Financial scammers these days are starting to get really smart in finding ways to steal your money. If you’re not careful, you can be an easy target and everything you worked hard could disappear in a glimpse. A survey conducted by True Link Financial showed older Americans as the most common victims of fraud with a total loss of $12.76 billion annually. This includes identity theft and all those crazy scams you probably thought would never work on you. Those who give strangers the benefit of the doubt, always attracted by bargains, and are comfortable in moving larger amounts of money around are usually the ones who are more likely to be defrauded according to that same survey.
Even if you do not consider yourself as someone who is wealthy, you can still be targeted by these financial scammers. To them, nothing is too small or too big when it comes to money so it is best to be aware of these crimes before you become one of the victims. Here is a brief look at the top five types of scams that could put your finances at risk and the ways to avoid them.
1. Government Frauds
If you receive a phone call, a letter, an email, or a text message that introduce themselves as someone from a government agency and requires you to make an upfront payment or personal financial information including your Social Security or bank account numbers, then you are most definitely dealing with a scam artist. They will usually tell you that you owe taxes or fines or that you have a debt that you haven’t paid. Their next move may even involve threatening you with a lawsuit or arrest if you don’t pay. Remember, federal government agencies won’t require you to send money for prizes or unpaid loans and won’t ask you to wire money to pay for anything.
2. Investment Fraud
Anyone who tells you that they can help you earn easy money by investing is pretty much a fraud. Investment fraud works by preying on your interest to make money the fastest and easiest way. These scammers pretend to be smart business professionals who want to introduce you on a hot new product whose stock is ridiculously low at the moment and if you want to cash in big on the investment, you should put in some money right away. One common type of investment scam is pyramid schemes or Ponzi schemes. They are an illegal multi-level marketing organization promising you a huge return of investments base on how many participants or investors you recruit. Make sure you inquire with the Better Business Bureau before you get a franchise or before you invest your money.
3. Lottery Scams
If someone told you that you won a lottery and requires you to first send money to the lottery company to pay off certain taxes and fees, report the fraudster right away especially if you’ve never really entered any lotto or contest. This is also similar with bogus prize winnings and sweepstakes. The whole scam is arranged by the scammer sending a letter to people using falsified FBI and FDIC letterhead, letting them know they won a famous lottery but they first need to do a wire transfer to the lottery ‘official’ in order to claim their winnings. The ‘official’ is actually tricking people into sending money.
4. Charity Scams
It’s, unfortunately, the charity scams exists. They normally happen during seasons of disaster relief when people are excited to contribute to a worthy cause. Do not fall from those emails or phone calls claiming to be an organization that requests you to make any donation. You must decline and make an online donation instead to an organization you are familiar with or is reputable. If you’re looking for genuinely charitable organizations to donate to, consult the Better Business Bureau Wise Giving Alliance to help you find one. Requesting money from fake alumni groups, religious groups, or heritage clubs are similar to charity scams as well.
5. Fraudulent Job Offers
We understand how it can be difficult to find a good paying job these days but make sure you’re aware of fraudulent job offers going around these days either online or in classified advertisements. The criminals' post as employers or recruiters offering very attractive opportunities including working from home. The scam starts when they require you to pay money in advance to “help secure the job” or you’re required to provide personal financial information for a supposed “background check,” those are huge signs of a potential fraud.
