Scams come in many varieties, and millions of people fall victim to them each year. Learn about some of the most common tactics and check out these practical tips to help you spot and avoid scams.
1. Money Mule Scam
Money mules are people who knowingly or unknowingly transfer stolen money to perpetrate fraud for criminals. In many cases, money mules are victims who have been duped into committing fraud. However, a money mule – even if participating unknowingly – can face serious repercussions like hefty fines or jail time.
Common types of money mule scams include:
- Romance scams: Romance scams target those who are emotionally vulnerable. Fraudsters make contact on online dating sites, online forums and social media networks with those seeking companionship. After a rapport is established, the fraudster requests money – often claiming the funds are needed for medical expenses, travel costs to see the victim or a business opportunity. Once the victim begins sending money, the fraudster will often continue requesting larger and larger amounts.
- Work-from-home scams: Employment scams target individuals by promising them high-paying jobs that can be done from home. Fraudsters often advertise the jobs on online forums and social networks such as Craigslist and Facebook. Some employment scams require job seekers to pay money up front – for supplies, job placement and more – while others ask for credit card or bank information prior to "hiring" an individual. You should never send money or give out sensitive information to an unverified source.
- Card cracking scams: Card cracking involves tricking victims into handing over financial account information, debit card numbers and/or online banking credentials. Fraudsters usually promise fast cash in exchange for sensitive financial information. Once card crackers have access to financial information, they deposit checks – often remotely – and then make quick ATM or money order withdrawals. The goal is to get the cash in hand before the bank figures out the checks are phony.
2. Inheritance Scam
Inheritance scams offer the false promise of an inheritance. Scammers – often posing as lawyers, bankers or foreign officials – contact their victims by letter, phone call, text message, email or social media claiming that the deceased left no other beneficiaries. Victims are then told that the inheritance is difficult to access, so they need to pay money and provide personal details to claim the inheritance. Victims pay up and the inheritance is never received.
3. Lottery Scam
With lottery scams, criminals promise large amounts of lottery winnings to victims in return for an initial processing fee. Once victim pays the fee, the scammer never distributes the promised winnings. Elderly persons and the financially vulnerable are often targeted in lottery scams.
To help prevent yourself from becoming the victim of a scam:
- Do not share sensitive financial information or passwords.
- Keep a close eye on your financial accounts and report anything suspicious.
- Never pay upfront for a promise of more money.
- Do not respond to suspicious messages or click on any suspicious links sent to you – even if they come from a friend’s account. Many times, the friend’s account has been hacked and the hacker is the one making requests.
- Seek advice from a trusted, independent professional – such as a lawyer or financial adviser – if you're in doubt of an offer.