How to Protect Yourself from Financial Fraud and Scams

The world of finance can feel complex, and unfortunately, that complexity is often exploited by criminals looking to steal your money and personal information. As of May 8th, 2020, financial fraud and scams are becoming increasingly sophisticated and prevalent. Whether you're dealing with phishing emails, phone scams, or fraudulent online transactions, it’s crucial to understand the tactics used by scammers and how to defend yourself.

Understanding the Threats

Let’s be clear: scammers aren’t going away. They constantly adapt their methods, so staying informed and vigilant is key. Here’s a breakdown of some common types of financial fraud and scams:

Phishing: This is perhaps the most common. Scammers send emails, texts, or make phone calls pretending to be legitimate organizations (banks, government agencies, retailers, etc.) to trick you into revealing sensitive information like passwords, account numbers, and Social Security numbers. Look closely at the sender's email address – is it legitimate?
Romance Scams: These scams involve individuals creating fake online profiles and developing romantic relationships with victims, eventually asking for money for fabricated emergencies or investment opportunities.
Investment Scams: Promises of guaranteed high returns with little risk are a huge red flag. Ponzi schemes and pyramid schemes are common examples.
Tech Support Scams: Scammers impersonate tech support from companies like Microsoft or Apple, claiming your computer has a virus and demanding payment for "fixing" it.
Government Impersonation Scams: Scammers pose as IRS agents or other government officials, threatening arrest or legal action if you don't pay immediately.
Charity Scams: Following disasters, criminals often set up fake charities to solicit donations, often keeping the money for themselves.

Protecting Yourself – Practical Steps

Here’s what you can do to protect yourself and your finances:

Be Skeptical: Always question unsolicited emails, calls, or texts asking for personal information. Legitimate organizations rarely contact you this way.
Verify Information Independently: If you receive a suspicious communication, don’t respond. Instead, contact the company or organization directly using contact information you find on their official website or by calling the number listed on your bill. Don't use the contact information provided in the suspicious message.
Secure Your Accounts:
- Strong Passwords: Use strong, unique passwords for every online account.
- Two-Factor Authentication (2FA): Enable 2FA whenever possible – this adds an extra layer of security.
- Monitor Your Accounts Regularly: Check your bank statements, credit card statements, and credit reports frequently for any unauthorized activity.
Protect Your Personal Information:
- Shred Sensitive Documents: Dispose of bank statements, credit card offers, and other documents containing personal information by shredding them.
- Limit Sharing: Be mindful of the information you share online and on social media.
Report Suspicious Activity: If you suspect you’ve been a victim of fraud, report it immediately to:
- Federal Trade Commission (FTC): https://www.ftc.gov/
- FBI’s Internet Crime Complaint Center (IC3): https://www.ic3.gov/
- Your Local Police Department

Resources

FTC’s Consumer Information: https://www.consumer.ftc.gov/
AARP Fraud Watch: https://www.aarp.org/money/scams-fraud/

Staying informed and taking proactive steps are crucial to safeguarding your finances. Don't hesitate to reach out to a trusted financial advisor if you have any questions or concerns.