8 Financial Scams You Should Know About

Scammers all have one thing in common—they’re looking to score a big win by getting access to money that doesn’t belong to them. So, they’re always coming up with clever ways to trick us. They know that if you really have time to think about what they’re asking or telling you, you may realize it’s a scam. So, they’ll try to get you to act fast. To protect yourself, it’s a good idea to learn what methods they’re using and how to spot red flags.

Some Are New—Some Tried and True

Although some scammers use new ideas, current events and technology, many use well-known financial scams—because they’re still successful. All scams, whether old or new, work by appealing to people’s desires, desperation, fear or sympathy. Two of their favorite methods involve phishing and vishing.

Actual Examples

Here are just a few examples of how these bad actors may prey on unsuspecting people:

1. Advance-fee scams. You’re offered a large amount of money or valuable goods in exchange for a small payment. The request might come from a supposed lawyer representing a large estate or a high-ranking member of a trusted company, international organization or government.
2. Job scams. Someone posing as a hiring manager may contact you to say you’ve been hired for a job they’ve posted. They ask for personal and banking information to set up direct deposit of your paycheck, but the job isn’t real. They’ll use that information to commit financial fraud and disappear. Since the pandemic, there has been an explosion of work from home scams where fraudsters say they’ve found your resume online, and you’d be perfect for their cushy job.
3. Debt-related scams. It’s easy to get sucked into this scam when you’re swimming in debt. Some scammers pose as debt collectors collecting on a past-due bill. Others offer to negotiate with your creditors to settle for a lower amount. Some offer to help you reduce your monthly payments, and still others say they can help you repair your credit. They’ll tell you to pay a high fee before they can begin work. But, once you pay, nothing else happens. You can see recent examples on the Federal Trade Commission website.
4. Mortgage Scams. There are several types of mortgage-related scams. For example, some scammers say they’re “foreclosure consultants” or “mortgage consultants” who can work out a deal and help to repair credit. Some may offer to pay off your mortgage and even other debt. The catch is you need to “temporarily” sign over the deed to your house to someone else, but you can stay on as a renter. You should know that once you sign over your house to someone else, you probably won’t be able to get it back—and you could end up evicted. A scam that has become popular in the last several years involves people who are getting ready to close on a house purchase. The scammer may pose as the lender, an agent or other person involved in the sale. Their goal is to get your banking information, so they can move your down payment to their own accounts.
5. IRS or law enforcement scams. The bad actors call, pretending to be IRS agents or other authorities. They may threaten you with legal actions, fines or imprisonment. They’ll say it’s because of unpaid taxes, missed court dates or jury duty or criminal acts. Then, they’ll try to bully you into acting immediately. Finally, they’ll suggest you can fix the situation with immediate payment using prepaid gift cards or wire transfers. Real government agencies will most often mail you notices. The IRS, for example, will never call you and only communicates through certified mail!
6. Tech support scams. Scammers may pose as support technicians to trick you into giving them access to your computer, phone or other electronic devices. They usually say they’re from well-known companies like Apple® or Microsoft® or a similar-sounding name. They’ll try to convince you your device is infected with a virus or other malware, and they can remove it for a small fee. Then, they’ll ask you to give them remote access to your device. Unfortunately, once you do that, they’ll also have access to anything stored on it like your banking, payment, medical and other personal information and could even lock you out.
7. Romance scams. A scammer starts to build a romantic relationship with you, often through a dating app or social media, where it’s easy to hide their true identity. Once they’ve built a strong connection and gained your trust, the scammer makes up a desperate financial crisis. If you don’t offer to help, the scammer asks for it, saying they’re embarrassed for asking. They usually promise to pay back the funds quickly, but they disappear after getting the money.
8. Charity scams. Scammers use just about every way possible to contact you: by phone, emails, social media and even crowdfunding. They often reach out during emergencies like natural disasters and prey on your desire to help other people. They may pose as a legitimate, well-known charity or create a name that sounds similar to what they’re raising money for like “XYZ Disaster Fund.” The FBI advises that you give only to established charities or those you know and trust. Don’t donate with cash, gift cards, cryptocurrency, wire transfer or payment services like Zelle® or Venmo®. Do your research. You can check a charity’s rating and how they spend donations through organizations approved by the Federal Trade Commission.

Be cautious and skeptical when dealing with financial offers, especially those that promise you can earn a lot of money fast.

Some Red Flags Might Surprise You

You might think scams are easy to spot, but that’s not necessarily true. Scammers are willing to invest a little time to get you to trust them. They know that the longer you communicate with them, the more likely they’ll be able to trick you. If you see red flags like these, delete their messages, cut off all communication and block them everywhere:

Navy Federal Credit Union Members Have an Extra Layer of Security

We work hard to help our members protect themselves from financial fraud. From our fraud prevention technology to enhanced security and notification features, our goal is to help you keep personal information and your hard-earned money safe.

Want to know more ways to protect your money, credit and personal information? Visit our Navy Federal Security Center.