Financial Fraud: How to Spot the Warning Signs

November 06, 2020 by First Federal Bank

FraudIn today’s fast-paced, online-centric world, scammers have more tools than ever to separate you from your hard-earned money. These efforts often ramp up during the holidays season. It is important to know these major warning signs for financial fraud:

Unsolicited contact

If someone contacts you out of the blue with an attractive investment opportunity or offer of money, this is a glaring sign you’re being targeted for fraud. Money expert Todd Tresidder notes on his website, FinancialMentor, any unsolicited calls, letters, emails or knocks on your door should put you on high alert. Whether they’re coming from a slick-talking sales agent on the phone, or an alleged Nigerian prince via the internet, these schemes are designed to make you poorer, not richer.

Unsolicited phone or email contact from seemingly legitimate sources should also put you on your guard. In these “phishing” scams, fraudsters impersonate actual businesses and financial institutions, trying to get you to click a link or call a number so you’ll give out your bank account number or open your electronic device to hackers. 

Requests for unorthodox payments

A request for an unorthodox payment method, whether you’re the one giving or receiving, is a sure indicator of financial fraud. According to the Consumer Financial Protection Bureau, if you’re asked to send money by wire transfer, courier, prepaid gift card or any complicated scheme, you’re likely at risk. Writing for The Balance, Justin Pritchard warns wire transfers are an especially bad idea, because the transaction can’t be reversed once you find you’ve been cheated. Another clear warning sign is a request for access to your bank account, credit card or any other financial account. And if you’re selling something online, Pritchard urges caution in accepting any payment form other than cash.

Threats and pressure

The more time you have to research a sketchy investment offer or consider a fraudulent request, the less likely you are to fall victim to a scam. Many fraudsters use pressure or even threats to get you to make a quick decision. The CFPB points out this can come in a positive form, like a push to get you to act immediately on an offer or an investment before the opportunity is withdrawn. Pritchard writes it can also take more negative forms. If you’re being threatened with jail, a tax audit or other dire consequences for not taking action, a scam is likely afoot. Any type of guilt-tripping or intimidation should also put you on your guard.

Offers that are too good to be true

You’ve probably heard this saying before: “If it seems too good to be true, it probably is.” This advice definitely holds true for financial matters. Tresidder cautions promises of market-beating investment returns, guaranteed or low-risk offers and get-rich-quick schemes are all signs you should avoid making a financial commitment. He also warns against falling for offers based on secret or insider information others can’t access. Even if this information isn’t false, acting on it could be illegal.

It’s crucial to stay informed and alert when dealing with any aspect of your finances. As you navigate the complicated and sometimes confusing world of investing and personal finance, keeping these common warning signs in mind can help you avoid the schemes of cheaters and crooks.

Categories: Fraud Alerts/Scams, Personal Banking, Financial Education, Credit Cards

Leave us a comment and join the conversation.