Your phone rings on a hectic Monday morning and it’s an IRS official. He calmly explains how you have evaded a tax bill and lays down the implications of the offense in a grave tone. It seems you have long passed the due date. And if you continue to evade it any further, they have no choice but to inform the police. You apologize for the oversight and agree to make the payment straight away. Then you immediately make a wire transfer to the account provided, all the while wondering how you’ve missed this tax payment.
While you’re feeling relieved about escaping a near miss, there’s one more thing you’ve missed in what just happened—you’ve become a victim of an IRS scam.
Phone scams are costing Americans $19.7 billion per year. But phone calls are just one source of fraud, and there are many other ways you can get duped. The next time you get tricked could be with an email, a social media post, or even a knock on your front door. And criminals are getting smarter each day and finding creative ways to get to you when you least expect it.
So, let’s take a look at five common scams and how you can protect yourself from becoming a victim.
1. Credit card fraud
In 2020, Americans gave out their SSNs and credit card information six times more than they did the previous year. And these reckless information-sharing practices are fuelling the rising number of scams.
Credit card fraud can take many forms. Criminals can use your card details to withdraw money or pay for massive purchases, especially for illegal or unethical activities. And the result? It could leave you with an empty wallet, or rather a credit card, and even a less than desirable credit score.
So, how can you protect yourself from credit card fraud?
- Keep your credit card in the wallet and not in your pocket or backpack to minimize the chances of misplacing it.
- When making a payment, ensure it doesn’t leave your sight.
- Only use your credit card at reputed vendors, whether it’s a brick-and-mortar store or an online shop.
- Avoid sharing credit card details over the phone, via email, or on social media.
- Regularly check your credit card statements for any unfamiliar payments.
- Immediately contact your bank and freeze the account if you suspect any foul play.
2. Lotteries and sweepstakes scams
These are some of the most common frauds that target elderly citizens. And according to Security.org, they are particularly high in Alaska, West Virginia, and Wyoming.
They are often initiated by a phone call, email, or a letter claiming that you’ve just won a lottery or some other contest. And they’ll typically offer a hard-to-resist prize, like a $10,000 check or an all-inclusive holiday to the Caribbean. But before dispatching it, they’ll need you to pay a tax, an admin fee, shipping fee, or some other similar payment. And once you do, that’s going to be the end of it.
But these can be tackled with a few simple steps.
- If you don’t remember entering a contest or lottery, then it’s probably a hoax. So, avoid entertaining any payment requests.
- Do not give out your bank details and other personal information to receive the prize money.
- If it appears to be part of a well-known organization, then research and contact it to verify the claim.
- Avoid responding to any offer that may sound too good to be true. Do not agree to meet, respond to emails, download attachments, or click on any links.
3. Pyramid schemes
Pyramid schemes have existed for ages. And they continue to remain popular because of their lucrative get-rich-quick approach. But they are, in fact, illegal. It’s a scam where you’re asked to make a payment and recruit more people into the scheme in return for a higher payout. The Blessing Loom that took off on social media is one such example.
Pyramid schemes can come disguised in many forms, often as legitimate businesses. So, what should you do to avoid them?
- Be suspicious of business propositions that offer quick returns of extraordinary scale or rely on recruiting others to make a profit.
- Do your own research to verify the legitimacy of the organization and to confirm whether they sell any tangible goods.
- Be wary, even if it’s presented by a close friend or a family member.
4. Fake charity scams
Fake charities are one of the easiest ways to defraud people by appealing to their emotions. And they seem to surge, particularly in times of crisis. And they often come disguised under names that closely resemble well-known charities. But unlike legitimate organizations, they’ll usually insist on immediate donations. They’ll try to rush you into making a contribution before you get a chance to weigh things up.
So, here’s what you should do to protect yourself.
- Never give in to charities that insist on immediate payments, particularly in cash. Charitable donation should be a well-thought-out decision to ensure your money contributes to the community in the best possible way.
- Note down the charity name and research it before you donate.
- Avoid cash payments and wire transfers. Opt to pay by credit card or with a check. But do not give out your card details over the phone or via email.
According to the Federal Trade Commission (FTC), Americans have lost $145 million to pandemic-led scams. Evidently, even a global health crisis couldn’t keep criminals away.
The point is, they’ll make use of every opportunity to get to your money. So, understanding the possible dangers and protecting yourself is essential to avoid becoming a victim of one of the countless scams out there. After all, prevention is certainly better than cure. And if you suspect any foul play, ensure that you report it to the FTC on their website.