Common fraud schemes and how to protect your money
Ever think you would never fall victim to a scam? There are many ways criminals will attempt to take money from you and they can be very convincing.
Here are 5 of the most common fraud schemes, often taking advantage of the human nature to be empathetic, trusting, and helpful and can even use scare tactics.
Romance scams occur when a criminal adopts a fake online identity to gain a victim’s affection and trust. The scammer then uses the illusion of a romantic or close relationship to manipulate and/or steal from the victim.
The scammer’s intention is to establish a relationship as quickly as possible, endear himself to the victim, and gain trust. Scammers may propose marriage and make plans to meet in person, but that will never happen. Eventually, they will ask for money.
Avoiding a Romance Scam:
- Be careful what you post and make public online. Scammers can use details shared on social media and dating sites to better understand and target you.
- Beware if the individual seems too perfect or quickly asks you to leave a dating service or social media site to communicate directly.
- Beware if the individual attempts to isolate you from friends and family or requests inappropriate photos or financial information that could later be used to extort you.
- Beware if the individual promises to meet in person but then always comes up with an excuse why he or she can’t.
- NEVER send money to anyone you have only communicated with online or by phone.
The victim gets a call from someone posing as his or her grandchild. This person explains, in a frantic-sounding voice, that he or she is in trouble: There’s been an accident, or an arrest, or a robbery. The impostor offers just enough detail about where and how the emergency happened to make it seem plausible and perhaps turns the phone over to another scammer who pretends to be a doctor, police officer or lawyer and backs up the story. The “grandchild” implores the target to wire money immediately, adding an anxious plea: “Don’t tell Mom and Dad!”
Avoiding a Grandparent Scam:
- Don’t drop your guard because the number on your caller ID looks familiar. Scammers can use technological tricks to make it appear that they’re calling from a trusted number, the Federal Communications Commission warns.
- Don’t volunteer information — scammers fish for facts they can use to make the impersonation believable. For example, if the caller says, “It’s me, grandpa!” don’t say your grandchild’s name. Wait for the caller say it.
- Don’t send cash, wire money, or provide numbers from gift or cash-reload cards to a person claiming to be a grandchild. Scammers prefer those payment methods because they’re difficult to trace.
- Call your grandchild or their parents and verify the story.
Lottery or Sweepstakes Scams
Congratulations! You just won the lottery a PCH sweepstakes or a prize- like an IPad, a new car or something else! They will request you pay taxes or a fee before they give you access to your winnings. If you pay, you’ll lose your money and find out there is no prize.
Avoiding a Lottery or Sweepstakes Scam:
- You do not have to pay to enter a legitimate sweepstakes and paying for one does not increase your chances of winning.
- Don’t be rushed into sending money.
- Don’t be fooled by “official” looking mailings. Read the information carefully.
After you post a listing for an item online, a normal-seeming “prospective buyer” will contact you and agree to purchase your item. The catch is that they’ll send you more money than you ask for. The scam takes a turn once you’ve been overpaid, as the buyer will invariably ask for some of their money back. They will likely be really nice about it, too, as if it were a simple mistake best handled informally between the buyer and seller. After you return the money, however, the initial payment will turn out to be false, as the check or transfer will be denied. At this stage, you will have lost the difference between the phony payment and the cost of your item, as well as the item itself.
Avoiding an Overpayment Scam:
- Don’t ship an item before you receive a payment. Make sure any payments you receive are legitimate before you ship your item to the seller. If you ship before they pay, you will have no way to get your item back.
- Look out for counterfeit emails. Scammers are skilled at imitating emails from popular payment services, such as Venmo or PayPal. Examine all emails carefully. If an email comes from a domain that isn’t official or contains obvious typos and grammatical errors, it’s probably a scam.
Fake Friend- Social Media
Here's how it works. A message pops up in Facebook messenger from your friend, family member or neighbors, only it's not them. From there, the fake account tells you about a great deal they found online, a quick way to make some easy money or a funny video they want you to see prompting you to click on a link that is used to hack your account and steal your personal information.
Avoiding a Fake Friend Scam:
- Be wary of online messages. Even people trustworthy in real life could accidentally share things without checking it first.
- Press for details. Ask questions for more information.
Be safe online — see our Cybersecurity, Fighting Internet Fraud, Malware and Mobile Devices and Identity Theft Prevention pages for more info.
- FBI Scams and Safety - https://www.fbi.gov/scams-and-safety/common-scams-and-crimes
- USA.gov Common Scams - https://www.usa.gov/common-scams-frauds
- OCC.gov types of Consumer Fraud - https://www.occ.gov/topics/consumers-and-communities/consumer-protection/fraud-resources/types-of-consumer-fraud.html
This information is offered up for the general guidance and is not intended as, nor should it be construed as legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues on this topic.