introduction to fraud AND SCAMS

Fraud and scams can happen to anyone! Both can result in financial losses, but they are slightly different.

Fraud occurs when someone else takes action that harms you financially. Fraud may be committed by a stranger or someone you know.

  • Fraud is taking someone’s money or property without their knowledge or consent.
  • Fraud may include impersonating someone to open fraudulent accounts, buy property in their name, or steal money from their accounts.
  • Other examples include stealing checks, credit or debit cards, and forging signatures.
  • Identity theft is a type of fraud.
  • If fraud is caught, usually there are consumer protections in place to help recover stolen money.

A scam is when someone convinces you to take action – to give up money or information. Scams may be committed by a stranger or someone who pretends to be a friend.

  • A scam is a dishonest scheme of any kind that tricks someone into giving up their money or belongings.
  • Scammers often have numerous interactions with the unsuspecting person.
  • Examples include tricking someone to send money or provide their personal financial information to a con artist.
  • If the scam succeeds, the target’s money is gone, and usually so is the scammer.

HOW SCAMMERS WORK

A scammer can be a stranger, a “new” friend or acquaintance, or even someone you know well. One common theme is that scammers often contact you unexpectedly and can quickly gain trust.

  • Scammers pinpoint vulnerabilities and can quickly gain trust. They build a rapport, develop relationships, and pretend to care.
  • They might appeal to emotions like sympathy, curiosity, fear, stress, or loneliness. For example, scammers play on fear (your grandchild is in jail), love (quickly befriend and want to marry you), or surprise (you won the lottery). This type of psychological manipulation is sometimes called “social engineering.”
  • Scammers know the art of telling a good story and how to make a lie seem real. They can be very believable – even very smart people get fooled!
  • They are insistent and convincing, refusing to take “no” for an answer. They make the situation seem urgent and make aggressive demands. They might use a sense of urgency to push you into sending wire transfers, checks, money, or gift cards.
  • Scammers might insist on secrecy. They take advantage of people hesitating to ask for help or feeling ashamed to report a scam.

Scammers can use information gathered online or on social media to send you misleading emails, texts, or letters, or call you with a story. They can also use the latest technology to make their attempts seem almost indistinguishable from legitimate communications. Other online dangers include:

  • Posting travel dates and photos
  • Posting family details
  • Use of dating websites
  • Sharing details on church or hobby groups

People may be most at risk of being scammed or defrauded if they:

  • Have a “can-do” attitude and tend to act quickly to get things done
  • Are in a vulnerable or busy time of life
  • Let their guard down and forget to be vigilant against scams and fraud

Make sure you check backgrounds of new caregivers, service providers, nonprofits, or new friends. If you think someone is trying to financially exploit you or commit fraud against you, delay the request for money and talk someone you trust.

Always slow down and check in with your instincts if you think you’re the target of a scammer. Call someone you know and trust to discuss before proceeding or giving out money or personal information.

types of scams

The list possible scams is long, but most scams have a few things in common.

  1. They involve someone who is pretending to be someone else or represent a business or the government. These are called impostor scams.
  2. They are often unexpected and contain some type of emotional appeal – fear, love, curiosity, or even greed.
  3. They involve someone asking you for your personal or financial information or for you to send money.

These are some of the most common types of scams.

The most common types of impostor scams involve impersonating the police, official government entities (IRS, immigration, FBI), banks, and well-known companies (for example, Amazon, PayPal, Microsoft, or Apple). Sometimes a scammer will try to re-create a company’s branding to make an email or text look like it came from that company. Pay attention when something doesn’t look quite right, such as an outdated or fuzzy logo.

Scammers may ask you to pay them using a gift card or prepaid card because they are like cash. Regardless of the situation, if you are ever asked to pay or donate in the form of a gift card or prepaid card—it’s a scam.

These happen when you meet a new friend or love interest online and they try to get you to send money or begin an investment opportunity. These scams usually develop over time, and once you have a “relationship,” the scammer will continually ask for money. Scammers can use technology to change how they look or how they sound, so that you will trust them. They also may have a story about why they can’t meet you in person – such as being in the military or having a job overseas. Watch out for anyone who asks for money to help them out of hardship, to come visit you, to support a “humanitarian” effort in a foreign country, etc. Also, never invest money in cryptocurrency or real estate based on the advice of someone you meet online. Always vet investment opportunities with a professional that you identify, such as a financial advisor or attorney.

These can also include “grandparent scams.” Scammers contact you and ask for money to help resolve an emergency. They might pretend to be a loved one, such as a child or grandchild, or they may pretend to represent your loved one who is injured or in jail. They usually demand payment through a gift card, wire transfer, sending cash, cryptocurrency, or another payment service/app. These can be hard to spot because scammers can use technology to create a realistic-sounding voice fake. It’s important to try and contact the loved one directly using the phone number you have – not one a scammer provides.

A tech support scam is when you receive a phone call or message (pop-up) on your device (computer or phone) from a scammer pretending to be from a technology company. Sometimes, you’re told there is malware that needs to be removed, other times you’re told that your subscription is expiring. What you need to know is that real tech support companies don’t call people offering to fix their computers. If you get a pop-up message ignore it. If you’re concerned that something is wrong with your device, take it to a professional. Also, never give remote access or download an app or software at the direction of anyone who contacts you. Never provide access to your online banking or send money based on this type of phone call.

Payment scams can take many forms. These are just a couple examples.

  • A phony company offers you easy money working at home. They ask you to help them by accepting a payment and sending them money (minus your pay) via an electronic payment or money order.
  • You advertised an item for sale and the buyer “accidentally” sends you more than the price. The buyer then asks you to deposit their payment and send them the extra amount.

In this scam, you receive a notice that the lender who collects your mortgage payment has sold or transferred your service to another lender. The notice is fake and you start sending your mortgage payments to a phony lender.

Remember, in most cases, your current services must notify you in writing at least 15 days before any such transfer. A “goodbye letter” should include all of the contact information, new loan number, and start date for the new servicer.

Contact your original lender to confirm that the transfer of service is legitimate. Generally, you will also get a notice from the new servicer confirming the details of the transfer.

Stay aware, because scammers are always inventing new methods of tricking people to obtain information, money or property. For example, scammers can use technology to show a different phone number on your caller ID or even copy a loved one’s voice on a phone call. Other types of scams include:

  • Tax scams
  • Cryptocurrency or investment scams
  • Current event scams
  • Winning a prize, the lottery, or a free trip
  • Phony charities
  • Home repairs

TIPS FOR AVOIDING FRAUD AND scams

Learning about scams is one of the best ways to prevent scams from happening to you and those you love. You can learn more and sign up for consumer alerts from the Federal Trade Commission at consumer.ftc.gov.

Things to remember:

  • If it sounds too good to be true, it probably is.
  • Winning the lottery requires playing the lottery. If you didn’t play the lottery, you didn’t win the lottery!
  • Do your homework before donating to any charity.
  • Double check or get a second opinion on home or car repairs before work is done.
  • Resist free drawings that require providing personal information.
  • Before you give anybody money, slow down and double check with a trusted person.

IF YOU HAVE BEEN SCAMMED

If you think you or someone you know is being scammed, report it to local authorities. You can also report it to the Federal Trade Commission at consumer.ftc.gov. The FTC shares reports with law enforcement partners, and it helps them build a case against scammers and educate the public.

Contact your financial institution. They might be able to reverse a fraudulent credit card charge or wire transfer, reimburse an unauthorized withdrawal, or provide other assistance.

And remember: You are not alone! Don’t be embarrassed or afraid to report the scam or suspected scam. Talk to someone you trust and seek emotional support.

BANK POLICIES AND PROCEDURES

Financial institutions have policies to help protect you from fraud. Here are some processes and procedures they use to authenticate their customers:

Identification: When you make a transaction at the teller window, the teller will typically ask you to provide two forms of identification.

Teller: The teller may ask you specific questions about yourself to confirm your identity — in other words, to make sure that “you” are really “you”!

ATM/Debit card reader: You may be asked to swipe your ATM or debit card and enter your PIN while you’re standing at the teller window.

One-time passcodes: Financial institutions may verify online transactions using one-time passcodes sent to a known device, such as a cell phone.

Note: If you plan to move, update your address with the United States Postal Service and give your bank your new address. They’ll send you a notice at your “old” address to confirm you really made this request — not a criminal trying to steal your mail and identity.

RESOURCES

Use these resources for information on how to protect yourself or a loved one financially.