Protecting Yourself Against Financial Fraud

Once you get a hang of the core personal finance skills (budgeting, reducing debt, investing), your net worth will start to tick up higher and higher with each passing month. Learning to identify financial fraud, tricks, and scams is an important part of protecting the nest egg that you’ve built up.

According to CNBC, 15.4 million consumers in the U.S. were victims of financial fraud in 2016. In total, these victims lost $16 billion.

With great wealth comes great responsibility.

Be Prepared

Scammers are constantly dreaming up new ways to defraud unsuspecting victims, but there are several common threads that you should be aware of:

• Commons Scams and Frauds from USA.gov: a good run-down of many typical tricks that scammers try to play
• 5 Common Financial Scams Aimed at Seniors – scam artists often target seniors since they tend to have significant savings, and are more likely to answer the phone

The more you understand the fraudster’s standard playbook, the better prepared you’ll be to avoid falling into their trap.

Stay Skeptical

Whenever you’re presented with a financial opportunity such as an investment in a new business or a unique way for you to invest your money, ask yourself: How will the other party in this transaction make money?

People who give things away for free tend to not stay in business very long. If it’s not clear how they make money, they’re probably making money off of you.

A healthy dose of skepticism goes a long way.

If you get a suspicious phone call, letter, or email, keep these tips in mind:

• 10 Tips To Avoid Common Financial Scams – a good list of best practices to follow to reduce the risk of being de-frauded and/or having your personal information stolen
• How to Secure Your Accounts with Better Two-Factor Authentication: As our digital and financial lives increasingly go digital, securing access to your online accounts is critical. Two-factor authentication is a recognized best practice for adding an extra layer of security

Scammers will often try to drum up a false sense of urgency in order to trick you into making a snap decision. Don’t fall for this.

If you find yourself in an unusual situation involving money, ask for a few minutes to think through the situation. Ask questions, and don’t be shy to tell them to call back later.

Stay safe!