Financial scams used to mean a weird email telling you that you’re a descendent of a prince in a far away country. All you had to do was deposit $5,000 into a bank account and you would unlock a lifetime of riches. This scam was easy to identify and I don’t think many people fell prey to it.
The Evolution of Financial Scams
These days, it’s different. Financial scams are no longer unsophisticated or laughable. They are sophisticated, well thought out, and play to human emotions like fear and scarcity. They are very realistic sounding and many of them create a strong sense of urgency.
Financial scams come from a variety of different sources: phone calls, texts, emails, DM’s, letters, etc. Almost all of it looks official and the “real thing.”
Highly Prevalent
According to this article in Forbes, Americans lost $8.8 billion to fraud in 2022. Looking back on your last year, how many times were you been targeted by a financial scam? Whether it be a phone call, fraudulent email, text, etc. They are happening more and more, and we have to be on the lookout.
Consequences of Falling for Financial Scams
The consequences of falling for financial scams can be dire. A financial scam can wipe out a bank or investment account, or even take your money in a wire transfer when you think you’re sending it to an escrow company when you’re trying to buy a house.
People can lose in the hundreds, hundreds of thousands, or even millions. Financial scams are a significant threat and not to be taken lightly.
Caution and Disclaimer: This is Not Meant as a Comprehensive List
This is not meant as a comprehensive list of everything to look for in financial scams. I’m not in law enforcement or an expert, these are just the things that I look out for, what I have experienced, and what others around me have experienced.
Always use your own experiences and common sense, and treat this blog as a supplement to what you already know.
What to Look For in Financial Scams
Here are eight things to look for in financial scams. Again, not a comprehensive list, but a great starting point.
Number 1: Sense of Urgency
- “There is a problem with your internet, click this link immediately to prevent immediate loss of service.”
- “Your tax return has not been received, call this number now or risk jail time.”
- “There is a problem processing your loan, verify your information on this link to avoid immediate foreclosure.”
- “Payroll has a problem processing your paycheck, please verify your information using the link or risk missing your paycheck.”
You have probably received similar messages as these. A massive sense of urgency followed by a dire consequence. The reality is internet providers don’t turn off your service if you don’t follow a link. And the IRS won’t leave you a message like that.
Anytime you see a sense of urgency followed by a dire consequence, it’s probably not real. If you think it might be real, reach out to the company on your own, not using the link or the phone number provided.
Number 2: Weird Looking Text or Email
If you get a text or email that just doesn’t look right, it’s probably a scam. Maybe there’s a misspelling, the company logo is slightly off, or the language just seems off.
If it’s weird looking, trust your instinct and verify with the company directly, not using any links or numbers provided in the weird looking email.
Number 3: Emails In the Middle of the Night
Emails in the middle of the night are often the sign of a scam, especially if it comes from an individual, or an individual with a company. Bank executives and CEOs of loan companies are not up in the middle of the night writing emails directly to individual customers. So if you get that strange email at 3:49 AM, it’s probably not real.
Number 4: Automated Calls
I get automated calls every tax season stating that my tax return hasn’t been received and I’m facing jail potential time. My wife and many of my friends get the same automated message. It’s a scare tactic by a fraudster and it isn’t real.
That’s an extreme example, but there are many automated calls more skillfully put together than the one described above. Calls claiming to be from your credit card company, auto lien holder, etc. A good number of these automated calls are scams.
Something many cell phone providers are doing to help with this is identifying callers as “potential spam” or “telemarketer.” This makes it a lot easier because you just don’t pick up and engage.
Number 5: Dramatic Consequences
- “If you don’t rectify this situation within the next 30 minutes, your account will be closed.”
- “Follow this link to immediately restore your account.”
- “Call us at this number or face prison time.”
Dramatic consequences usually mean scam. If you see messages like this, your antennae should be up for a scam. Scammers play on the emotions of humans and try to create big, dramatic consequences.
They know people will feel that wave of emotion and often act to solve the perceived problem. Don’t fall for it.
Number 6: Strange Email Address
If you see a strange email address claiming to be a company you work with (or don’t work with even), it’s probably a scam. Scammers are very skilled in this area as they will often be just a letter or number off, so it looks real. Potential things to watch for in a weird looking email address:
- A zero that is the letter O or vice versa
- The letter I and number one
- Upper case I and lower case l
Scammers know these look alike so they will use them on unsuspecting people. There’s also the email addresses that are so off that they look like an outright scam.
Number 7: Unusual Request From Your Manager or Boss
This one has been around for a while but it’s really effective and deceiving. You’re busy in the middle of the workday and you get a text or email from your supervisor. Suppose her name is Karen Smith. You get a text that says it’s from Karen Smith with a request to buy gift cards.
Usually the story is something like, “Hey, I’m in line at the store and forgot my wallet. Can you please buy me $500 in gift cards and I’ll pay you right back.” Followed by a reason why it’s urgent or can’t wait.
It doesn’t matter what kind of work you do, I’ve seen this scam delivered to teachers supposedly from their “principals”, real estate agents from their “branch managers”, workers in an office building from the “CEO”, etc.
Number 8: Just Seems Off/Doesn’t Feel Right
Lastly, if it just doesn’t feel right, there’s a good chance it’s a financial scam, or some other type of scam. Trust your gut instinct and don’t be fooled into acting quickly or rushing into something that feels wrong. Your intuition is probably correct in most cases.
For example, if you’re receiving a text from your “supervisor” to buy them something in a hurry (when that’s far away from their personality), it’s probably a scam. Trust your inner voice in these situations and don’t fall for it.
Conclusion
Financial scams are everywhere, and they are really good. Sophisticated criminals understand human emotions and they play to those fears and sense of urgency.
Scams are getting more and more sophisticated and complex. Many sound very, very realistic and play to all the human emotions. You still have your intuition though, so rely on that when something feels off.
If it doesn’t feel right, it probably isn’t. Trust your gut and don’t get taken by any of these scams.
What is the most sophisticated financial scam you have seen?
