Avoiding Financial Scams

Personal Finance
Avoiding Financial Scams

Avoiding Financial Scams

Fraud Prevention / Financial Awareness

Did you know? Fraud & Scams

Did you know?

Most people fall victim to scams not because they’re careless, but because today’s fraud tactics are designed to appear legitimate. From phishing emails to fake investment platforms, modern scams are highly convincing and constantly evolving. Understanding how scams work is your first line of defense.

What is a Scam? What is Fraud?

Scams come in many forms, targeting victims through phone calls, emails, social media, and even fake investment platforms. A scam is a deceptive scheme or trick used to cheat someone out of money, personal information, or valuables through false promises or misrepresentation. Common tactics include phishing, where scammers impersonate trusted entities to steal personal information; Ponzi and pyramid schemes that promise high returns with little risk; fake giveaways or “double-your-money” crypto scams; and even romance cons that build emotional trust before asking for money.

Fraud is the deliberate act of deception intended to result in financial or personal gain, often at the expense of an unsuspecting victim. It can take many forms, from identity theft and credit card fraud to investment schemes and falsified business records. Perpetrators use manipulation, false information, or misrepresentation to gain trust and exploit individuals, organizations, or financial systems. In today’s digital world, fraud has become increasingly sophisticated. A notable example is the case of MoviePass, where former CEO Ted Farnsworth misled investors by falsely claiming that the company’s $9.95 “unlimited” subscription model was sustainable and backed by advanced technology. In reality, the plan was a short-term tactic to inflate subscriber numbers and stock value, with no viable long-term strategy or functioning AI systems as advertised. This type of corporate fraud not only caused financial loss for investors but also eroded public trust in emerging tech-driven business models.

Social Engineering

Social engineering is a psychological manipulation tactic used by attackers to trick individuals into revealing sensitive information, granting access, or performing actions that compromise security. Instead of exploiting technical vulnerabilities, social engineers exploit human behavior such as trust, urgency, fear, or curiosity.

An example of this would be when a scammer calls pretending to be from the bank’s fraud department. They say there’s a flagged transaction and ask the victim to “verify their identity” by providing their debit card number, CVV, or security questions. With that info, the attacker gains access to the account. This action can also be called vishing, or voice phishing — a common form of social engineering that takes place over the phone, often using urgency and fear to manipulate the victim into giving up sensitive data.

Keeping Your Information Safe

Keeping your information safe requires a proactive approach to digital hygiene and awareness. Use strong, unique passwords for each of your accounts and enable two-factor authentication (2FA) whenever possible to add an extra layer of protection. Be cautious of unsolicited emails, texts, or phone calls asking for personal or financial information.

Imposter websites are also a growing threat; scammers often create near-identical copies of banking or retail sites to trick users into entering their login credentials. Always double-check URLs, avoid clicking on links from unknown sources, and manually type in trusted web addresses when accessing sensitive accounts. Regularly monitor your bank and credit accounts for suspicious activity, and keep your software and devices updated to defend against the latest security threats. In today’s digital world, staying secure means verifying everything and trusting nothing without confirmation.

Reporting Financial Crimes

The Federal Trade Commission, or FTC, is a government agency in the United States that works to protect consumers from fraud, scams, and unfair business practices. They investigate reports of things like identity theft, fake investment schemes, imposter websites, and deceptive ads — basically, anything that puts your money or personal information at risk. If you ever run into a financial scam or suspicious situation, the FTC provides a simple way to report it. Just visit reportfraud.ftc.gov to share what happened — whether you lost money or just spotted something shady. Reporting not only helps you take control of the situation but also helps others from falling into the same trap.

Frequently Asked Questions

Frequently Asked Questions: Fraud & Online Safety

Financial fraud involves deceptive practices used to steal money, personal information, or access to accounts. It includes scams like phishing, identity theft, fake investment schemes, and social engineering — all designed to trick individuals into handing over sensitive data or funds.

Phishing is a type of scam where attackers impersonate trusted entities — such as banks or online services — usually through email or text, to trick people into giving up their personal or financial information. These messages often look official and use urgency to prompt quick action.

Social engineering uses manipulation — not technology — to exploit human trust. Scammers may call pretending to be from your bank, send fake emails, or pose as tech support, convincing you to share personal details or grant access to accounts. It’s one of the most common ways people are tricked online.

Imposter websites are fake copies of real sites designed to steal your login details or personal information. They may look identical to a bank or shopping site but are created by scammers. Always double-check the URL, avoid clicking links from unknown sources, and use bookmarks for important sites.

Use strong passwords, enable two-factor authentication, never click suspicious links, and regularly monitor your financial accounts. Be skeptical of messages asking for sensitive info — even if they appear to come from someone you trust. When in doubt, contact the company directly using official channels.

If you think you’ve encountered a scam or have been a victim of financial fraud, report it to the Federal Trade Commission. The FTC investigates these reports to help protect others and stop scam operations. You can file a report at reportfraud.ftc.gov.