Phishing, pharming, pretexting, smishing – these are words that weren’t even in our vocabulary 10 years ago. These new words have been developed to describe different forms or methods of common financial scams. With financial scams being called the “crime of the 21st century”, we need to be better aware of how these scams work so we don’t become the next victim. Falling prey to online scams can be costly. One study suggests that older Americans lost at least $2.9 billion to financial exploitation in 2010 alone.
Scamming can occur through our telephones, mail and emails. Two of the more common scams involve lottery and sweepstakes scams and telephone scams.
Lottery and Sweepstakes Scams
Sweepstakes scams will congratulate the recipient on winning a lottery, drawing, or sweepstakes that they usually have not even entered. The scammer asks the “winner” for an upfront payment, perhaps to cover a processing fee or taxes. Often the “winner” will be sent a check that they can deposit in their bank account, knowing that while it shows up in their account immediately, it will take a few days before the (fake) check is rejected. During that time, the criminals will quickly collect money for supposed fees or taxes on the prize, which they pocket while the victim has the ”prize money” removed from his or her account as soon as the check bounces.
Scam artists use lies, deception and fear tactics on the telephone to convince someone to send money or provide personal account information. One example of this is the “grandparent scam”. In this scam, an imposter calls a grandparent pretending to be a grandchild in trouble; the scammer may even know the grandchild’s name. The scammer is usually crying, making it hard to recognize the grandchild’s voice. The fake grandchild will usually ask for money to solve some kind of financial problem such as overdue rent, payment for car repairs or being arrested. The scam artist will plead the victim to immediately send money, and beg them not tell any family members for fear of upsetting them.
Tips for Avoiding Common Financial Scams
Reduce the risk of becoming the next victim of financial abuse by being educated and by being on your guard. The following are tips to assist in avoiding common financial scams:
- Don’t react immediately to a phone call, letter or email. Think about the situation and talk it over with someone you trust before sending money.
- Never “Pay to play”. A legitimate sweepstakes will not ask for money upfront.
- You cannot win a sweepstakes or lottery that you did not enter.
- Don’t wire money or send pre-paid reloadable cards to strangers or to anyone who claims to be a relative or friend in an emergency.
- Consider it a red flag if the caller insists on secrecy.
- Look up the number of an organization independently before taking action. Oftentimes scammers will pretend to be calling from a company or entity you know and trust, but will be using fake phone numbers or addresses.
- Get caller ID and screen phone calls before answering them. If an incoming call is classified as “private” or “unknown”, it can help you be on your guard.
- Don’t reply to messages asking for personal or financial information.
- If you have been a target of some kind of financial fraud, consider changing your phone number since phone numbers and information are commonly sold to other tricksters.
- Scammers can be very convincing. If something seems unusual, check it out!
If You’ve Been the Victim of a Financial Scam
Many times financial fraud is not reported until long after a scam has occurred, usually because victims don’t realize they have been scammed or don’t know where to report the scam, or because victims are too embarrassed to admit that they have been taken. Silence is golden for scammers. If nothing is said, the financial fraud will continue.
If you think you may have been scammed, a good place to start is to report the crime to your local police department. They can direct you as to the best actions to take.
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