Have you ever been the victim of financial fraud? Most likely, the answer is yes.
According to some estimates, 10-15% of American adults (about 33 million people) are victims of consumer fraud every year. The cost of these financial frauds and scams is somewhere between $40 billion and $50 billion every year.
Financial frauds and scams are extremely damaging to millions of people. In addition to the physical and emotional toll, frauds and scams can cause bankruptcy and harm your credit score and reputation.
Whether you’ve already been a victim of fraud or not, it’s important to arm yourself with the proper knowledge so you can better protect yourself in the future. So, take the time to familiarize yourself with these common frauds and scams that target people like you — it makes them much easier to avoid.
Family Emergency and “Grandparent” Scams
Have you ever received a call from someone trying to trick you into sending money for a loved one? It usually involves a story about being arrested, mugged, or involved in a car crash. Sometimes the caller pretends to be a doctor, lawyer, police officer, or just a friendly bystander. Other times, they impersonate a friend or family member. The goal is to get you into panic mode and send money before you realize it’s a scam.
There’s no real way to protect yourself from receiving communication from a con artist, but it’s good to know there is a simple rule for protecting yourself from imposter scams: Never send money or gifts to anyone you haven’t met in person.
If you have any suspicions about someone you have met in person, verify the story with family and friends before offering help. Hang up the phone and call the person’s number directly, not the number provided by caller ID or the caller.
Also, it’s a good idea to only answer the phone from numbers that you recognize. Even if the caller ID says it is Social Security, Medicare, County Courthouse, or IRS, don’t answer. If it’s important, they will leave a message. Remember, it’s a scam if they ever threaten or demand that you pay them with a gift card, money order, or by wiring money.
Watch this video to learn how scammers play with your emotions and use high-pressure tactics to get your money. If you or someone you know has been contacted by a con artist, hang up the phone and report it to the Federal Trade Commission.
Romance Scams
In recent years, romance fraud (sometimes called “catfish fraud”) has been popular with scammers. You probably know the story: You meet someone special online and then they ask you to send them money.
Other examples of imposter fraud include IRS and government imposter scams, nanny and caregiver imposter scams, and tech support scams.
According to the Federal Trade Commission, imposter scams were the number one fraud reported on their Consumer Sentinel Network in 2019.
Identity Theft
Identity thieves use stolen information opening up new accounts under victims’ names or gaining access and seizing control of existing accounts. According to the 2019 Identity Fraud Study from Javelin Strategy & Research, 14.4 million Americans fell victim to identity theft in 2018.
Unfortunately, identity theft victims typically don’t realize they are a victim until after the financial, personal or professional damage is done. Recovering from identity fraud after is has occurred is extremely difficult. That’s why it’s important to take proactive measures for preventing and detecting fraudulent activity:
Get a free credit report from the three consumer credit reporting companies (Equifax, Experian, and TransUnion) and review them for errors.
If you believe you are a victim of identity theft, report it to the Federal Trade Commission at IdentityTheft.gov.
Government Imposter Scam
Scammers are always looking for the opportunity to get their victims excited so they can’t think clearly. One of the ways they do this is by impersonating government agencies or federal employees. They might say you won the lottery and or are in danger of having your house repossessed. Some even pose as representatives of the United States Citizenship and Immigration Service (USCIS) and threaten arrest or deportation.
Don’t fall for it. Government agencies won’t ask for money for prizes, unpaid loans, or wire transfers. If you truly won a prize, you shouldn’t have to pay anything. And if you never entered a sweepstakes or lottery, there’s no way you could have won.
Any legitimate concern from the government will arrive in the mail in writing. Never give the caller money or any financial or personal information, such as credit cards or Social Security numbers.
Consider registering your phone number on www.donotcall.gov to reduce the number of calls you receive. Most legitimate sales people will respect the Do Not Call list, so if you do receive a call from an unfamiliar number, it’s most likely illegitimate.
Debt Collection Scams
While most debt collection calls are probably legitimate, there are some scammers who try to get you to pay for debts that you don’t owe or have already been paid. Many of them falsely claim that they are from a law firm or government agency. Then, they’ll threaten arrest or repossession if you don’t make a payment right away.
It’s important to verify the debt before giving out any financial or personal information. Ask the caller for their name, company, street address, telephone number, and professional license number (if your state licenses debt collectors). You can also use this sample letter from the Consumer Financial Protection Bureau to request more information.
Here are some warning signs of a debt collection scam:
- The debt collector threatens you with criminal charges.
- The debt collector refuses to give you information about your debt or is trying to collect a debt you do not recognize.
- The debt collector refuses to give you a mailing address or phone number.
- The debt collector asks you for sensitive personal financial information.
Source: CFPB
Frustrated with debt collectors? Learn how to stop debt collectors from contacting you.
Report Scams
If you think you’ve been a victim of a fraud or scam, file a complaint with:
- the FTC
- your state Attorney General
You may want to contact the Consumer Financial Protection Bureau if the scam involves student loans mor mortages. Learn more about how to report scams and frauds.
Scammers are always looking for new ways to get your money. Stay up-to-date with all the latest scams by signing up to get new scam email alerts from the FTC.
DebtBlue has a team of financial professionals on your side to help you find true financial freedom. Contact DebtBlue today for your free consultation.