Common Financial Scams to Avoid
Lately I’ve been having a lot of conversations about how to protect against financial scams. We like to joke about the famous “Nigerian Prince” email that promises to park money in your bank account if you just give them your banking information (what could go wrong?!?) but, fact is, the scams are getting more sophisticated.
Here are some of the most common financial scams happening and some advice on how to avoid them:
Phishing Scams: The sophistication of phishing scams are pretty impressive. Scammers will send emails or messages disguised as a trustworthy source like a bank, government agency, or business, to get people to reveal sensitive information like passwords, social security numbers, or credit card details. The emails will look completely legitimate. You’ll believe it’s from your bank and click on the link.
How to avoid it: Never click on a link in an email that claims to go to one of your accounts, no matter how legitimate it looks. In such an instance, leave the email and log on to your account through a browser just as you normally would. Or, if you don’t have online access, call the financial institution.
Lottery Scams: Scammers send emails claiming that the recipient has won a lottery or sweepstakes prize, and ask for personal information or fees to collect the winnings.
How to avoid it: My first answer as a financial advisor is, don’t play the lottery because it’s a waste of money. Of course, most of us are guilty of buying a ticket here and there (who wouldn’t want to win $750 million? We can dream…). The better answer is, like phishing scams, never click on such a link. You can simply call the lottery organization in question.
Tech Support Scams: Scammers impersonate technical support from legitimate companies, claiming that there is a problem with the recipient’s computer or software, and ask for remote access to the device or payment for fake technical support services.
How to avoid it: Never allow someone you don’t know to access your computer. If you think there may be a real problem with your computer, seek out a referral to a trustworthy techie. Also, be sure to keep your anti-virus software up-to-date and try not to click on pop-up ads.
Investment Scams/Ponzi Schemes/Pyramid Schemes: In an investment scam, scammers may offer investment opportunities that promise high returns with little risk. They may use tactics like cold calling, unsolicited emails, or social media to promote these investments, and may pressure victims to act quickly to avoid missing out. Ponzi Schemes involve paying existing investors with the money of new investors, rather than generating returns from a legitimate investment. These schemes can collapse when new investors stop joining, and earlier investors cannot be paid. Pyramid schemes involve paying commissions to people for recruiting new members, rather than selling a legitimate product or service. These schemes can also collapse when there are not enough new members joining to support the existing members.
How to avoid it: Call me first! I’m here to help you avoid such things. Even if you don’t call, remember that if something seems too good to be true it usually is.
One final item, the Internal Revenue Service. Since it’s tax season, scammers will call or email you and claim they’re from the IRS to try and steal your personal and financial information.
How to avoid it: Keep in mind the IRS generally does not initiate contact with taxpayers by phone or email. They typically use mail to communicate with taxpayers. If the IRS needs to contact a taxpayer, they will usually send a letter through the United States Postal Service.
There are some exceptions to this. In certain circumstances, the IRS may call a taxpayer or their representative to discuss their tax situation, such as to schedule an audit appointment or to discuss a payment plan. In these cases, the IRS will usually send a letter first to inform the taxpayer that they will be receiving a call.
If you’re unsure, don’t give any information over the call or email and, instead, you can contact the IRS directly through their official channels to confirm whether the communication is legitimate.
Of course, if you have any questions please don’t hesitate to contact me. And be safe out there!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Investing includes risks, including fluctuating prices and loss of principal.