Natasajic Eye Stock | Getty Images
“Fraud is at a crisis level in this country,” said Kathy Stokes, director of AARP's fraud prevention program.
The perpetrators of this type of crime can be organized gangs or transnational criminal enterprises with employees with scripts to lure victims. “They have the money, they have the time, and they have strategies to get them into a heightened emotional state,” Stokes said. “We are the ones who will stand up to them.”
Personal Finance Details:
Bipartisan tax deal could expand child tax credit in 2023
How to make New Year's resolutions stick
How this 77-year-old widow lost $661,000 in a common tech scam
The most important step to avoid getting scammed is to know what to expect and talk to your family and friends. According to the FINRA Investor Education Foundation, if people are aware of a particular scam, they are 80% less likely to engage in it, and even if they do, they are 40% less likely to lose money or confidential information.
Here are five financial scams to watch out for in 2024 and how to avoid becoming a victim.
Exploiting people's emotions by targeting personal relationships or pretending to be someone they care about is the starting point for many fraud schemes.
Grandparent scams are becoming a more damaging version of scammer scams that use advanced technology. Thieves can capture voice recordings and generate imitated versions of your voice that they can use to impersonate you.
Scammers may call and pretend to be a family member in immediate danger (for example, they have been arrested or have a dangerous illness) and are in urgent need of money. . Scammers often try to isolate their victims by inventing some reason why they can't talk to friends, family, or the police, such as saying the incident is under a “gag order.””
“Elder fraud and elder abuse are reprehensible crimes,” U.S. Attorney General Merrick B. Garland said in a statement to CNBC. “We urge all Americans, especially older Americans, to be aware of potential scams, stop before handing over any personal information, and report fraud or abuse when it occurs.”
Some scammers have a third co-conspirator pose as a courier and send the victim to his or her grandparents' house to collect the money.
How to avoid grandparent scams:
“Don't respond to emails or phone calls from people you don't know,” advises Michael Bruemmer, vice president of global data breaches and consumer protection at Experian. “All we need is a voiceprint of less than 10 seconds.”
- Choose a “safe word” or “password” to share with your grandparents, family, or loved ones and say that word when you call in an emergency. So they know it's you.
- If you receive a call or text message from someone claiming to be your loved one using a number you don't recognize, try calling or texting them to the regular number you use to contact them to make sure they don't call. Please confirm that you have called.
- Confirm urgent financial needs with other family members. Don't fall prey to scammers who ask you to keep your first call or text message private.
Romance scams are a common method of stealing people's money using new, but fake relationships, and are growing in popularity. These scams often begin with private girlfriend messages on social media or dating apps after the thief reviews information posted to these accounts.
Once a new “lover” gains your trust, they may claim that someone close to them is sick, injured, or imprisoned. They may claim to be in the military or need help with an important birth. They lie to you and then ask you for money or to make purchases on their behalf.
Scammers often request payment through methods that are difficult to track or reverse, such as gift cards or peer-to-peer services like Venmo or Zelle, said Ted Rothman, senior industry analyst at Bankrate. He said: “Be very suspicious if someone you don't know asks you to make these payments.”
Another common lie from online “lovers” is offers to help you invest in cryptocurrencies. While many victims of romance scams send money with gift cards, the most significant dollar losses (more than one-third of romance scam losses in 2022) are in cryptocurrencies, according to the FTC.
How to avoid romance scams:
- Talk to your friends and family about your new relationship and pay attention to any concerns you may have.
- Don't share personal information, usernames, passwords, or one-time codes with your significant other that others can use to access your account or steal your identity.
- If someone you just met tells you they're in trouble and wants you to send them money or pick up a package, the FTC says it could be a scam.
According to the FTC, investment fraud is the costliest type of financial fraud, with total losses expected to exceed $3.8 billion in 2022. Median loss was $5,000.
Fraudsters use cryptocurrencies because they don't have the same legal protections as credit or debit cards, and payments usually cannot be reversed. In investment scams, cryptocurrencies are central in two ways. It can be both an investment and an irrevocable payment.
Cryptocurrency scams can involve an “investment manager” calling you out of the blue and offering information that doesn't seem to be true, or a scammer claiming to be a celebrity, in addition to claiming to be your lover who wants to send you money. It may start. You can quadruple your money.
How to avoid cryptocurrency scams:
- Don't confuse online dating with investment advice. If you meet someone on a dating site or app and they tell you how to invest in cryptocurrencies or ask you to send them cryptocurrencies, it's a scam.
- Know that no legitimate company or government agency will ever email, text, or message you on social media to solicit money or to buy or pay you in cryptocurrency. Put it down please.
- Do not pay money to anyone who contacts you out of the blue and requests payment in cryptocurrency.
Business- and work-related fraud is also a top category of financial fraud, and these schemes are likely to continue in 2024 as companies lay off employees.
Some scammers use attractive, hard-to-detect tactics to lure victims through interviews with legitimate-looking companies. This fake employer then sends fake emails to collect personal information or claims to use a third party, also fake, to conduct a background check. Once they have your personal identifying information, it is easy for them to access your bank account.
Other job scams may promise you a guaranteed or easy way to earn money if you purchase their program, or offer job postings that involve transfers or transfers to another account.
How to avoid employment scams:
- Search for the words “scam,” “reviews,” or “complaints” in addition to the company name or the name of the person who employs you. See if other people have said they were scammed by the company or person.
- Don't click on links from unexpected texts, emails, or social media messages, even if they appear to be from a company you know.
- Never pay to get a job. If someone asks for an advance payment for a job or says they will buy cryptocurrency as part of the job, it is a scam.
In this scam targeting individuals, scammers pose as a “helpful” third party and offer to help you create an online account at IRS.gov to pay your taxes. Bad actors could use the taxpayer information in such accounts to file fake tax returns, allowing fraudsters to obtain refunds. This information can also be used for other financial fraud and identity theft, such as obtaining a loan or opening a line of credit.
“The entire process for opening an account, verifying a refund, or simply verifying a payment you made will begin on IRS.gov,” IRS spokesperson Eric Smith said. Stated. “If someone contacts you and says, 'I'm going to help you set up an IRS account and send me all your information,' that's a lie.”
How to avoid online account tax fraud:
- Set up your taxpayer's IRS online account yourself at IRS.gov. Do not use third-party assistance for that task.
- Do not store financial records or information in your email account.
“If a criminal gets in there, there's a roadmap to everything,” said Heywood Talcove, CEO of LexisNexis Risk Solutions Government Group.
If you have been scammed, report it to your local law enforcement agency, the FBI, the attorney general of the state where the scam took place, AARP, and the FTC.
sign up: Money 101 is an 8-week course to financial freedom delivered to your inbox weekly.
Don't miss the next story from CNBC PRO.
