Here are some of the most common scams involving financial theft, and tips to spotting them:
1. Investment scam
Has someone promised you extremely high returns on an investment with little or no risk? There’s a good chance it’s a scam—any financial advisor will tell you that high returns almost invariably come with high risk.
In this type of fraud, scammers attempt to steal your money by tricking you into investing based on either false or misleading information. Other things to look for in this kind of scam:
- You’re pressured to act now, or you’ll miss out.
- Being asked to pay or invest in cryptocurrency. Fraudsters like to use cryptocurrencies for transactions because there are no financial intermediaries to validate the transactions, making them harder to trace and difficult to reverse. Fraudsters are also taking advantage of the general hype around high returns on crypto investments.
2. Bank impersonation scam:
In these scams, fraudsters pretend to be bank employees in an attempt to trick individuals into revealing personal information such as bank account details, passwords or verification codes. They may also attempt to pressure a potential victim into authorizing a fraudulent transaction.
- As with investment scams, there’s usually an element of urgency/pressure with the scam, with the targeted victim being told they must act now or face account closure, legal action or other penalties.
- Be aware: fraudsters may use caller ID spoofing (the creation of a fake caller ID) to make it appear as though their phone call is coming from the bank. They may also use fake websites that look like the financial institution’s official site as a way to steal login credentials or personal information.
- Fraudsters may also ask you to share your multi-factor authentication one-time verification code. (This is the typically four- or six-digit code that is sent to your phone to verify your identity during login). There is almost never a reason to share this code with another person.
3. Companionship or romance scam
This type of scam is usually initiated through social media and dating apps. The fraudster uses a fake online identity and attempts to build a relationship with a targeted individual. At a certain point, when the fraudster feels they’ve gained their target’s affection and trust, they will ask for money—typically to deal with an emergency or take advantage of an incredible investment opportunity. Once the money is received, the fraudster disappears.
- Be careful how much personal information you share online via social media or dating apps. Fraudsters will use this information to target victims and build a connection.
- Fraudsters are also using artificial intelligence (AI) to create false images and scripts to help them create realistic interactions.
4. Family member emergency scam
An impersonator calls, claiming to be a family member in distress to trick a relative into sending money or personal information. The fraudster may say they have a medical emergency or need money for car repairs, tuition or even to get out of jail.
- A common approach for this type of scam is to pretend to be a grandchild who lives in another city from their grandparent—making it harder to verify their story.
- Again, fraudsters will take advantage of personal details they can gather from online sources. For example, they could target a grandparent who posts online that they miss their granddaughter who they haven’t talked to in years.
- Again, fraudsters can use AI tools to do things like spoof the family member’s voice based on online videos the relative may have posted.
General tips to avoid becoming a victim:
- As a general rule, be wary of urgent requests involving money or financial information. They are often designed to make you rush into making a rash decision.
- Before acting on an urgent request, find some way to verify the other person’s identity or story. For example, when faced with something that could be a bank impersonation scam, you can hang up and call the bank back using the number you find on the bank’s public website. Likewise, before giving your estranged grandchild $15,000 for an emergency, call a relative you have in common who can verify the story.
- Never share passwords or one-time codes. A legitimate bank employee or IT support person should not need you to share this kind of information with them to access your account.
- Try not to overshare personal information online. Social media and dating sites offer the ability to maintain connection with distant friends and family, and to make new connections. However, be careful to limit the personal details you share online, particularly when your posts are viewable by the general public.
- Be cautious whenever something just doesn’t sound right or seems unusual in your experience. A sudden, new and unexpected request using a communication channel that’s different from the past can be a red flag. For example, banks and law enforcement would never suddenly request payment for a fine via a text message or insist you pay using cryptocurrency or gift cards.
- Share these tips with friends and family—especially those who may be less familiar with online environments and cybersecurity issues.