Owning a bank account puts you at risk of being targeted by numerous fraudulent schemes related to banking and investments. Even if you consider yourself to be financially secure, with a steady income and a well-managed portfolio, you may still fall victim to these scams. It only takes one clever scammer to wipe out your entire savings in a matter of minutes.
According to the Federal Trade Commission (FTC), the number of people affected by fraud increased significantly in 2022, with consumers losing a staggering $8.8 billion. What’s even more alarming is that most of these victims were not even aware that they were being scammed. This highlights the fact that it can happen to anyone, regardless of their level of financial expertise or experience.
Here are the 5 most popular banking scams you should avoid.
1. Classified advertisements overpayment scam
Scammers often exploit online marketplaces and classified ads, such as online auctions and social media platforms, to carry out a common banking scam. The scheme involves the scammer promising to send a check to the victim, but when the check arrives, it is for a larger amount than owed. The scammer then requests that the victim transfer the excess funds back to them.
The catch is that the check is fraudulent, and the victim is unaware of this fact until after they have deposited it. The bank may not decline the check until several days after the deposit, during which time the scammer has already received the excess funds. This leaves the victim with a significant financial loss and the added hassle of resolving the fraudulent activity with the bank.
It is essential to be vigilant when engaging in online transactions and to avoid deals that seem too good to be true. One way to protect yourself is to only do business with trusted and reputable sellers and buyers. And always verify the authenticity of the check with your bank before depositing it. Remember, it’s better to be cautious than to suffer financial loss at the hands of scammers.
2. Cancelled wire transfer
Similar to the previous scam, this banking fraud involves an individual attempting to purchase an item from a seller located in another state. However, it is unlikely that they will travel for hours just to buy an inexpensive item, such as a pair of used shoes.
The scammer will send the seller a payment via wire transfer, which initially appears to be successful. However, afterwards, the original transfer may be declined, canceled, or not go through at all.
This scam preys on the trust between the seller and buyer, and it is important to be cautious when conducting transactions with individuals located far away. It is advisable to only sell to people you know and trust or who have a proven track record of positive transactions.
3. Bank asking to verify your social security number
This banking scam involves receiving an email that appears to be from your bank, complete with the official logo and a legitimate-looking email domain. The email will request that you click on a link to verify your Social Security number or other forms of personal identification.
The scammer will often use trusted brand names and logos to make the email appear authentic. However, it is crucial to stop and think before clicking on any links. Ask yourself why your bank would suddenly need such sensitive information.
If you have any doubts about the email’s legitimacy, it’s best not to respond or click on any links. Instead, contact your bank directly from the phone number listed on their official website or visit your local branch in person. Verify whether the email is genuine or a scam. It is always better to be on the side of caution and protect your personal information.
4. Fake text message or e-mail with a security code
This banking scam involves receiving a text message or email that appears to be from your bank, asking you to click a link to verify your identity when logging in to your account. This process is legitimate if initiated by you, as it is a common practice for banks to verify the identity of their customers for security purposes.
However, scammers take advantage of this process by sending fake text messages or emails that look very realistic, prompting you to click on a link to verify your login information. They prey on your fear of someone else trying to log into your account, causing you to click the link out of concern.
The problem is that the link is not genuine and is designed to expose your personal and financial information to the scammer. If you did not initiate the verification process or recently visit the bank’s website, it is highly likely that the text message or email is a scam.
5. You won, now pay up
This type of banking scam revolves around winning a contest, where the scammers will inform you that you have won a fabulous prize. They will ask you to pay a small fee, usually for shipping, taxes, or processing, to receive your reward. However, once you pay the fee, the prize never arrives, and you’re left with an empty promise and a charge on your bank account.
It’s important to be cautious of contests that you never entered in the first place or that seem too good to be true. Scammers often use this tactic to lure in unsuspecting victims with the promise of a grand prize or reward. Once they have your attention, they will ask for payment of a small fee or for your personal and financial information, which they can use for fraudulent activities.
To protect yourself from this type of scam, always be skeptical of unsolicited messages or emails that claim you have won a contest or prize. If you’re unsure, research the company or organization to see if the contest is legitimate.
