Common Financial Scams and How to Avoid Them

One that has been making the rounds since last summer is the Money Flip. A photo of dollar bills entices you to learn how to “flip” hundreds of dollars into thousands. The post even includes testimonials from your social media friends, using a technique that tricks people into “liking” or sharing posts. According to the Better Business Bureau, a victim is told to load a prepaid card and share the PIN to learn the business. Bye-bye, $100.

 

Although some scams seem ridiculous, nobody is laughing about fraud. Mass-communication and technology fraud is estimated to have cost tens of billions of dollars worldwide. Consumers who receive a fishy offer may want to run it by a financial services professional at Veridian Credit Union.

 

Among the most widespread schemes that fraudsters use are advance fee scams, like the Money Flip, that promise a big payday later if you pay the con man something upfront. These run the gamut from scams that ask you to help them to ones that promise to help you. Here are some other common ploys:

 

The Spanish Prisoner Fraud dates back hundreds of years. A con artist presents himself as the friend of an imprisoned Spanish prince who has been entrusted to find someone to buy the prince’s freedom — for which the prince will reward the lender (victim) handsomely when he is free.

 

That scam has spawned many others over the years, such as the Grandparent Fraud. Older victims receive a telephone call to send money to bail a grandchild out of jail. The young relative supposedly doesn’t want to upset his parents (thereby encouraging the victim not to check the story).

 

The scam familiar to most people, and the one that has been the most successful, is the Nigerian Letter Fraud. The writer sends an email or letter asking for money to pay legal fees and bribes to get millions of dollars out of Nigeria — which he will share with you later. Victims who fall for this not only lose their money, but also can fall prey to identity theft.

 

Yet other fraudsters may call to tell you that they can eliminate your debt, negotiate reductions in your credit card interest rate or set you up to make big bucks working from home, all in return for an advance fee or a starter kit that you buy. Any payment you make is followed by silence — except, perhaps, for notices from your credit card company telling you that additional unauthorized purchases have been made with your card.

 

These hoaxters prey on people desperate for money. If you happen to find yourself with cash problems, it’s a better idea to turn to a financial professional who can provide planning and debt-reduction advice to help you weather economic ups and downs.

 

Before giving money to someone you don’t know, go online to research their story — comments from victims will alert you fast. If you suspect fraud, contact your financial institution immediately to protect your personal information. Awareness, hypervigilance even, can be the best prevention.

 

Terri Kaufman, NerdWallet

 

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