If you’re tech savvy, you might think you’re too clever to fall for financial scams. But I’ve got some bad news…

Even as our financial savvy increases, scammers have continued to evolve. I’ve seen the smartest of people lose out on a few hundred bucks because they were caught off guard by a scam they hadn’t seen before.

In today’s world, it’s extremely important to use best practices for securing financial information and staying up to date on the latest scams.

Scams are more common than you think…

While once upon a time it used to be that older folks fell for financial scams more frequently, the opposite is true now. People ages 20-29 are losing money to scams more often than people who are 70+ years old. 

The point is, even if you’re under the impression that your finances are impenetrable, you may be more vulnerable than you think. That’s why we’ve compiled a list of the top financial scams to look out for. So that you’ll be prepared if you’re ever come face to face with one. 

8 Common Financial Scams to Avoid 

If you want to hold on to your cash, make sure to be on the lookout for financial scams in these areas…

1. Fake Social Media Accounts

Gone are the days where scams sat only in your email spam inbox. Now, scams have moved to the places that people spend most of their time, the internet. Tiktok, Instagram, Twitter, Facebook and Snapchat have become rife with people targeting you for financial gain. 

One of the most common scams on social media is when people make fake accounts of reputable businesses and try to sell you goods or services. For example, you might think you’ve purchased a sweatshirt from LL Bean or a new piece of furniture from Wayfair, only to find out that you’ve been scammed by a fake account, and your product is never to be seen!

In fact, we even had a run-in or three with fake How To Money Instagram accounts earlier this year! This is our only instagram account!

Before you interact with accounts on social media, be sure to vet the account to make sure it’s legit. If you’re taken to an external website or shopping cart, verify that the URL is actually secure and correct. Do some internet sleuthing to make sure sites are legit before entering your credit card information!

2. Money Scams in Dating Apps

There’s nothing less romantic than being scammed out of thousands of dollars by someone you thought you were really connecting with!

Dating app scammers are particularly nefarious. Because they prey on people who are trying to put themselves out there to find love. Here are a few red flags to look out for on dating apps to make sure you keep your money (and heart!) safe. 

  • Moving the conversation: If someone tries to get you to move the conversation to WhatsApp, it might be a scam. WhatsApp encrypts each message, so it’s popular with scammers who want to avoid getting caught.
  • Asking for money: If someone you’re chatting with on a dating app asks you for money, best to end the conversation. Never send money to someone you don’t know personally. 
  • They offer to invest for you: If your Roblox girlfriend offers to quadruple your money overnight by investing in cryptocurrency, it’s most certainly a scam. Trust me, you’re better off investing the plain and boring way!!

It can be rough out there on dating sites. So make sure to keep your eyes open for these financial scams while getting to know someone you’re meeting on an app.

3. Money App Scams 

You’re hanging out waiting for the bus and someone comes up to you and asks to make a call from your phone. It seems harmless, so you let them. You come to find hours later that they actually sent themselves $3,000 from your Venmo account. Ouch! 

Unfortunately, you have to be on guard when trying to be a good samaritan. Instead of saying yes, offer to dial the number for them and put it on speaker phone, without letting them actually touch your phone. And unlike credit card fraud which offers you some protection, it’s basically impossible to claw money back from Venmo or Cash App once it’s been sent. 

Pro tip: Lock all your money apps with your fingerprint or a password on your phone! Nobody should access them but YOU.

4. Multi-Level Marketing Scams

This is one of those schemes that unfortunately is legal, but is just as awful as the others. MLMs are organizations from which only a handful of people profit. But almost everyone else (especially newcomers) lose a bunch of money.

We covered MLMs extensively in Episode 254, but they are basically pyramid schemes. The only real way to make money in MLMs is by recruiting other people. Even though the person encouraging you to join might make it seem like you make the bulk of your money by selling products.

So if you get a “hey girlie!” dm from one of your old high school acquaintances offering you a job that is wayyyy too good to be true, it probably is.

5. Imposter Scams

One way that scammers can trick otherwise skeptical folks is by creating a false sense of urgency. This comes into serious play when with imposter scams. 

With this financial scam, the fraudster will contact you via phone or email, impersonating a legitimate company and tell you that either you owe them money, or that you’ve overpaid. They create a sense of panic by telling you that your power is going to be shut off, or that your car will be repossessed, etc, making you rush to send payment before you even think about whether or not this is a real email or phone call.

This time-sensitive tactic makes it far more likely that we’ll make a poor decision. And that’s how these scammers are able to take advantage of you. Here are some common imposter scams these days:

IRS Scams

Especially around tax season, scammers love to impersonate the IRS. The IRS will NEVER contact you by phone or email. They send all communications through snail mail. So never respond to someone claiming to be with the IRS through a different communication method.

Utility Scams

Similarly to the IRS scams, scam artists will often impersonate utility companies, telling you that they will disconnect/shut down your services if you don’t pay them immediately. 

Scams like this can be difficult to detect, so here are a few questions to ask yourself before you remit payment after receiving a phone call or email. 

Does this company even reach out to people via phone/email? If it’s the IRS, the answer is always no.

Have they provided you with any personal information? If you receive an email that says “DEAR CUSTOMER” asking for money, it’s most certainly a scam. Look for personal information within the email like your name and account number. If it isn’t found, it’s likely BS.

What email/phone number are they contacting me from? While their name might be set to the company name, usually if you click through to see the actual email it will be a weird collection of numbers and letters. This is a dead giveaway that you’re dealing with a scam artist. 

Are they asking you to pay with a gift card? Legit companies won’t ask you to go to a store in order to pay with a gift card. That should set off a bright red flag!

Are they pressuring you to do this right now? If they’re putting the pressure on you to take care of this immediately, it could be a scam. They’re trying to get you to send them money before you catch on. 

6. Charity Scams

Charity financial scams take advantage of events like natural disasters or wars. They pose as organizations that provide aid. But instead, they use those donated funds for their own gain.

And some charities, while they aren’t exactly scams, use most of their donations to pad the wallets of their executives instead of using as much as possible to make a difference in their communities. 

If you see a cause you would like to give money away to, make sure to properly vet the organization yourself. Use websites like Give.org, Charity Navigator, CharityWatch, and GreatNonprofits. This will make sure that your donation is actually going to the people you would like to help. Not to a crafty yet cruel scam artist. 

7. Employment Scams

Looking for a new job to maximize your income this year? Be sure to watch out for scams along the way. 

These scammers tempt people to apply for work from home or “mystery shopper” positions. Then, they’ll send you your first paycheck. Sweet, right!? Well, after a bit of time they will contact you and tell you that they’ve accidentally overpaid you, and ask you to send back a portion of the check. Eventually, after you’ve sent them real money from your account, the check they sent you will bounce, and you’ll be out a few hundred dollars!

That’s why it’s important to thoroughly research a company before you start working for them. You can also use verified job search agencies like FlexJobs which sifts through employers and removes imposters.

8. Affinity Scams

Affinity scammers use personality and charm to infiltrate a group of people. Like a religious group, a community, or professionals within a certain field. They’ll convince people within this group to let them “invest” their money for them, promising sky high returns and practically no risk.

Often, affinity scammers use money from other people they’ve scammed to send returns to other “investors” to give the illusion of gains. Just like a ponzi scheme!

Perhaps the most famous modern example of this is Bernie Madoff, who scammed over 13,000 investors out of over 65 billion dollars! 

The best way to avoid affinity scams is by learning the investment basics, and going the DIY route.

How to Protect Yourself From Financial Scams

Now that you’re aware of these financial scams, you’re less likely to fall for them! However, there are a few measures you can take to make sure that you’re protected against scammers.

1. Freeze Your Credit

The best way to protect yourself from identity theft is to freeze your credit with the three major credit bureaus. When you freeze your credit, you restrict access to your credit report, making it nearly impossible to get your identity stolen. It takes 5 minutes, it’s free, and it helps to keep criminals from opening up credit accounts in your name. 

2. Be Cautious of Those Close To You

Just because you’re friendly with someone doesn’t mean you need to trust them with your wallet. Don’t assume that just because someone is a part of your community, or because you work with them that any pitch they make to you is infallible. 

If they try to get you to let them invest your money into a “too good to be true” investment, or attempt to recruit you to an MLM, just tell them that you’re happy that things are working out great for them but that you aren’t interested. No use in arguing with someone who is ‘drinking the Kool-Aid’ so to speak.

3. Don’t Rush

Scammers depend on getting you to take action quickly. If you get a fishy phone call or email, or leave a conversation feeling sketched out, don’t be afraid to head over to the internet in order to give your experience a lengthy Google search. You’ll often find tons of threads online confirming whether or not something is a scam. Take the time to truly consider the situation before taking action. 

4. Monitor Your Accounts

It’s hard to notice that money is missing from your accounts if you never check them! Be sure to keep an eye on your transactions, and call the bank or credit card issuer immediately if you notice anything suspicious. 

5. Set Strong Passwords

Don’t be that person who uses the same password they created in high school for all of your accounts.

Instead, create strong passwords using a variety of letters, numbers and special characters. If you struggle to remember them all, you can use a browser extension like LastPass or Bitwarden to save them. 

6. Call the Companies Directly

If you aren’t sure whether or not an email from a company is real, try calling the actual company to inquire. For example, if you get an email from Disney+ asking to verify your social security number, delete the email and call them using the customer service line you find on their website. They’ll be able to verify any communications that have been sent out.

7. Practice Stealth Wealth

One of the best ways to prevent affinity scams is by practicing stealth wealth. Meaning, the less you flash your money around with things like fancy watches, expensive cars, or huge splurges, the less likely scammers in your community are to target you!

The Bottom Line:

While there are tons of scammers out there, there are plenty of measures you can take to protect yourself from them. Even just being aware of the different types of common financial scams can provide a strong layer of defense, and can help to keep your money safe.

Remember to be alert, not paranoid, and your finances will be well protected. Check out these related posts for more ways on how to keep your money safe! 

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4 comments on “Watch Out For These Sneaky Financial Scams

  1. There is a nice app that can help you to check a URL before opening it:

    https://f-droid.org/en/packages/com.trianguloy.urlchecker/

    Also, if you have a Virus Total API key (it is free), you can check for virus in the website before visiting it.

  2. Rachel Mar 10, 2022

    Hey friend,

    In response to your pineapple comment and how it’s “tearing up the inside of your mouth”. Turns out, pineapple contains the enzyme Bromelain, which breaks down proteins. Thus, why your mouth feels like it’s getting little soars, it’s literally breaking our flesh down when we eat it! Cooking or grilling the pineapple first can help release the enzymes. Consuming with dairy, like yogurt or ice cream or even rinsing with water after can help reduce symptoms. The more ya know!

    Peace out

    • Rachel- thanks for sharing! I’ve never heard of that before and am pumped that- not only am I the only one dealing with this, but that it’s something that technically affects everyone. Crazy! Now anytime I eat pineapple I’m going to think of it as a battle- who can devour who first (I’m pretty sure I’m always going to win).

      • I have the same problem if I eat more than a few pieces, so I’ll take Rachel’s advice into account for next time!