammers will often test an account with a small transfer to ensure that the connection is valid. Then, they go in for the big financial score.

Freeze your credit. Another protection is to create a security/credit freeze. You can contact the three credit reporting agencies: Equifax, TransUnion and Experian. For no cost, these agencies will freeze your account and not allow any institution to run a credit check unless you authorize it. This means a scammer will not be able to take out a credit card, open a financial account or borrow money under your name without you knowing about it.

Don’t be shy if you get scammed. If you have been scammed, you may be embarrassed to tell anyone that you fell for it. The FTC needs to know so that it can go after the perpetrators and help warn others of the threat. Think about the Bernie Madoff Ponzi scheme. Hundreds of well-known, educated, intelligent people lost millions of dollars to that scam. You are not alone — please report it to the FTC.

A CFP® professional can recommend solid security procedures for your money and can help you navigate any financial fallout if you’ve been scammed. Find your CFP® professional today.