Financial scams are everywhere, and you could quickly become a victim if you don't know the red flags.
Here's everything you must know about financial scams and how to avoid them.
What is a Financial Scam?
A financial scam can take on many looks. You can get scammed by someone pretending to be a bank representative, tax collector, or charity.
Scammers often use scare tactics to get you to act quickly without thinking or talking to anyone else.
All financial scams have one thing in common — they get a hold of your money, bank account information, or other sensitive financial information.
How Do Scammers Profit?
Scammers profit in many ways. For example, if a scammer convinces you to wire $10,000, they profit by getting your money. If you give your bank account information to someone running a hoax, you may unknowingly give them access to your bank account or credit cards.
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How Can You Identify a Scam or a Scammer?
Because financial scams are so common, it's essential to know how to identify someone trying to take advantage of you and using deceitful practices.
Here are some common things to look for:
- The offer they provide seems too good to be true.
- There aren’t any identifying factors for the ‘company’ online when you look them up.
- The scammer demands you send money now, giving you only an hour to respond
- The scammer asks for payment in obscure ways (gift cards, Western Union, etcetera).
- The scammer asks for personal information that no bank or creditor would ask, such as your password or bank account number.
Use your gut when deciding if it's a scam.
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If the situation doesn't sit right with you, it's best to avoid it.
You're better off missing a 'great deal' than unknowingly giving away your private financial information.
The Top 12 Financial Scams and What to Look For
In 2022, Americans lost $8.8 billion dollars to scammers, which is a 30% increase from 2021. While there are thousands of financial scams, here are the top 12 scams to watch out for and avoid.
Tax Scams
Scammers often pretend to be tax collectors or tax representatives to help you file your taxes or steal your Social Security number and work under it, sticking you with the tax bill.
How to avoid: Never share your Social Security number or other sensitive information with someone that calls you. The IRS, your bank, and other creditors will not ask for this information.
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