Not all situations are fraud-related, but if any of these happen to you, slow down and take a moment to think about what’s being asked of you before sending any money or making any purchases. Always remember to validate a source outside of an email or phone call. Go directly to the company’s legitimate website to find the contact information and verify the request.
Fraud & Scams Warning Signs
- Asking for money up front to pay for taxes or fees associated with a prize or gift.
- Asking for money to be loaded on gift cards, wired, or sent by courier.
- Government agencies calling to solicit funds.
- Anyone requesting access to bank accounts, credit or debit cards, or other financial information.
- They are pressuring someone to “act now” before the offer goes away.
- Deals that are too good to be true
Tip: if something doesn’t seem right, just hang up, don’t respond to an email, or walk away from the situation. Fraudsters want a quick decision before the person has a chance to think about the situation or repercussions.
Common Types of Scams and Frauds
Account Takeover
This occurs when a malicious actor gains unauthorized access to a user’s account credentials and assumes control of the account to commit fraud.
- Protect yourself: Never give out your credentials or personal information to anyone. Watch out for unknown or suspicious links or attachments in emails that can steal this information.
Charity Scam
A fraudster will pose as a real charity or make up a fictitious charity to solicit money. These scams are more prevalent during the holiday season or when disasters or emergencies happen. For instance: earthquakes, storms, and wildfires.
- Protect yourself: Always verify a charity through their legitimate website or a trusted third-party source.
Debt Collection Scam
Fraudsters will pose as a debt collector requesting you pay a debt you don’t owe or debts that have already been paid. They could also say the debt is a friend’s or family member’s that you need to pay for them. Fraudsters could check obituaries and try to scam living relatives saying the deceased has debt that needs to be paid.
- Protect yourself: Legitimate debt collectors can tell you the accounts associated with the debt and will send letters to your address. Do not give out personal financial information until you verify the debt is legitimate. No one is obligated to pay another person’s debt.
Debt settlement and debt relief scams
Companies promise to renegotiate or settle a person’s debt. Dealing with these companies can be risky and sometimes will leave people in more debt than they began with.
- Protect yourself: Avoid doing business with companies that charge upfront fees to settle or renegotiate debt. Try working with a free or nonprofit credit counseling program.
Foreclosure relief or mortgage loan modification scam
Fraudsters try and take someone’s money or house by promising foreclosure relief. Fraudsters will try and get the victim to pay upfront fees or to sign over the title to personal property.
- Protect yourself: If someone has trouble making their mortgage payments, a HUD-approved housing counselor can help assess their options and avoid scams.
Grandparent scam
A call from someone saying their grandchild is in trouble and needs money fast, either by wire, transferring money, or by gift cards. The caller could identify themselves as a position of authority, friend, or act like the grandchild themselves.
- Protect yourself: Remember for phone calls, the caller ID can be faked. Verify the information outside of the phone call.
Internal Fraud
This occurs when fraud is committed by someone who is part of the company. Usually involves stealing money but could also include equipment or personal property of the company.
- Protect yourself: Dual control in most situations will lessen this risk substantially. It’s okay to have one person as the expert but have a knowledgeable secondary person as a backup who would be able to spot inconsistencies.
Lottery or prize scams
This scam involves an email or phone call saying you won the lottery or a prize, but you must pay upfront taxes or fees to claim the money or prize.
- Protect yourself: Do not give out any financial or personal information. Do not make upfront payments for items you won.
Mail fraud
Letters look real but the promises inside are fake. A common warning sign is a letter asking to send money or personal information now to receive something of value later.
- Protect yourself: USPS has identified common postal or mail fraud schemes. A victim of mail fraud can file a complaint through the U.S. Postal Inspection Service.
Money Mule scams
A money mule is someone who receives and moves money that came from victims of fraud. While some individuals know they are assisting with a crime, most individuals are unaware they are helping fraudsters.
- Protect yourself: Never agree to receive or send money or packages for unknown parties.
Mortgage closing scam
This targets homebuyers who are nearing the closing date on their mortgage loan. The fraudster attempts to steal the homebuyer’s closing funds by sending the homebuyer an email posing as a real estate agent or closing company requesting the fund be sent to an alternate account.
- Protect yourself: Before sending any closing funds, verify with the real estate agent or title company outside of an email.
Romance scam
A romance scam is when a new love interest tricks someone into falling for them when they just want the person’s money. Romance scams can start in different ways, but generally, they start online. Fraudsters could spend weeks or months “getting to know someone” before they request any money.
- Protect yourself: Be smart about who you contact and connect with online. Don’t share personal or financial information with a new love connection.
Tech support scam
This scam involves a tech support person calling or emailing you to try and help you with your computer. They will ask to remote into your machine and help “fix” the issue. They will then try and get personal and financial information from your computer as they work through the problem. They may even request this information from you over the phone as they work.
- Protect yourself: Do not let someone have access to your personal computer. If you have computer issues, go to a legitimate company for help, and do not trust emails or phone calls from tech support saying they can solve your issue.
Wire or money transfer fraud
Fraudsters may use money wire transfers to steal money. One example of a wire transfer fraud is the “grandparent scam” where a fraudster poses as a grandchild to have money sent to them because they are stuck in a foreign country. Once a money transfer or wire is picked up, there is very little that anyone can do to get it back.
- Protect yourself: Never transfer money until you confirm the transfer is legitimate. If a wire or money transfer was made to a fraudster, contact the bank or company immediately and ask for it to be reversed.
Tips to Protect Yourself
Take things slow, do not rush into a decision.
Do not keep personal checks unsecured. Keep these in a safe or do not obtain checks for an account at all. Banks can issue temporary checks when you need to write a check instead of keeping a book full of checks.
When surfing the web, make sure to visit legitimate sites. Fraudsters can change one letter or add a special character to make you assume you are going to a legitimate site so they can steal your information.
Do not answer unknown phone numbers or reply to unknown texts.
Review financial accounts and billing statements. Look closely for charges that you did not make. Even a small charge can be a danger sign that thieves have your account information. Once a thief knows a small amount can go through, they will return to take out larger sums of money.
Review free credit reports from www.annualcreditreport.com. Verify that no accounts are being opened without your knowledge. Check for inquiries from companies that you did not apply for credit and accounts opened without consent.
Don’t share numbers or passwords for accounts, credit cards, or social security.
Use a Virtual Private Network (VPN) and Multi-factor authentication (MFA).
Use phrases for your passwords that contain both numbers, lower-case and upper-case letters, and special characters. Never reuse passwords and keep personal passwords different than passwords used for work.
Use a lock service for your credit and debit cards. You can lock the card down while not in use.
Virtual cards have no physical card and can be used online. This helps prevent your card from being compromised since there is no physical copy.
Reconcile accounts every week instead of monthly.
Use Tap to Pay instead of swiping or using a chip card. While not foolproof, this makes it harder for fraudsters to steal your information.
Use an ID monitoring service to monitor your information for any breaches.
Never pay upfront costs for a promised prize, award, or lottery winnings.
After hearing a sales pitch or offer, take time to think about what is being offered. Compare prices with other companies and ask for the pitch to be put in writing for review.
If something is too good to be true, it probably is. Ask someone why there is such a deal on an item.
Watch out for deals that are good today or only available for a few hours. This puts pressure on you to act now instead of thinking about your decision.
Sign up for the National Do Not Call Registry. Go to www.donotcall.gov or call (888) 382-1222.
Sign up for USPS Informed Deliver for free. This shows you what mail you should receive in your mailbox each day.
Reporting Fraud and Scams
Submit complaints online with the Federal Trade Commission.
Contact the local Police or Sheriff’s Office.
Report to the State Attorney General’s Office.
Report to the U.S. Postal Inspection Service.
File a complaint with the Internet Crime Center (IC3.gov).
Key Terms
Skimmer: This is a card reader that can be disguised to look like a part of an ATM, point-of-sale terminal, or gas pump. The skimmer collects card numbers and PIN codes, which are then replicated into counterfeit cards (card cloning) or used online where a physical card is not needed.
Card Cloning: This occurs when fraudsters obtain your card information through skimming or a data breach. Fraudsters will make a counterfeit card and sell it to other fraudsters.
Elder Financial Exploitation: This is the illegal or improper use of an older adult’s funds, property, or assets. It is the most common form of elder abuse, but only a small fraction of incidents are reported. Elder abuse can be done by strangers who gain the trust of the victim, or it can be perpetrated by the victim’s own family members or friends.
Fraud Alert for Prevention: A fraud alert is something someone can use to reduce the likelihood that they will be the victim of new account identity theft. It requires creditors who check credit reports to take steps to verify their identity before opening a new account, issuing an additional card, or increasing a credit limit on an existing account. Fraud alerts can be placed on your credit report through one of the three nationwide credit reporting companies. The one company you contact is required to notify the other two.
Fraud by Fiduciaries: A fiduciary is someone who manages someone else’s money or property. Fiduciaries are required by law to manage the person’s money and property for that individual’s benefit and not the benefit of the fiduciary.
Identity Theft: This occurs when someone steals someone else’s identity to commit fraud. This includes using personal information without the victim’s permission, such as name, Social Security number, bank account information, or credit card numbers.
Phishing: Phishing attempts occur when someone impersonates a business or a person to trick someone else into giving out their personal information, such as passwords or banking information. A fraudster can use fraudulent emails, texts, or websites to steal this information.
Security Credit Freeze for Prevention: A security freeze prevents new creditors from accessing a consumer’s credit file and others from opening accounts requiring a credit check in their name until that party lifts the freeze. Most businesses will not open credit accounts without checking someone’s credit report. A freeze can stop identity thieves from opening new accounts.
Spoofing: Spoofing happens when a caller disguises the information shown on a caller ID. This gives the caller the ability to disguise or “spoof” the name and number to appear as if the call is coming from a specific person or location.