The Most Common Scams and How To Avoid Them

Scams are on the rise - especially during the holidays - and can happen to anyone. Scammers use elaborate stories to play on emotions and gain trust. Once they have your trust, it’s easier for them to get the information they seek from you. And you can be down a lot of money or have your identity stolen. It’s important to know the different kinds of scams that exist, the warning signs that something may be fraudulent, and how to avoid getting taken in by a scamming thief.

The Federal Trade Commission (FTC) reported that 2020 was a tough year, not just because of COVID-19 and the economic downturn, but because scammers didn’t take a break. In 2020, the FTC received more than 2.2 million reports of fraud, with people stating they lost nearly $3.3 billion.

Experts say always be suspicious of calls, emails, texts or any communication you receive from someone you don’t know – particularly if they want money or your personal information. And during the holidays, be especially vigilant about fraudulent holiday savings such as bogus online adverts and emails or text messages about cheap rates that tempt you into booking holiday travel through them.

Let’s take a look at the different types of scams: How to identify them, and how to avoid them.

Imposters

Imposter scams are exactly what they sound like - crooks pose as someone (or something) else to try to convince you to send them money. This is the most common form of fraud reported to the Federal Trade Commission (FTC), which logged nearly 500,000 complaints about imposter scams in 2020. Here’s what one might sound like:

“I’m with the IRS, and you owe back taxes. If not paid immediately, a lawsuit will be filed against you.”

Sometimes they impersonate a non-existent National Sweepstakes Bureau, or another made-up agency. Scammers sometimes pretend to be from the FTC. If you’re in doubt, check out the list of real federal agencies at usa.gov.

Online Romance

Romance scammers use lies and charm to try to get people to do as they say, which is usually to send them money. A major warning sign of an online romance scammer is their background. They’ll often say that they are far, far away. Other signs include a social media profile that seems too good to be true, the relationship moves fast, they break promises to visit, they claim they need money, and quite often, they ask for specific payment methods. They may sound like this:

“I want to meet you in person, but I can’t afford to travel. Can you send me money?”

Grandparent

Grandparent scams typically work like this. The perpetrator poses as the victim’s grandchild and in a frantic-sounding voice, claims they are in trouble: There’s an accident, or an arrest, or a robbery. They exploit the love and generosity of the grandparent. By the voice sounding higher pitched and frantic, it sets off an emotional charge in the victim and to the grandparent, it may explain why their grandchild sounds differently.

“Grandma, I’m in trouble – I need money fast.”

Lottery Winnings

These scams all have one thing in common: They try to trick you into sending them money or personal information by claiming that you have won a large lottery prize. Another trick is to send the winner a bogus “check” and ask the winner to send money back to cover expenses. It may sound like this:

“Congratulations! You’ve won the lottery. We will need to collect taxes prior to your payment. I will send you the instructions to get this done.”

Remember that in order to win a lottery or sweepstakes, you need to have purchased a ticket beforehand to participate. Sweepstakes are free games of chance. Never send money to claim a prize. Never provide your bank account number or other personal information.

Investment Opportunities

Investment scams lure you with the promise of big payouts, quick money or guaranteed returns. Always be suspicious of any investment opportunities that promise a high return with little or no risk; remember that if it seems too good to be true, it probably is – and is highly likely to be a scam.

“You’ve registered to receive notifications on investment opportunities. Are you ready to invest? I have a once-in-a-lifetime opportunity!”

Tech Support

An industry-wide issue, tech support scammers use scare tactics to trick you into unnecessary technical support services to supposedly fix device or software problems that don’t exist. According to Microsoft, at best, the scammers are trying to get you to pay them to “fix” a nonexistent problem with your device or software. At worst they’re trying to steal your personal or financial information; and if you allow them to remote into your computer to perform this “fix” they will often install malware, ransomware, or other unwanted programs that can steal your information or damage your data. A call from such a scammer may sound like this:

“We’ve detected malware on your computer. Let’s get that fixed for you. There will be a small cost associated to make your computer secure.”

Gift Card Scammers

Gift cards are for gifts, not for payments. But they’re popular with scammers because they’re easy for people to find and buy, and they have fewer protections for buyers compared to some other payment options. They’re more like cash: once you use the card, the money on it is gone. Scammers like this. If someone calls you and demands that you pay them with gift cards, you can bet that a scammer is behind that call. Once they have the gift card number and the PIN, they have your money. Scammers may tell you many stories to get you to pay them with gift cards, but this is what usually happens: They scare you into thinking that something terrible has happened and that they need money right away or they need money right away to avoid something terrible from happening. They tell you to go to a particular store and buy particular gift cards (often more than one card). They tend to stay on the phone with you as you load money onto the card. They then ask for the card number and the PIN number. Once you give it to them, they have direct access to that money right away. An example of how this may go:

“You owe money on ___. We’ll accept gift cards as repayment.”

Fake Charitable Giving

Some scammers set up fake organizations to take advantage of the public’s generosity. They especially take advantage of tragedies and disasters, but during the holidays, scammers step it up a notch by taking advantage of that spirit of giving. They make bogus phone calls – often spoofing legitimate charities' phone numbers – or may even create fake charities to try to steal your money or personal information. Sometimes their pitches include added enticements, such as end-of-the-year tax write-offs.

Don't let scammers stifle your charitable spirit. A little advanced research can ensure your contributions are reaching the intended recipients. If you want to give to a charity, check with Better Business Bureau's Wise Giving Alliance, Charity Navigator, Charity Watch, or GuideStar to see which ones are legitimate and then consider donating directly to them. Decline suspicious phone calls from numbers you don’t recognize. Don’t open and certainly don’t click on links in suspicious emails. Some warning signs to watch for: Pressure to give right now - a legit charity will welcome donations whenever you can give one; a thank-you for a donation you don’t recall making in the past to trick you into lowering your guard; a request for payment in cash, gift card or wire transfer - these are a scammer’s favorite way to cash in because there will be no trace of the transaction. Check out this example:

“We want to thank you once again for making a donation to our cause in the past. During the holiday season, the needs are so much greater, especially during this pandemic. Do you think you could help us out one more time?

Rewards Points Theft

If you weren’t aware of it before, even rewards and loyalty points can be stolen. In fact, between July 2018 and June 2020, over 100 billion credential stuffing attacks happened, according to Akamai, a cybersecurity company in the loyalty arena. These attacks happen when hackers use stolen passwords that you use across multiple accounts. It’s possible that the thief is interested in a free airline ticket or free hotel rooms using your reward points (despite that it’s a serious criminal offense); but there’s another - and scarier - reason why they steal your information. Hackers want access to your accounts, not just for your points but for your personal data as well. Personal data is attached to your rewards and loyalty programs. They can then use this data to build a profile about you that they can later sell on the darknet for identity fraud.

Delivery/Shipping Scam

Many delivery scams start with a text message or an email about delivering a package to your address, according to the FCC. These messages often include a "tracking link" that you are urged to click in order to update your delivery or payment preferences. You might also get a voicemail message with a call-back number, or a "missed delivery" tag on your door with a number to call.

While these messages often look or sound legitimate, you should never click a link or call back the number from an unexpected delivery notice. Contact the delivery service or seller directly using a verified number or website.

In some cases, a link may open a website that prompts you to enter personal information, or it may install malware on your phone or computer that can secretly steal personal information. The number you call back may be answered by a scam "operator" asking to verify your account information or the credit card number you used for a purchase. Other scam calls and texts may claim you need to pay a customs fee or tax before the delivery can be made.

Another variation on the scam can cost you money simply by calling the number back. The fake delivery notice will include a call back number with an 809 area code, or other 10 digit international number. Calling back can result in high connection fees and costly per minute rates. (See also FCC Consumer Guide: One Ring Phone Scam)

Holiday Job Scam

Retailers and shippers traditionally hire seasonal workers to fulfill the demands of holiday shoppers whether they are online or in person. These jobs are a great way to make extra money, sometimes with the possibility of turning into a long-term employment opportunity, however, they are not all what they seem. When looking for something part-time or to fill the gap until a better opportunity comes along, Better Business Bureau has some suggestions to make the seasonal job hunt successful. Being proactive in finding the right opportunity is key, but so is being careful when a job just seems too good to be true. What to watch out for: Beware of businesses asking for upfront payment of costs related to doing a job.

Source: AARP, Chase Bank, FTC, Microsoft, BBB.