Common Financial Scams and How to Avoid Them

4.5-minute read | Jul 2, 2024

Scammers have many devious ways to try to get your money—here are tips for protecting yourself and loved ones.

Natalie VanderVegt

Salal digital banking questions answered

In today’s digital age, financial scams are becoming increasingly sophisticated and sneaky in order to entrap individuals across all ages and demographics. Younger generations might feel confident in their ability to recognize scammer tactics that have emerged in recent years across social media. But opportunities for financial fraud are fluid, and even savvy consumers can fall prey to fraudsters and their ever-evolving tactics. It’s important to stay informed and educated, and be vigilant when it comes to your financial security.

Here are some of the most common scams we come across, and how to protect yourself and people you care about.

Online Dating Scams

The popularity of online dating platforms like Tinder, Bumble, and Match.com make them attractive to scammers looking to siphon money from vulnerable targets. Fraudsters create fake profiles to establish friendly or romantic relationships. Once trust is established, they fabricate stories and tragic tales of financial distress, and ask for help with medical bills, gas, food, etc. We’ve also seen scammers first send the victim money as a way to establish trust, then ask you to send money back—guilting the victim into sending more money than they originally received. Never send money to someone you haven’t met in person, and always be wary of profiles that seem too good to be true.

Money Mule Scams

Suitcase with money in it--how to avoid money mule scams These types of financial scams involve tricking individuals into transferring illegally obtained money on behalf of others. This can happen in two main ways: Either the victim unknowingly becomes part of the scam, or they are lured into the scam with promises of easy money. In either case, the individual is left responsible for fraudulent transactions that can lead to potential legal and financial repercussions. Always be suspicious of job offers or opportunities that involve moving money through Venmo, PayPal, or opening new bank accounts.

Fake Job Offers on LinkedIn

These types of scams can be extensively developed and involve requiring applicants to provide personal information or even open new bank accounts for supposed business transactions like signing bonuses. Fraudsters use spoofed email addresses and may direct victims to open accounts at specific banks. Victims might even think they have gotten a new job, only to discover that the entire application process was fraudulent. To protect yourself, always verify the legitimacy of job offers and be cautious of any requests for personal financial information.

Other Social Media Scams

Instagram and TikTok are not just platforms for entertainment; they’re also hotspots for financial scams. Influencers—or seemingly successful individuals—might promise quick money returns in exchange for your bank information. They claim to need your account to make deposits, but it’s just a scammer tactic to access your funds or involve you in illegal money movements. Never share your banking information with anyone online, and be skeptical of offers that seem too good to be true.

Email Spoofing and Domain Scams

Email spoofing involves sending emails from addresses that appear legitimate but are not. These fake emails are used to request money or personal information. To avoid falling for them, check the domain names of email addresses carefully, and look up domains to see where they are registered. Is it google.com or go0gle.com? New or suspicious domain registrations are big red flags.

ACH and Electronic Deposit Scams

Automated Clearing House (ACH) transfers are electronic transactions that can be reversed quickly. Victims might receive checks in the mail or be asked to facilitate electronic deposits. The deposits are then reversed, leaving the victim liable. Be cautious of any unsolicited checks or online deposits into your account, and understand that legitimate businesses will not ask you to move money for them.

Sophisticated Identity Theft

Scammers often recruit individuals to provide their personal information, such as Social Security numbers, under the guise of employment or investment opportunities. This information can then be used to open fraudulent accounts or take out loans in your name, severely impacting your credit and financial future. Always guard your personal information and verify the legitimacy of any entity requesting such details.

 

Illustration of a person carrying a big lockHow to Protect Yourself

The best way to protect yourself from financial scams is to stay educated, be aware, and understand the different types of scams and new tactics used by fraudsters.

  • Verify information: Always verify the legitimacy of job offers, emails, and social media accounts. Use tools like domain lookups to check the authenticity of email addresses.
  • Be skeptical: If an offer sounds too good to be true, it probably is. Be cautious of unsolicited requests for money or personal information.
  • Secure your information: Never share your bank account details, Social Security number, or other sensitive information with anyone you don’t know well and trust.
  • Report suspicious activity: If you suspect you’ve been targeted by a scam, report it to your bank and the relevant authorities immediately.

 

  • Share your experience: Scammers are counting on personal embarrassment and keeping quiet as a way to keep their scam going. If you fall prey to phishing or another type of scam, it’s not a failing. Sharing your story with friends and family brings awareness to scammer tactics and helps others avoid a similar issue.

 

Financial scams are an ever-present threat, and vigilance is essential to protect yourself and people you care about. By staying informed, verifying information, and being cautious with your personal data, you can significantly reduce your risk of falling victim to these schemes. Remember, if something feels off, trust your instincts and seek advice before taking any action.

 

Salal’s banking experts know the ins and outs of personal banking and business banking. We support business owners in all industries, including cannabis. Reach out today to see how we can help you achieve financial success.

 

 

 

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