A Guide to Identifying and Avoiding Common Financial Scams

First Seacoast Bank • October 26, 2023
Financial scams can happen to anyone.

Financial scams are an unfortunate reality in the digital age we live in. With a myriad of sophisticated tactics at their disposal, fraudsters continue to evolve, devising new ways to deceive unsuspecting victims. As a result, it's essential to stay informed about common types of scams and learn how to protect yourself.

Common Types of Financial Scams

The road to scam detection begins with an understanding of the most common types of scams that exist. Here are some frequently encountered ones:

Charity Scams

These occur when fraudsters pose as charitable organizations to solicit donations from well-meaning individuals. Always verify the legitimacy of a charity before donating.

Debt Collection Scams

Scammers pretend to be debt collectors, demanding payment for debts that do not exist or have already been paid.

Debt Settlement and Debt Relief Scams

In these scams, companies promise to settle or reduce your debt but charge hefty upfront fees.

Mortgage Loan Scams

These fraudulent schemes are designed to take your money or even your home, often by luring you in with the false assurance of saving you from foreclosure. The scammers may request upfront payment for their services, assure a guaranteed loan modification, or ask you to transfer the title of your property. They may even present you with complex paperwork that you may not fully comprehend.

Imposter Scams

These involve scammers posing as government officials, loved ones, or business representatives to trick you into sending money or revealing personal information.

Mail Fraud

Scammers send mail asking for upfront payments to claim prizes or valuable items.

Money Mule Scams

You're asked to receive or send money or packages for people you don't know, essentially acting as a 'money mule.'

Lottery or Prize Scams

Fraudsters ask for upfront payments for promised prizes. Remember, you cannot win a lottery or contest you didn't enter.

Investment Scams

They involve fake investment opportunities promising high returns but end up defrauding victims of their money.

Phishing and Vishing Scams

In phishing scams, scammers impersonate legitimate companies to trick you into revealing sensitive information. In vishing scams, they use phone calls instead.

Romance Scams

Online love interests ask for money or personal information under false pretenses.

Common Payment Methods Used by Scammers

Scammers often prefer untraceable payment methods. Some of these include wire transfers, person-to-person payment services, mobile payment apps, and gift cards. These methods make it difficult to track and recover payments once they're sent. As a rule of thumb, never send money to someone you don't know or trust.

Financial scammers often target a broad range of individuals, but there are specific groups that tend to be more susceptible due to their perceived vulnerability or lack of financial knowledge. Here's an overview:

Who Do Financial Scammers Target?

While everyone is at risk of a financial scam attempt (let’s face it, the people wreaking this havoc can be pretty cunning), there are some key personas that they hone in on. Those people include:

The Elderly: Senior citizens are often targeted as they may be less familiar with digital technology and may have accumulated savings over their lifetime. Scammers may use tactics such as pretending to be a family member in need or offering fraudulent investment opportunities.

Young Adults: This group may be targeted due to their relative inexperience with managing finances. Scammers might offer too-good-to-be-true credit offers or job opportunities.

Non-native English Speakers: Individuals who aren't fluent in English may be targeted because they may not fully understand the information presented to them, making them more susceptible to scams.

People in Financial Distress: Those struggling financially are often targeted with debt relief or loan scams, playing on their need for quick financial solutions.

Online Daters: This might seem like a weird one, but it’s true… People looking for love online may fall victim to romance scams, where fraudsters build up a relationship only to eventually ask for money.

Again, it’s important to remember that anyone can fall victim to a scam. It's essential to stay informed about common scams, be skeptical of unsolicited offers, and always verify the legitimacy of any person or organization asking for money or personal information.

How to Avoid Financial Scams

Protecting yourself from scams requires vigilance and a healthy dose of skepticism. Here are some steps to take:

First Things First: First Seacoast Bank allows our customers the ability to monitor their bank accounts with real-time alerts and online and mobile banking. Our real-time alert settings enable you to set notifications that are sent straight to your mobile device, informing you of several different alerts you can manually choose from, such as password change, address change (physical and email), login attempts, transactions, and more. What this does is put you on the frontlines of any potentially fraudulent activity, which you can flag in the moment. 

Verify Before You Trust: Whether it's a charity, a debt collector, or an online love interest, always verify the legitimacy of the person or organization before giving money or revealing personal information.

Be Cautious of Upfront Fees: Many scams involve requests for upfront payments. Be wary of anyone asking for such fees, especially if they promise prizes or debt relief.

Use Trusted Payment Methods: Only use money transfers and mobile payment services with trusted individuals. Avoid sending money through untraceable methods to people you don't know.

Never Send Money to Strangers: It may seem like common sense, but many people still fall victim to scams by sending money to strangers. If you don't know the person or company well, do not send any funds.

Protect Your Personal Information: Be cautious of sharing personal information online or over the phone.

Update Account Passwords: Periodically updating the password to accounts that contain sensitive data is a smart decision to prevent hackers from finding their way into your portals and stealing personal information.

Reporting Scams

If you suspect a scam, report it immediately. You can submit a complaint online with the Federal Trade Commission, contact your local police or sheriff's office, or report it to your state attorney general.

Staying informed and vigilant is your best defense against scams. Remember, if something seems too good to be true, it probably is. And, as always, if you have any questions at all about financial scams or just finances in general, we’d be happy to help you out