5 tips to protect your financial information from scammers

With digital wallets and auto-fill, it’s never been easier to automatically share your financial information with a new website or platform.

But any time you make a purchase online or input your personal or financial information into a new website or app, there’s a risk that you could end up spending money in the long run. Consumers reported losing nearly $8.8 billion to fraud in 2022—an increase of more than 30% over last year—according to DATA from the Federal Trade Commission (FTC).

This increase in fraud-related losses highlights the importance of being vigilant and taking appropriate precautions online so that your personal information and financial health not compromised.

Consumers pay the price

According to the FTC report, impostor scams (fraudsters posing as legitimate businesses), online shopping scams, and investment scams are some of the main reasons for the increase in fraud. When consumers fall into these types of traps, they not only pay a heavy price through the losses they incur, but may also compromise their personal and financial information-setting themselves for fraud and identity theft in the future.

Last year, there were more than 1.1 million identity theft reports received through the FTC’s IdentityTheft.gov website. And while you may be able to recover financial losses through the protections offered by your financial institution, protecting your personal and financial information once it falls into the wrong hands can be challenging. That’s especially because you won’t catch this type of fraud until the damage is done to you credit.

“When we think about how fraud affects a person’s credit score, the number one concern is identity fraud,” said Stu Bradley, senior vice president of fraud and security intelligence at software company SAS. . He explains that an identity thief can use stolen information to apply for credit in your name, and the hard questions that result from applications alone can negatively affect your credit scores. credit. “Once the fraudster has successfully opened an account, the spending begins,” Bradley added. “It may be months before you realize something is wrong. In the meantime, you’ve accumulated a chunk of loan and several unpaid ones cause further damage to your credit scores.”

Bradley reiterated that even if you catch the signs of fraud, correcting the issue can be an uphill battle. “While you may not ultimately be held liable for fraud, it often takes months and countless hours of stress to recover a stolen identity and correct erroneous data obtained by the credit bureaus.”

Recognizing these common red flags can help protect your finances

There are several common tactics scammers use to get your personal and financial information. Knowing their tried-and-true methods will help you stay vigilant and avoid falling into any traps if you become the target of a potential scam.

This may include:

  • Phone calls or text messages from someone pretending to be a representative from your financial institution, a government entity, a charity, etc.
  • Contact about a prize for a contest you didn’t enter, or an overdue payment for a bill you didn’t recognize
  • A debt collector seeking payment for a debt you don’t know
  • Someone is cold calling you about a debt relief, foreclosure recovery, or mortgage loan modification program.
  • Phishing emails which may also contain harmful links

“We’d like to think it wasn’t us, but the sad truth is that anyone can be a victim of identity fraud,” Bradley said. “Fraudsters love the anonymity of digital interactions and transactions. This makes it easier for them to impersonate their victims—and easier to trick their victims into inadvertently revealing personal information.”

5 tips to protect your financial information from scammers

Although there is no surefire way to prevent fraud, there are ways you can better identify scams and protect your personal information.

  • Do not click on any suspicious links, email attachments, or downloads. Scammers may try to gain access to your personal information by sending you links or attachments asking you to submit additional personal information or claim a prize after you make a purchase. Do not engage with any of these phishing attempts. If you have any questions, or are unsure whether the message you received is genuine, contact the merchant directly via a verified contact number or email.
  • Enable multi-factor authentication (MFA) on all your accounts. This setting requires a user to provide more than one password or form of verification to log into your financial or personal accounts. That way, even if scammers get their hands on a piece of your personal information, they have to jump through a few more hooks to do anything with it.
  • Be sure to research companies, businesses, and charities before making a purchase or donation. Before you buy or donation, research the company first. A quick online search can help you find out more about the company and pull up any reviews about potential scams.
  • Press “ignore” on spam calls. If you don’t recognize a number and don’t expect a phone call, you can avoid picking it up. Scammers will often call you from a phone number with the same area code to gain your trust and make themselves look more legitimate. Your cellphone may also warn you in advance with a “likely scam” warning.
  • Beware of strange payment methods. If you receive a message about a missed or late payment that requires you to pay in the form of a gift card, money order, or wire transfer, you’re probably dealing with a scammer. Be sure to go straight to the source and ask your service providers for your most recent account statement to find out if you’re behind and by how much.

The takeaway

Being a victim of fraud can not only ruin your finances in the short term, but scammers can cause damage that can take years to recover from. Knowing the key warning signs and common strategies used by fraudsters can help you avoid becoming a victim of a scam.

If you have been targeted by a scam, be sure to act as soon as possible through filing a report with the FTC and your local law enforcement.

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