By Christian Hudspeth, CFP®
Saying “it could never happen to me” has never sounded more foolish when it comes to being financially frauded today in the US.
Almost one in five US adults in 2023 reported that someone in their household has become a victim of financial fraud in the past year, according to a recent Gallup News survey. One in 10 said they have suffered from a scam personally.
Armed with new Artificial Intelligence (AI) technology, clever scripts, and tactics, scammers from organized gangs or international criminal enterprises have been preying on more and more ordinary Americans.
All told, fraud cost US consumers $7 billion during the first three quarters of 2023 according to data from the Federal Trade Commission, up 5% from the same period in 2022.
Fortunately, there are steps you can take to reduce your own chances of being frauded.
The first step is to know where they are most likely to come from. Here are the top five ways Americans are mostly likely to be scammed in 2024, according to a recent report from CNBC:
The Top Scams to Watch Out For in 2024
- Grandparent scams: Thieves may capture the voice of or pretend to be a grandchild or family relative and call you pretending to be in trouble (such as dangerously ill or in jail). They may claim to be under a “gag order” with other family members and need you to send them money to bail them out.
- Romance scams: Fraudsters may reach out to victims with a romantic private message on social media or dating apps. As trust builds, the false lover may create a false story that they need money to get someone close to them out of jail, pay for their hospital bill, or buy a store gift card to mail to them.
- Crytocurrency scams: About one-third of losses in 2022 came from victims being asked to help the perpetrator invest in cryptocurrency. The median loss by victims was $5,000. Scammers often pretend to be “investment managers” with the promise of a too-good-to-be-true return that could “quadruple your money” in short order.
- Employment scams: With layoffs continuing into 2024, scammers pretending to offer great job opportunities will lure victims with fake job interviews and then ask the job applicant to send personal information as part of a “background check.” Other fraudsters will ask unsuspecting persons to purchase a program they offer in exchange for “easy” or “guaranteed” income.
- Online account tax scam: The perpetrator poses as a third party to prepare a fake tax return so they may collect a “refund” on your behalf. The fraudster may also set up an IRS.gov account online to supposedly help victims pay taxes. After being provided with all personal and banking information to complete these “services”, the scammer may use the victim’s information to steal identities and open lines of credit in the victim’s name.
How to Prevent Being Scammed
Now that you know how scammers could potentially target your identity and your life savings, here are some useful ways to protect yourself with tips from the Federal Trade Commission and from our team of experienced advisors who have seen (and prevented) clients from being robbed:
1. Don’t let them hurry you. If someone is asking you for money and they make you feel rushed, you should question why. Most scammers try to convey a sense of urgency so you act before you think. Any reputable business will allow you the time to think about your decision first.
2. Be cautious of callers not on your contact list. You may even consider not answering them at all. If it’s important they will leave a message, and then you can proceed to tip #3. Remember that Social Security, the IRS, and other government entities won’t call you and will typically send a letter first.
3. Don’t necessarily believe a call, voicemail, text, or email is from where it says it’s from. New technology means criminal calls and emails can show up labeled as a legitimate business, bank, or even the local police department. Even if it looks legitimate and they give you a callback number, look up the number online to verify and call the number you researched to see if the contact is who they say they are.
4. Never pay in specific ways. Think twice if someone is telling you “there is only one way to pay” such as cryptocurrency, wiring money through MoneyGram or Western Union, depositing money into an unknown bank account, or buying gift cards. Don’t accept checks with directions to deposit them and immediately send money, as these checks often end up being fake with victims left holding less in their bank account.
5. When in doubt, stop and talk to someone you trust. Talking to a friend, family member, or neighbor can often help potential victims realize that an unusual request is a scam. You can also call a reputable professional for their opinion. For example, our team here at FMP Wealth Advisers has helped clients verify if a financial inquiry from another organization sounds normal or fraudulent.
6. Consider the following preventative measures:
- Register your phone in the National Do Not Call Registry to block technology-powered scam callers.
- Freeze your credit lines or set up account alerts through a credit bureau, such as Experian.
- Consider subscribing to a service like “incogni” to remove your information online sellers of personal information.
While no one can guarantee total prevention from being scammed or frauded, we hope these tips will give you some security and reduce the potential risk of suffering needless financial losses or identity theft. If you’ve been frauded, contact the FTC so they can potentially help you further. Remember, you are your best advocate and defense, so stay vigilant to keep your life savings out of criminal hands.
More Resources to Avoid Being Scammed:
Federal Trade Commission: How to Avoid a Scam
Experian: The Latest Scams You Need to be Aware of in 2024
CNBC: 5 Financial Scams to Watch Out for in 2024
*The information presented here is not specific to any individual’s personal circumstances. FMP Wealth Advisers is not providing investment, tax, legal, or retirement advice or recommendations in this article.
**To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
***These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
