Financial scams and frauds are constantly on the rise. Scammers are more sophisticated than ever, using digital platforms to impersonate trusted institutions and exploit individuals’ desires to grow their wealth quickly. As a result, many suffer the loss of their hard-earned money, face the threat of compromised personal data, and experience long-term financial damage. However, being aware of some common financial scams and their warning signs can help individuals keep their assets safe.
Cryptocurrency Scams
Scammers and fraudsters tend to cash in on new financial trends, as it is a surefire way to swindle individuals. This tendency is even more apparent in cryptocurrency dealings.
Many individuals are eager to invest in cryptocurrency, considering the waves it is making in the financial world. This sudden popularity has given scammers a chance to dupe the unsuspecting. For instance, a common crypto scam that has recently emerged is “pig-butchering.” Here, fraudsters befriend individuals and, over a period of time, gain their trust. They then try to convince potential victims to download an app and invest in a crypto fund. Initially, victims might even be able to trade and earn a little; however, that is a tactic to get them to invest more money, which fraudsters can later siphon off.
The key to avoiding this investment fraud is not to trust anyone easily. Individuals must also avoid downloading third-party apps, and before investing in a new fund, they should research and read up on it. They should also do some research about an app before downloading it to confirm its legitimacy.
Phishing
One of the most common ways criminals scam individuals is via phishing. They send messages or emails that appear to come from trusted financial companies, often promoting credit card offers or banking alerts. The messages also carry a link, which, when clicked, redirects individuals to a scam site, which asks them to enter their account information. When unsuspecting individuals enter their details, they end up giving the criminals access to their finances.
An easy way to recognize such online banking scams is to check if the website address has a padlock icon or “https” written before it. If not, the site is not secure and can steal private data. In addition, a general precaution against phishing attacks is to avoid trusting messages that incite urgency or fear and request personal or financial details. When in doubt, contacting the bank or company directly and getting confirmation is safer.
Credit Card Fraud
If a scammer or identity thief gets access to an individual’s credit card or details, they can make unauthorized purchases or withdraw funds. What’s worse is that individuals won’t know about the fraud until they check their credit card statements or get an unbelievably high bill. To prevent credit card fraud, individuals must closely monitor their statements and transactions. They must also avoid entering credit card details on suspicious websites or emails since that is how identity theft happens.
Phone Call Scams
The internet is not the only medium scammers use to carry out financial fraud. Some even use phone calls for these malicious activities. Individuals need to be aware of three main types of phone call scams.
Imposter Calls
Fraudsters pose as personnel from financial institutions or charities. They inform their victim about a fabricated bank account problem or claim they need donations for a “good cause.” They also compel victims to share sensitive details about their bank account or make direct transfers.
Social Security Calls
As with imposter calls, this scam involves criminals posing as Social Security personnel on the phone, claiming to a potential victim that their account has been frozen. They may then ask the victims to transfer a certain amount to release their funds.
Calls From Scammers Posing As Relatives
Victims might receive phone calls from fraudsters posing as their grandchildren or other relatives, asking to avoid going to jail.
To avoid these kinds of financial fraud, it is crucial to never share personal or financial details over the phone unless the caller’s identity can be verified. If individuals wish to make donations, they should research legitimate charities and organizations to support them.
Ponzi Schemes
Pyramid schemes, Ponzi schemes, and get-rich-quick schemes have been around for quite a long time. They involve a group of individuals tasked with luring more people to join the pyramid scheme. Almost all of them have a similar strategy for attracting victims—scammers claim that with their particular schemes, individuals can earn high rewards with minimal investment and no risk. But the truth is that there is no real profit in such cases. Early investors only earn their share through the money invested by new victims or investors. This means that Ponzi schemes always require a constant cash flow to stay intact.
The simplest way to identify Ponzi schemes is by spotting certain warning signs, such as minimal to no paperwork, unlicensed agents or sellers, and promising high returns with no risk.