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.
Scammers are constantly dreaming up new ways to defraud unsuspecting victims, but there are several common threads that you should be aware of:
The more you understand the fraudster’s standard playbook, the better prepared you’ll be to avoid falling into their trap.
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:
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!