It’s a fact of life nowadays that you have to always be on the lookout for financial fraud and scams. Even while sitting in the comfort of your living room and making an online order, you could find yourself getting bilked out of your hard-earned money.
Although financial scams often target older adults, they’re not the only victims. Even younger people can be vulnerable to financial fraud through cash apps and similar approaches.
Here are five of the biggest financial scams of 2021—and how to protect yourself.
1. Synthetic Identity
This is a fast-growing and relatively new area of fraud, according to a Forbes magazine article. With synthetic identity fraud, criminals create a fictional persona that combines personal information stolen from real people and made-up details. Your real address may be used but with a fake name to process an organization’s identity checks. The scammer uses the fake identity to open accounts and perform transactions.
Synthetic identity fraud is hard for businesses to detect and prevent. Although to some extent there is not a victim with synthetic identity theft, the use of your address (or another area of personal information) could have a harmful effect on your credit report which is why it makes our list of the top financial scams of 2021.
2. Imposter Scams
“This is the Internal Revenue Service.”
“We are calling on behalf of your granddaughter.”
“This is the Federal Government Vaccine Bureau.”
Have you ever gotten calls like this in an official-sounding voice, conveying some message of urgency that included a message for money? (Sometimes, the organizations they name aren’t even real, like the Federal Government Vaccine Bureau.) These so-called imposter scams were the top fraud of 2020, according to the Federal Trade Commission. In fact, the FTC received almost 500,000 reports of imposter scams that led to a loss of $1.2 billion. The median loss? $850. The scams often followed what was going on in the news headlines and were related to topics such as COVID-19 and stimulus checks.
In 2021, there seems to be no reason to expect these impostor scams to slow down, hence their inclusion in our list of the top 5 financial scams of 2021.
3. Identity Theft
Here’s “an oldie but goodie” that’s still going strong in 2021. Scammers use fake websites for a bank, credit card company, or other seemingly legit site to get you to share personal information, such as your Social Security number, date of birth, and address. Sometimes, they may get that information simply by calling you if you then share your information. The scammers then use your personal data to open up credit accounts or make purchases. These financial scams have been going on for ages and don’t seem to be slowing down.
4. Online Shopping Scams
To no one’s surprise, online shopping skyrocketed in 2020 due to the pandemic, leading online shopping to be the second highest financial scams area, according to the FTC. This involves making an online purchase but then never receiving it. Consumers lost more than $245 million to online shopping scams, with more than 350,000 reports and a median loss of $100, according to the FTC.
5. Cash App Scams
Have you used mobile payment apps such as Zelle, Square, or Venmo? These apps make it easy to transfer or receive money, but they have their downsides. Scammers will use certain messages to prompt you to send money to them via cash apps. These messages include:
- You won a prize but you need to pay some related fees
- You owe money to the IRS and must pay it right away
- A loved one is in trouble and you need to send money via a mobile payment app
- A new romantic interest of yours is in need of money and asks if you can send it via a mobile payment app
6 Ways to Protect Yourself From the Top Financial Scams of 2021
- Never give out your personal information such as your Social Security number to people you don’t know. Federal officials such as the IRS and Medicare will not call to ask you for your Social Security number.
- Verify that the websites you use are legit. With all of us typing quickly online, it’s very easy to mistakenly type in a wrong web address and reach a site that looks like a trusted website—but isn’t. Next thing you know, you find yourself making a purchase from a fraudulent website, and the item you want to order may never arrive.
- Don’t click on any unexpected links you get via email or text message. If the message is asking for money via a mobile payment app, log in to your account to see if you actually have a request for money. Don’t send money to anyone you don’t know.
- Check your credit report at least once a year to see if there is any inaccurate information. You can get a free copy of your credit report annually (find instructions here). This is where you can find out if someone has opened up an account using your personal data.
- Read reviews online if you plan to use a website you’ve never used before for purchases, the article from Forbes advises. You can also run the site through Google’s Safe Browsing tool. This allows you to check for security threats.
- Use strong passwords and change passwords regularly, to make it harder for scammers to get into your online accounts.