Tips To Avoid Common Financial Fraud
Data breaches, identity theft, and online scams, oh my! Year after year, a destructive flood of fraud sweeps the nation, leaving countless victims in its wake. Unfortunately, new and improved technology only gives fraudsters an edge, making it easier than ever for scam artists to nab financial data from unsuspecting consumers.
In fact, swindlers and hackers pinched US$16 billion from 15.4 million U.S. consumers in 2016, according to Javelin Strategy & Research’s 2017 Identity Fraud Study. To make matters worse, the Identity Theft Resource Center reports there were 1,473 recorded data breaches in 2019.2 But even in these uncertain times, there are things consumers can do to protect themselves from greedy, increasingly crafty fraudsters.
Below are the some tips to avoid the Financial fraud.
1. Never Wire Transfer Money to a Stranger: At some point or another, you’ve probably received an odd email from a wealthy Nigerian prince whose father/mother/brother recently died and left him a huge fortune. Because of his noble status in a foreign country, the prince needs your help transferring the millions of dollars from a U.S. account. In return, he will reward you handsomely with hundreds of thousands of dollars! All you have to do is wire $5,000 to him.
Although it’s one of the oldest internet scams in the book, there are still consumers who fall for this rip-off or some variation of it. No matter what the circumstances – whether you receive an email from a wealthy traveler who needs your help getting back to the U.S. or your long-lost cousin who claims to be in an emergency situation – NEVER wire money to a stranger. Once you wire cash (especially overseas), it’s virtually impossible to reverse the transaction or trace the money. If you’re worried about your cousin, check separately. She’ll probably be safe at home, and you can alert her that her email’s been hacked.
One of these "Nigerian Princes" was recently detained and charged in December of 2017, and to no one's surprise, he turned out to be a 67-year-old man from Louisiana.3 This particular brand of the scheme first popped up in the 1980s and Americans have lost millions of dollars to the scam.
2. Use Tough to Crack Passwords: The days are over when you can use 12345 as your password. Hackers can easily crack passwords that are simple number combinations or the name of your pet. Create a password that is at least eight characters long and has upper and lower case letters, numbers and symbols. You should also use a different password for every website you visit.
3. Watch and Verify All Investments: Many people have stockbrokers or investment advisors. It is important to verify all of your investment holdings yourself. Do not just rely on the financial statements you get your from your financial advisor. The reason that Bernie Madoff got away with billions of fraud in his Ponzi scheme was that he had intricate, fake statements that he sent to clients each quarter.
Invest your funds in large mutual funds or companies, and carefully review their quarterly or annual performance reports yourself without relying on your investment advisor.
4. Don't Give Out Financial Information: Never reveal sensitive financial information to a person or business you don’t know, whether they reach out to you via phone, text or email. Scammers will sometimes email or call you, claiming to be from a retailer, financial institution or government agency. They may say your account has been compromised or needs to be updated. More often than not, these crooks are trying to trick you into giving them your credit card number, Social Security number or other financial information.
This common scam is known as phishing. Remember, your bank or credit card company will never contact you and ask for your personal information. If you receive a suspicious call or email and are concerned about your account, call the credit card company or bank directly to check on your account status.
5. Never Answer Emails Wanting Your Personal Information: No legitimate company ever asks for your social security number in an email. Nor will they ask for your PIN and bank account details. This information would only be gathered on a secure website. The URL for such a site should be one that is well known, such as www.paypal.com or www.amazon.com. If you don’t know the site, it is probably a scam.
Hover your cursor over the URL of the website. If it looks unusual and is something you never have heard of, it is wise to not even click it.
6. Never Respond to Phone IRS Calls for Money: A common scam today is fake calls from ‘IRS officials’ who claim you owe a lot in back taxes and law enforcement is en route to arrest you. You are instructed to call the number and arrange payment. This is always a scam. The IRS never contacts taxpayers in this manner. Virtually all of their correspondence about taxes owed comes through the US mail. If you are ever contacted by someone who claims to be from the IRS, ask for their name, department, supervisor, employee ID etc. Almost all of these calls from the ‘IRS’ are scams.
7. Make Sure the Websites You Visit are Safe: Before you enter your financial information on any website, double-check the website’s privacy rules. Also make sure the website uses encryption, which is usually symbolized by a lock to the left of the web address. When you see the lock, this means the information you’re entering is safely encrypted and protected against hackers.
8. Don't Write Checks: Some people still write checks to pay bills and buy groceries, but note that a check contains all of your personal information, including your bank information and account number. A criminal can use that information to take money out of your bank account.
If you insist upon writing checks, do not carry your checkbook around with you. It actually is less of a risk to use a debit or credit card for payments at grocery stores, etc. You can always contest any suspicious charges with the bank or credit card company.
For preventing the frauds you have to be careful for everything related to your Business or Personal Information.
(Article sources from: https://www.consumerprotect.com/crime-fraud/best-ways-to-avoid-financial-fraud/, https://www.investopedia.com/articles/personal-finance/041515/10-tips-avoid-common-financial-scams.asp)
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